During “618”, offline traffic increased by 30% over the week prior, with online orders also jumping by 20%. Another partner retailer, Beijing’s Easyhome, a seller of furniture and home remodeling supplies, topped 100 million yuan (US$15.7 million) in sales by 1 pm on the first day of “618”, while Alibaba’s Fresh Hema saw sales increase to seven times what they were in the same period last year.

Tmall’s June 1-18 2018 promotion pulled in offline stores, including 70 New Retail stores from around China, along with 100,000 Tmall smart stores, Intime department stores, Hema supermarkets and superstore chain RT-Mart.

Along with its usual array of coupons and discounts, this year’s festival offered up physical interactive pop-up stores, red packets, and free shipping.

This year’s shopping festival also targeted consumers outside of China. Product sales in apparel, beauty, and food & beverage shattered last year’s records in just minutes. This year’s shopping festival hit during the World Cup and Dragon Boat Festival, helping boost sales in several categories. Below are highlights of Tmall’s 618 promotion.

With the increasing utility and availability of mobile payment methods, store-based O2O commerce has experienced steady growth, with total sales of US$91.1 billion in 2016, a figure which is projected to reach US$143.6 billion in 2019.

Online-to-offline (O2O) commerce has long been more prevalent in China than in the developed world, leading to China becoming the largest and most developed O2O market in the world.

With consumers having largely bypassed credit and debit cards in a rush to mobile payment apps, O2O maintains a strong position and strong prospects for growth within China’s consumer markets. Still, the industry is witnessing disruption and structural shifts in response to changing buying habits.

AS STORE-BASED O2O COMMERCE IN CHINA MAINTAINS STEADY GROWTH…

Because of its early start and ability to fill an important niche within e-commerce, store-based O2O commerce has long held a leading position in the O2O space within China.

With the increasing utility and availability of mobile payment methods, store-based O2O commerce has experienced steady growth, with total sales of 612.4 billion yuan (US$91.1 billion) in 2016, a figure which is projected to reach 964.8 billion yuan (US$143.6 billion) in 2019.

… HOME-BASED O2O COMMERCE FILLS A NICHE…

Meanwhile, home-based O2O, which includes sectors such as food delivery, online provision of home services, at-home spa and health services, and home delivery of groceries and goods, has begun to catch up rapidly. With shifts in preferences and a willingness to pay a premium to bring goods and services to their door, consumers have rapidly embraced the home-based O2O model.

From a low starting point, home-based O2O commerce came to take up 19.6% of the O2O market in 2016, a whopping 149.6 billion yuan (US$ 22.3 billion), and is expected to grow to more than a third of the market by 2019, with expected sales of 505.4 billion yuan (US$75.2 billion) that year.

… WHILE LAGGING IN SOME AREAS

At present, the home-based O2O market is greatly dominated by two services: delivery of prepared foods, and online education; in 2012 education accounted for 46% of the O2O market, with delivery in second at 27.4%.

By 2016, their positions reversed, with food delivery holding 54.9% of the market and education only 20.5%. Meanwhile, other fields like home repair, at-home health services, grocery delivery, and laundry services have grown less rapidly and still have some distance to go to make up ground on the major players.

WeChat recently upgraded a store management feature, originally part of WeChat Official Account, to Store Mini-Program. Retailers can use this type of mini-programs directly. It costs almost nothing and requires no programming knowledge although the capability of Retail Mini-Program is limited.

It’s been over four months since WeChat has officially launched its mini-program platform. The number of daily active users on WeChat Mini-Programs sees much faster growth since the last week of March 2017.

This week, WeChat team just rolled out a new feature on Mini-Programs that could be very useful to retailers.

Mini-Programs are located under “Discover” on WeChat. And, the new feature sits under “Mini Programs”, where users can search for Mini-Programs nearby. Both retail store mini-program and other types of mini-programs can be discovered using this function as long as it’s enabled.

The mini-program publisher must be registered businesses or organizations to qualify for “Mini Programs Nearby” feature. And, documents such as the business license are required to get approval.

What eventually encourage some users to naturally check out the nearby mini-programs  could be discounts and coupons, which are included in Store Mini-Program:

Retailers can integrate store information like the address, contact information, photos, and operation hours as well as special offers to customers including membership card, coupon, voucher, and etc.

One store mini-program can support multiple stores; but, one store can offer one type of card promotion only.  And, one mini-program can only link up to 10 locations. You can send a request to WeChat team to increase the limit.

