Key Figures and Growth Areas

From January to June, China’s total retail sales of consumer goods amounted to 23.5969 trillion RMB, representing a 3.7% increase compared to the same period last year.

Online retail sales of physical goods reached 5.9596 trillion RMB, up by 8.8%, accounting for 25.3% of the total retail sales of consumer goods.

Significant growth was observed in the online retail sales of food, clothing, and daily necessities:

• Food products: +17.8%
• Clothing: +7.0%
• Daily necessities: +7.8%

Technological Impact on Retail

According to a spokesperson from the NBS, the advent of new technologies such as big data and artificial intelligence has generated innovative consumption scenarios.

Emerging consumer models like live-streaming e-commerce and instant delivery services have been pivotal in driving the 8.8% increase in online retail sales of physical goods. Additionally, the volume of express delivery services has surpassed 80 billion packages.

E-Commerce Trends and Analysis

The China Retail Performance Index (CRPI) for July, released by the China General Chamber of Commerce, showed the e-commerce physical goods total sales index at 50.2%, down 4.2 percentage points from the previous month but still within the expansion range.

Meanwhile, the e-commerce average order value index stood at 50.0%, a 1.6 percentage point increase from the previous month.

Analysts attribute the rise in the average order value to the conclusion of mid-year e-commerce promotional events, which resulted in a decrease in “bargain-hunting” consumer behavior.

Outlook

The robust growth in China’s online retail sector reflects the continuous evolution and adaptation of the retail industry to new technologies and consumer preferences. As digital transformation accelerates, the integration of AI and big data is expected to further enhance the efficiency and appeal of online shopping, maintaining the sector’s upward trajectory.

China’s Retail Sales Sees 4.7% Year-on-Year Increase in Q1

China’s retail sector showed a robust increase in March, with total retail sales of consumer goods climbing to 3.9 trillion yuan ($568 billion), marking a 3.1% rise compared to the same month last year, according to data from the National Bureau of Statistics released on April 17. Excluding automobiles, sales rose by 3.9% to nearly 3.5 trillion yuan.

For the first quarter of 2024, the total retail sales reached approximately 12 trillion yuan, a 4.7% increase year-over-year. Sales excluding cars also mirrored this growth rate, amounting to 10.9 trillion yuan.

Urban areas saw significant retail activity, with sales amounting to 3.38 trillion yuan in March alone, up by 3% from last year, while rural retail sales rose by 3.8% to 518 billion yuan. Over the first three months, urban sales increased by 4.6% to 10.4 trillion yuan, whereas rural sales grew faster at 5.2%, reaching 1.6 trillion yuan.

The data also highlighted a divergence in performance across different retail sectors. In March, goods sales increased by 2.7% to reach 3.5 trillion yuan, while the catering industry surged by 6.9% to 396 billion yuan. From January to March, goods sales rose by 4% to 10.7 trillion yuan, and catering revenues jumped by 10.8% to 1.3 trillion yuan.

Looking at retail formats, the first quarter showed mixed results. Supermarkets, convenience stores, specialty stores, and brand-exclusive shops saw sales increase by 2.2%, 5.2%, 6.3%, and 1.1% respectively, while department stores experienced a sales drop of 2.4%.

E-commerce continued to expand rapidly, with online retail sales hitting 3.3 trillion yuan in the first quarter, up by 12.4% year-over-year. Online sales of physical goods, which include food, clothing, and other consumer items, grew by 11.6% to 2.8 trillion yuan, representing 23.3% of the total retail sales. Specific increases were seen in food (21.1%), clothing (12.1%), and other consumer goods (9.7%).

This mid-year retail bonanza, initially started by JD.com, has evolved into a crucial battleground for e-commerce dominance.

Strategic Overhaul: Eliminating Pre-Sales

For the first time, both Alibaba and JD.com have abolished the pre-sale mechanisms that have been a staple of past 618 festivals.

The pre-sale model, while beneficial for brands in securing early sales, often led to consumer frustration due to complicated purchasing processes and prolonged delivery times.

The cancellation aims to simplify the shopping experience and enhance satisfaction by emphasizing immediate availability and competitive pricing.

Content-Driven Commerce and Live Streaming

In a bid to capture consumer attention and drive sales, platforms are heavily investing in content-driven commerce in recent years.

Livestreaming has emerged as a pivotal tool, with platforms like Taobao Live and JD Live featuring high-profile celebrities and influencers to attract millions of viewers.

