Chinese e-commerce companies pin hopes on 618 festival for quick bounce-back

by S&P Global

This article was originally published on S&P Global.

Chinese e-commerce companies are turning to aggressive discounting and vouchers for the mid-year 618 shopping festival as they seek to revive consumer spending in the wake of the COVID-19 outbreak.

The three largest Chinese e-commerce companies — Alibaba Group Holding Ltd., Inc. and Pinduoduo Inc. — all reported slower revenue growth for the first quarter of 2020, the period that covered the worst of the pandemic. Soaring demand in some categories, such as online groceries, did not translate to better margins as logistics subsidies, commission waivers for marketplace merchants and extra costs incurred from protective equipment ate into profits.

The companies now hope that heavy discounts will spur consumers to spend more on higher-margin gadgets, apparel, makeup and beauty items to make up for losses suffered during the pandemic.

Although sales volumes have historically paled in comparison with the Singles Day shopping bonanza on Nov. 11, this year's 618 event, which runs for the first 18 days of June, could very well be an indicator of the recovery of Chinese consumption, particularly through online outlets. Read More at S&P Global

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