One location can only be linked to from one unique mini-program. So, it could be a problem if you share the same address with others.

WeChat membership card guide and case study

Starting on 29 April 2017, users can easily rent a bicycle from one of the six leading bike-sharing companies in China via Alipay without installing additional mobile apps.

Alipay’s “Scan & Ride” function connects six bike sharing brands including Ofo, Youonbike, Bluegogo, Hellobike, Funbike, and Ubike, offering a total number of over six million shared bicycles across 50 cities in China.

Currently, shared bikes on the streets require the download, installation, and registration of mobile apps; some may ask for cash deposits. Skipping all these delivers better user experience and convenience. These bike-sharing apps sitting on top of Alipay app achieves that; and, the idea is very similar to WeChat launched Mini-Program.

All the six bike-sharing companies but Hellobike also joined Alipay’s riding protection program, which offers insurance to bike riders.

China bike-sharing market is estimated to reach US$1.5 billion (+735.8%) and 209 million users in 2017. Read China bike-sharing market insights in Q1 2017 →

Update (30 April 2017): Mobike reported an addition of 24 million newly registered users on 28 April 2017 after being integrated with WeChat since 29 March 2017, an increase of over 200%.

Check out the UN report: The growth of digital payment ecosystems in China: what it means for other countries

Baidu Tongji, or Baidu Statistics, announced an additional product “Store Statistics” for offline retail stores.

Baidu Store Statistics provides traffic analysis, source, interests and targeted marketing on the store level or business district level by integrating online users’ interest attributes, complete user visiting path with offline visiting behaviors.

It offers real-time and historical traffic data covering various industries including restaurants, entertainment, hotels, retail, real estate, cinemas, etc. Devices will be installed in stores to monitor and collect the traffic information.

Nearly 60% of Chinese respondents said they used their mobile devices in-store to check and compare prices according to a study by JDA and Centiro.

Almost half respondents read products or service reviews using their mobile devices while shopping in-store.

Quality issue is the top reason digital buyers in China are less likely to make another purchase from a retailer.

E-commerce retail sales account for over 50% of China’s total product value in lower tier cities; online shoppers growth rate is 61%, higher than that of the first-tier and second-tier cities.

The number of online shoppers in third-tier cities and below reached 257 million.

The proportion of WeChat online shoppers doubled in 2016 with 31%.

Users who shop on JD.com via WeChat account for 32%, slightly more than that of other shoppers on WeChat.

Cross-boarder online shoppers in the first-tier and second-tier cities are more than shoppers from the third-tier and fourth-tier cities.

Shoppers from the first-tier cities spend 40% of their total expenditure on health care products, while shoppers from the second-tier cities tend to spend 50% of total expenditure on luxury goods.

Over half users in China’s first tier cities use O2O travel service.

63% China online shoppers are willing to pay more for guarantee tickets.

67% consumers use catering service. More Chinese consumers from third-tier cities and below are willing to pay more on catering service.

Convenience and price subsidies are main reasons for customers to choose O2O catering services.

54% Chinese consumers from the first-tier cities are likely to use O2O mobile sharing service, followed by users from the second-tier cities (43%).

After using O2O mobile sharing service, Chinese consumers drive less per week is down to 3.26 times compared with 4.04 times before.

77% Chinese consumers’ actual consumption on travel services could be increased in the future, followed by foods (65%). Consumers who expect lower prices while using travel service on O2O platforms account for 59%.

The third-tier cities and below own a huge room of O2O market. China O2O companies were busy expanding to tier-3 and tier-4 cities in 2015.

Also read: Chinese online shoppers insights 2016

Offline merchants hoped to get more consumers and profits by accessing to the O2O platforms in China in 2015. Tier-3 and tier-4 cities have been a new expanding regions for the O2O platforms. Meituan maintained a prominent position in the less developed cities.

China O2O companies were busy expanding to tier-3 and tier-4 cities in 2015 as more consumers accessed to the service according to Tencent. For example, 36.8% of total transaction values of Meituan came from tier-3 and tier-4 cities in early 2015 and over 80% once came from tier-1 cities in 2010.

China O2O market entered a white-hot competition period in 2015 and companies tried hard to win consumers. The number of merchants on Meituan was only 780,000 in 2014 and the number increased to 1,600,000 in 2015.

Major catering O2O apps were Meituan, Dianping, and Nuomi in China in 2015. Penetration of Meituan in tier-3 and tier-4 cities was far higher than that of other catering O2O apps.