This strategy is bolstered by the success of Douyin (TikTok) and Kuaishou, which have integrated more robust e-commerce functionalities to leverage their vast user bases.

Broad Product Range and Competitive Pricing

This year’s 618 festival has seen a surge in sales across diverse categories, from electronics to beauty products and new energy vehicles (NEVs).

For instance, Xiaomi reported 1 billion yuan in sales within the first 13 minutes of the event, underscoring the high demand for tech products.

Concurrently, JD.com and Taobao have introduced aggressive pricing strategies to lure price-sensitive consumers, including substantial discounts and subsidy programs aimed at undercutting rivals like Pinduoduo.

Enhanced Customer Service Initiatives

Improving customer service has been a focal point for these platforms. JD.com has rolled out services such as “Free At-Home Return” and expanded support for large-item returns, aiming to streamline the shopping experience.

Both JD.com and Taobao have also refined their policies on delayed shipments and customer service responsiveness, ensuring a smoother and more satisfying shopping experience for users.

Integration of Online and Offline Channels

The integration of online and offline shopping experiences is another notable trend. Platforms like Meituan and JD.com have expanded their reach to include offline retail, enhancing convenience and immediacy for consumers.

This hybrid approach aims to offer a seamless shopping journey, bridging the gap between digital and physical retail spaces.

618 Shopping Festival in 2024

The perception of the “618” shopping festival among consumers has been gradually declining as e-commerce platforms continuously roll out “billion-dollar subsidies.” This year, major platforms like Tmall and JD.com announced the cancellation of the pre-sale model during “618,” impacting both consumers and merchants.

For consumers, this means quicker access to desired products without the wait. For merchants, the shift to immediate sales is expected to boost the end-market performance in May but may lead to a decline in June.

Different consumer groups also exhibit distinct preferences for purchase channels. “Taste connoisseurs” and “prudent and respectable” consumers tend to purchase products offline, correlating with the distribution of high-end sales channels. The “thrifty and conformist” group values the reliability and low prices of online platforms, while “savvy and independent” users balance both online and offline channels, leveraging their ability to gather information and select optimal purchasing opportunities.

AI-Powered “618” Sales Surge

The growing influence of AI technology has penetrated daily life, with consumer demand for AI smart terminals increasing. During “618,” manufacturers have actively promoted AI terminal products.

Various brands launched new products and participated in platform promotions to meet consumer demand and expand the AI product market. Notable launches included Lenovo’s ThinkPad, Yoga, and Xiaoxin series; ASUS’s new Wuwei series; Huawei’s MateBook X Pro series; and HP’s Star Book, all performing well during “618.”

Xiaomi’s performance during “618” was particularly impressive, with cumulative sales across all channels reaching 26.3 billion yuan, setting a new record. Xiaomi led in mobile phone sales across platforms like JD.com, Tmall, Pinduoduo, Douyin, and Kuaishou, securing top positions in various price segments.

Retail Innovations and Performance Highlights

The “618” festival has also seen significant innovations and performance improvements across the retail sector:

• JD.com: Reported record transaction volumes and order numbers, with JD Live order volume increasing by over 200% year-over-year. Major brands like P&G, Vivo, Midea, iQOO, Deschmann, Haier, Feihe, Aptamil, Gree, and SK-II were the most popular during JD Live broadcasts.
• Xiaomi: Achieved outstanding sales across its ecosystem, with strong performance in home appliances and smart devices. Products like Xiaomi TVs, air conditioners, washing machines, and AIoT devices topped sales charts on multiple platforms.
• Tmall: Simplified shopping mechanics, eliminated pre-sales, enhanced 88VIP member benefits, and offered significant promotions, resulting in over 190,000 small and medium-sized merchants doubling their sales year-over-year.
• Red (Xiaohongshu): Emerged as a strong contender in the e-commerce space, with live streaming orders increasing 5.4 times compared to the previous year, driven by both buyer and store broadcasts.

The “618” shopping festival of 2024 highlighted significant shifts in consumer behavior and market trends. The integration of online and offline channels, the proliferation of AI-powered products, and innovative sales strategies have driven substantial growth and transformation in the retail sector.

As the market continues to evolve, consumers can look forward to enhanced shopping experiences, while companies can capitalize on new opportunities to stay competitive.

Meituan’s revenues for the first quarter surged by 25% to RMB 73.3 billion, up from RMB 58.6 billion during the same period last year. This growth was driven by strong performances across both its core local commerce and new initiatives segments.

