Although a little less catchy than Singles Day, Alibaba’s “6.18 Mid-Year Shopping Festival” set new records this year, including new highs for both sales and participating brands over the 18-day consumer event, thanks to a new emphasis on targeting shoppers in China’s smaller and emerging third- and fourth-tier cities.
The group, which operates Tmall, Taobao and the Juhuasuan flash-sale daily deals site, calls these cities “the largest source of untapped consumption growth in China,” and said that it saw the fastest growth from cities like the Shandong Province’s Qingdao or Shaoyang in the Hunan Province.
“The results of the 6.18 Mid-Year Shopping Festival are encouraging. It has proven to be a celebration that can match the enthusiasm and scale of the 11.11 Global Shopping Festival,” Jiang Fan, president of Taobao and Tmall told Alizila, the Alibaba Group’s news service. “We are very pleased to see that our strategy to help brands penetrate the less-developed markets has paid off. Customers in the emerging cities are very receptive to innovative products and promotion campaigns such as programs on the Juhuasuan platform.”
Jiang said that cities in the third and fourth tier doubled both the average number of consumers participating in the festival and the gross merchandise volume compared to the previous year. Some of that growth, according to Liu Bo, the GM of Alibaba’s marketing platform business, was created by developing new methods of reaching users—specifically on the newly upgraded Juhuasuan platform.
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The site absorbed Alibaba’s Daily Deals channel in March and Alibaba rearranged its user interface ahead of 6.18 to increase traffic on the platform. According to group, the offers promoted through its Daily Deals channel are part of a group-buying effort that allows Chinese factories to sell their products directly through the platform, leading to larger discounts for consumers. Overall, retail analysis firm Coresight Research said that the new site attracted 300 million new customers during the festival this year, leading to 420 million new orders in 18 days. Rival Pinduoduo offers a similar, and rapidly growing, group-buying approach that’s also caught on like wildfire in the lower-tier metropolises.
“Tmall achieved growth beyond our estimates this 6.18, while the Juhuasuan marketing platform brought explosive growth on all fronts,” Liu Bo explained. “These results reflect how Taobao and Tmall have sped up penetration into third-to-fourth-tier cities, with the goal of helping brands capture these fast-growing markets.”
There are 193 third-tier cities and 696 fourth-tier cities in China, compared to four tier-one cities and 46 tier-two cities. Those smaller markets, when combined, totaled about 934 million people in 2017 and account for about $3.3 trillion in consumption per year.
According to a Morgan Stanley study, that number is expected to reach $8.4 trillion by 2030 and Alibaba, in its most recent earnings report, said that more than 70 percent of the growth in its user base in fiscal 2019 has come from these developing urban areas.
More than 200,000 brands also participated in the festival, another record broken in 2019, according to Alibaba. Of those, over 110 were able to pull in more than 100 million Chinese yuan ($14.56 million) in sales. Some brands, including Crocs, L’Oreal and Emporio Armani, were even able to surpass the sales they saw during the previous 11.11 shopping festival, Alibaba’s premier shopping event.
Among those brands, more used livestreaming shopping channels this year than ever before, as well. According to Alibaba, brand-led livestreams grew by more than 120 percent over last year. One livestream, hosted by a L’Oreal-owned beauty brand and some of China’s most popular streamers, collected more than 10 million interactions from shoppers and, according to the group, contributed to more than 13 million yuan ($1.89 million) in sales, alone.