About 50% users would use catering apps less than five times per month according to Tencent and the usage frequency of tier-1 and tier-2 city users was higher than that of tier-3 and below city users in 2015.

About half users spent 100 yuan to 300 yuan each time. 35.4% tier-3 and below city users spent less than 100 yuan and 28.7% tier-1 and tier-2 city users spent less than 100 yuan when catering with O2O apps. However, 10.4% tier-3 and tier-4 city users spent 300 yuan to 500 yuan higher than 8.7% of tier-1 and tier-2 city users.

Competition among food-delivery O2O market also was fierce in 2015. Meituan played a more prominent role in tier-3 and tier-4 cities and the penetration rate surpassed others with a large gap. Penetration rate of food-delivery O2O apps didn’t have much gap in tier-1 and tier-2 cities.

The monthly usage of food-delivery apps came more frequently in advanced cities than less developed cities in China in 2015. The overall usage frequency of food-delivery O2O apps was fewer than the catering O2O apps.

Ctrip was more active in tier-1 and tier-2 cities and Meituan was more active in tier-3 and tier-4 cities when booking hotels online.

36.0% couples in tier-3 and tier-4 cities would reserve hotels online for dating and 38.2% users in tier-1 and tier-2 cities would book hotels for neighboring travel.

Low price, rich hotel resource, and perfect function of hotel O2O apps was the major reasons for users to reserve hotels online in China in 2015.

The increasing travel needs boosted the intense competition of hotel O2O apps. The top seven travel apps were Ctrip, Qunar, Meituan, Alitrip, Tuniu, CY, and eLong.

Rich resource was more important towards tier-1 and tier-2 city users than the less developed city users. Tier-3 and above city users concerned more on low price than other city users.

Catering O2O market developed into a mature stage in 2015. 72.0% merchants surveyed engaged in the catering industry in China in 2015.

The recent two year had witnessed the fast development of the O2O market. 63.0% merchants accessed to the O2O market in 2015 and 21.0% accessed in 2014.

42.0% of offline merchants surveyed accessed to the O2O platforms because of the large orders online and 13.0% because of the quick payback speed. Promotion of salesman was also an important reason for the merchants to access to the O2O platforms.

By accessing to the O2O platforms, offline merchants hoped to get an increase in turnover, profit, and brand public praise.

About 50% of merchants surveyed believed their turnover increased by 10% to 30% after accessing to the O2O platforms and 32.0% believed their turnover increased by 30% to 50%.

Some merchants terminated their cooperation with the O2O platforms. 50.0% terminated because of the loss of consumers and 33.0% because of the decrease of turnover.

The current cooperation mode of merchants and O2O platforms is subsidy plus discount which is expected to upgrade to maintain and draw more merchants and users. The O2O platforms could bring in more traffic and consumers for merchants while how to manage the merchants is still a severe challenge for O2O platforms.

Also read: China B2B Market Insights 2016

Total retail sales of China consumer goods were 26.24 trillion yuan (US$4.11 trillion) in 2014, an increase of 12% compared to the previous year. The growth rate of the Chinese retail market has dropped for five consecutive years. More than two-tenths of responding retailers have reduced opening new stores and the average number of employees fell by 0.8% and 1.2% respectively in 2013 and 2014 according to Deloitte.

Consumption in education, travel, culture, entertainment and others gradually occupied more share on consumers’ expenditure in the past few years. In the next 6 months, customers tend to spend more on food and beverage, travel, entertainment, investment, investment, home appliances and so on.

State-owned enterprises managed China’s industry in most aspects with overwhelming advantages. In recent several years, state-owned enterprises have given up much control to promote more dynamic market.

The growth rate of Chinese consumer goods market has declined following the slowing macroeconomy and residents’ income. Total retail sales of Chinese consumer goods were 26.24 trillion yuan (US$4.11 trillion) in 2014, an increase of 12% compared to the previous year. About 23% companies didn’t open any new stores in 2014 according to Deloitte.

Bricks-and-mortar retailing has become fragmented under the booming of China’s online shopping market. The growth rate of China’s top 100 chain retailers slowed down. 27% companies surveyed maintained negative growth in 2014.

The larger companies are, the more transactions companies may have. Chinese companies with national-wide operating scale gained an average revenue of 26.5 billion yuan (US$4.16 billion) and an increase of 9.6% in operating revenues compared to the previous year.