The company’s operating profit saw a significant jump of 45.3% to RMB 5.2 billion, while profit for the period increased by 59.9% to RMB 5.37 billion.

Expanding Core Local Commerce

The core local commerce segment, which includes Meituan’s on-demand delivery services, saw revenues increase by 27.4% to RMB 54.6 billion. Operating profit in this segment rose by 2.7% to RMB 9.7 billion, maintaining a solid operating margin of 17.8%.

Meituan’s on-demand delivery business recorded robust growth. The introduction of innovative models such as Branded Satellite Stores, which offer high-quality, cost-effective food delivery without in-store dining, has significantly contributed to this growth.

Additionally, the company expanded its Pin Hao Fan model to more cities, enhancing consumer experience and improving order dispatch systems.

Rapid Growth in New Initiatives

The new initiatives segment experienced an 18.5% increase in revenues, reaching RMB 18.7 billion. Notably, the operating loss for this segment narrowed by 45.2% to RMB 2.8 billion, indicating improved operational efficiency and strategic focus on high-quality growth.

Meituan Select, the company’s community group buying service, played a pivotal role in this performance. By increasing the price mark-up ratio, reducing fulfillment costs, and improving marketing efficiency, Meituan has significantly enhanced its operational metrics.

Broader Business Insights

On-Demand Delivery and Instashopping:

Meituan’s on-demand delivery services saw significant transaction growth, with innovative models like Branded Satellite Stores and expanded Pin Hao Fan coverage driving higher engagement.

Meituan Instashopping continued its rapid growth, driven by increased user engagement and transaction frequency. Strategic initiatives during the Spring Festival, focusing on holiday products and gifts, contributed to higher revenues in categories like liquor, beverages, and daily necessities.

In-Store, Hotel, and Travel:

The in-store business experienced strong growth, benefiting from enhanced marketing capabilities and enriched content offerings. Live streaming campaigns and merchant support measures increased participation and consumer engagement.

Meituan’s hotel and travel segment reported robust year-over-year growth in domestic hotel room nights and GTV. The company capitalized on emerging trends by focusing on niche travel destinations, particularly in lower-tier cities.

Financial Highlights

For the first quarter of 2024, Meituan achieved notable financial milestones:

• Revenues increased by 25% to RMB 73.3 billion.
• Operating profit rose by 45.3% to RMB 5.2 billion.
• Profit for the period jumped by 59.9% to RMB 5.37 billion.
• Adjusted EBITDA and adjusted net profit saw year-over-year increases of 28.9% and 36.4% respectively.
• Number of on-demand delivery transactions grew by 28.1%.

As Meituan continues to navigate the evolving digital landscape, its strategic initiatives and robust financial performance position it well to capitalize on emerging trends and growth opportunities in China’s competitive internet sector. The company’s commitment to operational excellence and innovative service models is expected to drive sustained growth and market leadership.

Top e-commerce mobile shopping platforms in China

The company’s unaudited consolidated results reflect a significant surge in revenues, operating profit, and user engagement metrics, underscoring its dominant position in the digital economy.

A robust start to 2024

In Q1 2024, Kuaishou reported revenues of RMB 29.4 billion, marking a 16.6% increase compared to the same period in 2023.

This growth was accompanied by a notable rise in gross profit, which reached RMB 16.1 billion, up from RMB 11.7 billion in Q1 2023, reflecting a gross profit margin of 54.8%.

The company’s operating profit soared to RMB 3.99 billion, reversing the operating loss of RMB 698 million from the previous year.

Strategic initiatives driving growth

Kuaishou’s strategic initiatives have been pivotal in driving its growth. The company’s innovative traffic recommendation mechanism, enhanced monetization strategies, and robust e-commerce operations have all contributed to its strong financial performance.

In Q1 2024, Kuaishou rolled out a new traffic recommendation mechanism, aligning user experience improvements with increased monetization efficiency.

This strategy has attracted higher buyer budgets and boosted the company’s e-commerce business, which grew by 28.2% year-over-year to RMB 288.1 billion in GMV.

Financial highlights

Kuaishou’s financial metrics paint a picture of robust growth and strategic success. The company achieved an adjusted net profit of RMB 4.39 billion, a staggering increase from RMB 42 million in Q1 2023.

