Where have the consumer traffic for major shopping festivals gone to?

ecommerce promotion festivals in China have been key events for the online retailers’ traffic generation until very recently.

Unfortunately, this year, the trend has been broken for JD’s 618, one of the largest ecommerce promotion festivals every year.

618 rivals Double 11 in the yearly calendar of such shopping festivals but has seen mixed reviews this year despite total sales value rising to RMB159.2B (US$ 24B) as compared to 2017’s RMB119.9B (US$18B).

However, participating retailers have lamented disappointing traffic through ecommerce sites, with some experiencing little change in sales revenue in the promotional period of 618 compared to usual sales.

This is surprising, considering the fact that 618, which lasts from 1 June to 18 June every year, coincided with Father’s Day. Why has the growth of traffic slowed down this year in such a key event of ecommerce and what does it mean for the future of ecommerce?


Fragmentation of Traffic

An important reason to explain this upset is the increasing fragmentation of the ecommerce space. Some features of this fragmentation are the high number of shopping festivals per year, fierce competition amongst online retailers, competition between online and offline retailers, and competition between retail and other entertainment options. Occurring on multiple fronts at once, hence making its cumulative impact felt more strongly.

The number of shopping festivals per year has been increasing since the inception of such events given the previous success of such promotions. This is particularly true for the 1st half of the year, whereby the promotions calendar is so saturated with at least a shopping festival or holiday going on every month. The Nian Huo festival, Valentine’s day, Girls’ Day and Women’s Day, 418 festival, Men’s Festival, I Love You Day, Children’s Day, 618 festival – the list goes on.

With promotion after promotion lined up ceaselessly, the consumer is inundated with similar offerings throughout January to June before 618 even begins. The result is a fatigue and numbness towards the same sales tactics employed in hopes of attracting shoppers. Adding on to the fact that this happens yearly, and that the second half of the year has in line more shopping festivals, consumers are understandably getting bored.

JD expands efforts to integrate online and offline shopping

The fragmentation goes beyond the inter-festival level to the intra-festival. While 618 may have been initiated by JD, other ecommerce sites are offering competitive deals during 618 to get a slice of the pie. Of course, this does not stop at online retailers. Offline retailers are also jumping in on such festivals started by ecommerce platforms, and some have even better offers to hook the deal-hunting customer. In fact, there has been a greater effort by JD and its rival Alibaba this year to integrate offline and online retail into a seamless experience that cross-markets and drives traffic for both. Its execution, however, has been less than perfect which could be another reason for the fragmentation experienced in the promotion festival. Consumers end up paying more attention to the offline stores, hence resulting in traffic being redirected away from online retailers.

Shopping is but one of the many activities done on mobile in China

The mobile shopping experience, as an activity, is also competing with other entertainment options vying for the fragmented time of users. These include social media, games, music, news, etc. The user has to perceive the promotion as sufficiently valuable such that it can be prioritized over other mobile activities. This is because the current ecommerce experience does not have much entertainment value beyond just shopping, and hence consumers are focusing only on the material gains of cheap deals especially for promotion festivals.

The lukewarm reception of 618 this year is not an isolated incident as we have heard that the sale promotions during Ramadan this year in the Middle East have also yielded less-than-expected results. The offline brick-and-mortar experience still holds sway with only 16% of YouGov’s survey respondents indicating that they would shop exclusively online during Ramadan. Perhaps similar forces are at work in the consumers’ psyche, and the experiences of mid-year 2018 in China and the Middle East could be the beginning of a downtrend for the efficacy of ecommerce promotions.

A new approach to retail is crucial to recapture the attention of consumers inundated by the same old sales techniques.  


Reinventing ecommerce

A reinvented retail space is one to watch out for as the blending of social and shopping offers a fresh experience for consumers and holds great promise for retail to re-engage with consumers by leveraging their proven penchant for online social interaction.

Social media influencers on Douyin (TikTok) in OPPO’s marketing campaign

This is already happening with social media influencers endorsing products on popular social apps targeting the fragmented time of phone users. For example, the bite-sized user-generated content of fastest-growing micro-video app Douyin (known as Tik Tok internationally) is a perfect platform to both entertain and sell. Large brands such as OPPO, Michael Kors, Audi, and Pizza Hut have already used Douyin as a marketing channel to reach the youth of China. It is definitely possible to integrate social and shopping, and could be the way forward for redefining the user experience for ecommerce to be more engaging.


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