Shopping malls, convenience stores, and hypermarkets maintained growth in operating revenues in 2013 and 2014 compared to supermarkets, department stores, and specialty stores. Major retailers dropped in sales such as Sun Art, Carrefour, Lianhua, Yonghui, and Lotus.

Although the offline market in China didn’t see any significant improvement, the online shopping market maintained a steady momentum of growth in the recent several years. Overall transaction values of online shopping market reached 2.81 trillion yuan (US$0.44 trillion) in 2014, representing a growth of 48.7% compared with the same period the previous year and 10.7 percentage points slower compared with the growth rate in 2013. Overall online retailing sales accounted for 10.71% of the whole retailing market in China.

Many large offline retailers developed online shopping platforms in 2014 that the transaction values of O2O market in 2014 exceeded 300 billion yuan (US$47.07 billion) and was expected to reach 465.54 billion yuan (US$73.04 billion) in 2015. Lower price and good deals remained an important driver of online shoppers while product variety also saw more importance. Overall transactions of chain retailers’ online shopping market totaled 6.1 billion yuan in 2014.

Chinese mobile shopping market reached 928.5 billion yuan (US$145.67 billion) in 2012, reflecting an increase of 240% compared the previous year. In the first quarter of 2015, the mobile shopping market reached 362.34 billion yuan (US$56.85 billion) accounting for 47.8% of the overall internet shopping market and was expected to exceed 50% in 2015.

Skin-care products, milk and infant formula sold best online. Tmall, Taobao Jingdong, Jumei, Vipshop and others were major shopping platforms while when purchasing those products offline users were more likely to buy in Watsons, RT-MART, War-Mart, Carrefour and CR Vanguard.

Chinese cross-border e-commerce market saw much potential that the transaction values reached 4.2 trillion yuan (US$0.66 trillion) in 2014 with YoY growth of 33.3% and realized a 26.2% CAGR (compound annual growth rate) over the past five years. However, China was still new to cross-border e-commerce concluded by the relatively low import transaction values.

As high as 93.5% transactions were dealt on B2B platforms in 2014 in China and 6.5% on B2C platforms. However, with speedy development of logistics and overseas online shopping market, B2C market would increase in online transactions in the future. Tmall, Jingdong, Suning, Gome, Vipshop and Yihaoian were major B2C online shopping platforms.

Also read: 22% Online Shopping Spend Are Newly Created Demand

Recently, Alibaba announced that it would launch Tmall Supermarket across China in several stages. It would invest 1 billion yuan (US$160.78 million) targeting consumers in Beijing in the first phase.

Tmall Supermarket is like an online supermarket, focusing on FMCG products and was only available to consumers in Jiangsu, Zhejiang, and Shanghai with fast delivery and discounted price. After adding all products from Tmall Supermarket to shopping cart, they will be packaged together and send in one package.

Besides Alibaba, Jingdong and Yihaodian are also competing for the actual market share of offline supermarkets while offline commercial supermarket companies were on the transformation to the online market. For example, Wal-Mart acquired Yihaodian and launched O2O service platform.

Tmall Supermarket uses the same day delivery service of Cainiao network in Beijing. By late July, data showed that sales of Tmall Supermarket in Beijing region grew by 740% year over year, of which 90% transaction volume was from the mobile client.

However, most offline commercial supermarket companies were reluctant to cooperate with Jingdong or Alibaba. The storage and purchasing capacities of large online markets and advanced logistics had a powerful hit on offline traditional companies. This year, Tmall put forward many important initiatives, including the duty-free shop project in China partnering with Shilla Group and King Power, who were the largest duty-free groups in South Korea and Thailand respectively. Compared with Tmall global and other online supermarkets, offline supermarkets didn’t have more competitiveness.

Also read: China Online Shopping Accounted for over 10% of Total Retail in Q1 2015

Kuaidi and Didi mobile car calling apps still rank first in China’s car calling market by usage rate according to iiMedia Research. Carpooling will become the next focus of competitions in China’s car calling market.

Public transportation is primary transportation in China’s first-tier and second-tier cities when mobile phone users go to work, which accounts for 42.8%. Public transportation system in first and second-tier cities is more sophisticated and less expensive, thus it is the main means to go to work among most mobile phone users.

Brand awareness of Kuaidi ONE and Didi cars lead the market, but China’s mobile phone users’ overall awareness of the car calling mobile commerce has room for improvement. Uber ranks next to Kuaidi and Didi, accounting for 13.0%.

Also read: Baidu’s Global Market Share Decreased to 7.52% in June 2015