The adjusted EBITDA also saw a significant rise, reaching RMB 5.98 billion, up from RMB 1.99 billion in the same period last year. These metrics highlight Kuaishou’s effective cost management and revenue generation strategies.

User engagement and platform growth

Kuaishou’s user engagement metrics have shown impressive growth, with average DAUs reaching 393.8 million, up from 374.3 million in Q1 2023.

Average MAUs also increased to 697.4 million, reflecting the company’s successful user acquisition and retention strategies.

The average daily time spent per DAU on the Kuaishou app was 129.5 minutes, further emphasizing the platform’s ability to engage users effectively.

Kuaishou’s adjusted net profit of RMB 4.39 billion and adjusted EBITDA of RMB 5.98 billion are indicators of strong financial health. The substantial increase in these metrics from the previous year highlights the company’s effective cost management and revenue generation capabilities. Additionally, the significant reduction in administrative expenses by 49.7% year-over-year is a positive sign of operational discipline.

The growth in Kuaishou’s overseas business, with revenues reaching RMB 991 million, up 193.2% year-over-year, and the narrowing of operating losses in these markets, indicates successful international expansion. The company’s localized strategies and investments in content generation and platform optimization are paying off, contributing to overall revenue growth and improved operating efficiency.

The company’s strong performance across its key business segments highlights its successful strategic initiatives and robust market presence.

Strategic Initiatives and Business Review

PDD Holdings has demonstrated strong strategic execution, significantly enhancing its value proposition in the digital commerce landscape.

The company’s commitment to high-quality development, emphasized by its leadership team, has been pivotal in driving growth across various sectors including gaming, digital content, advertising, and FinTech.

With a focus on improving the overall consumer experience and strengthening supply chain capabilities, PDD Holdings has seen significant traction in its strategic initiatives.

In Q1 2024, the company reported a total revenue of RMB86,812.1 million (US$12,023.3 million), a dramatic increase from RMB37,637.1 million in the same quarter of 2023. This growth was fueled by a 56% rise in revenues from online marketing services and a 327% surge in transaction services.

Financial Highlights

PDD Holdings’ financial performance in Q1 2024 was marked by several key achievements:

• Total Revenues: The company reported total revenues of RMB86,812.1 million (US$12,023.3 million), representing a 131% year-over-year increase.
• Operating Profit: Operating profit soared to RMB25,973.7 million (US$3,597.3 million), up 275% from the previous year’s RMB6,929.0 million.
• Net Income: Net income attributable to ordinary shareholders reached RMB27,997.8 million (US$3,877.7 million), a 246% increase from RMB8,101.0 million in Q1 2023.
• Non-GAAP Metrics: Non-GAAP operating profit and net income also saw significant growth, with non-GAAP operating profit at RMB28,552.2 million (US$3,954.4 million) and non-GAAP net income at RMB30,601.8 million (US$4,238.3 million).

PDD Holdings’ Q1 2024 results underscore the company’s robust growth trajectory and strategic focus on long-term value creation.

With a strong financial performance and continued investment in high-quality development, PDD Holdings is well-positioned to capitalize on future opportunities. As the company deepens its strategic initiatives and enhances its service offerings, stakeholders can expect sustained growth and innovation in the coming quarters.

Strategic and Operational Highlights

CEO Sandy Xu emphasized JD.com’s focus on improving user experience, leading to significant growth in active users and engagement. The company continues to provide a superior combination of selection, speed, quality, and price, resonating with consumers nationwide.

AI in Livestreaming

On April 16, 2024, JD.com introduced an AI digital representative of founder Richard Qiangdong Liu for its livestreaming rooms. This innovation attracted over 20 million views within the first hour, marking a significant milestone in AI integration within e-commerce.

Healthcare Expansion

JD Health partnered with pharmaceutical giants like Pfizer and Sanofi to debut new drugs online, enhancing accessibility and upgrading its one-stop medicine retailing and healthcare services through collaborations with Shanghai Pharmaceuticals and Daiichi Sankyo.

Logistics Growth

JD Logistics expanded its support for Chinese brands globally. In Q1 2024, it provided integrated supply chain services to MINISO stores in Australia and Malaysia, showcasing JD’s international warehousing and fulfillment capabilities.

Financial Highlights

• Revenue: Net revenues for Q1 2024 were RMB260.0 billion (US$36.0 billion), a 7.0% increase from Q1 2023.
• Income from Operations: Reached RMB7.7 billion (US$1.1 billion), up 19.8% from Q1 2023.
• Net Income: Net income attributable to ordinary shareholders was RMB7.1 billion (US$1.0 billion), up 13.9% from Q1 2023.
• Earnings per Share: Diluted net income per ADS was RMB4.53 (US$0.63), a 15.3% increase from Q1 2023.

Between January 1 and May 15, 2024, JD.com repurchased 98.3 million Class A ordinary shares (49.2 million ADSs) for US$1.3 billion, representing 3.1% of its outstanding shares as of December 31, 2023.

The company achieved a 9.2% increase in fourth-quarter revenues, reaching RMB34.7 billion (US$4.9 billion), and a 9.4% rise for the full year, amounting to RMB112.9 billion (US$15.9 billion).

This performance underscores Vipshop’s successful navigation through the retail landscape, leveraging its strategic focus on brand discounts to attract value-conscious consumers.

Significant growth was also seen in Gross Merchandise Value (GMV), with a 21.9% increase in the fourth quarter to RMB66.4 billion and an 18.7% rise for the year, reaching RMB208.0 billion.

The company’s gross profit followed suit, climbing by 19.3% in the last quarter to RMB8.2 billion (US$1.2 billion) and by 19.0% annually to RMB25.7 billion (US$3.6 billion).

Furthermore, net income attributable to shareholders soared by 32.2% quarterly and 28.9% annually, to RMB3.0 billion (US$415.8 million) and RMB8.1 billion (US$1.1 billion), respectively.

Active customer numbers and total orders also saw upward trends, with the former increasing by 3.9% year-over-year to 87.4 million and the latter by 9.8% to 812.3 million.

These figures highlight Vipshop’s growing market penetration and consumer trust.

Eric Shen, Chairman and CEO, attributed the success to the company’s adept execution of its merchandising strategy and focus on apparel, which resulted in crossing the RMB200 billion mark in annual GMV for the first time.

Mark Wang, CFO, echoed this sentiment, noting 2023 as Vipshop’s most profitable year, driven by efficiency improvements and operational discipline.

Looking forward, Vipshop anticipates first-quarter revenues for 2024 to be between RMB27.5 billion and RMB28.9 billion, indicating a cautious yet optimistic outlook amid dynamic market conditions.

Top mobile shopping platforms in China: Taobao, Pinduoduo, JD

This innovative approach allows overseas shoppers to make purchases on China’s cross-border e-commerce export platforms by simply entering their foreign bank card information to complete payments.

This significant development in the acceptance of foreign payments marks a major stride in facilitating international consumer spending, simultaneously propelling Chinese export businesses to achieve global sales from their domestic bases, thereby fostering a new development pattern that promotes the mutual reinforcement of domestic and international economic cycles.

The chasm in cross-border e-commerce exports has long been a hurdle. With China’s export e-commerce rapidly evolving and becoming a new engine for high-quality foreign trade development, the sector saw a 19.6% increase in total exports, reaching 1.83 trillion yuan in 2023, according to estimates from customs data.

The Central Economic Work Conference in December 2023 emphasized expanding high-level opening up, accelerating the cultivation of new foreign trade momentum, and expanding trade in intermediate goods, service trade, digital trade, and cross-border e-commerce exports.

The payment aspect of cross-border e-commerce exports, a critical link connecting supply and demand, faces inherent “chasms” due to regulatory requirements for cross-border information and fund transfers, as well as differences in currency types, payment tools, and habits.

This has led to numerous Chinese export enterprises facing penalties on foreign platforms, frozen funds, and extended payment cycles due to a lack of understanding of cross-border payments.

JD Pay has introduced this new model under the guidance of the People’s Bank of China and the State Administration of Foreign Exchange.

Leveraging JD’s comprehensive e-commerce ecosystem, the model was developed in collaboration with clearing organizations and financial institutions, focusing on cross-border payment pain points.

It addresses compliance issues, ensuring smooth funds transfer for merchants on China’s cross-border e-commerce export platforms. Furthermore, it lowers the shopping barriers for overseas consumers, who can now pay with their international bank cards without needing currency conversion or a Chinese bank account.

Currently operational on JD Global, this new model serves Chinese mainland merchants and overseas consumers.

Going forward, JD Pay aims to further refine its cross-border payment services in close collaboration with clearing organizations and financial institutions, enhancing the payment experience and services for more cross-border e-commerce platforms and independent sites, benefiting both international consumers and Chinese export enterprises.