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China's biggest sales, which have historically raked in billions of dollars, appear to finally be losing their chokehold on the Chinese market.
These sales, characterized by steep discounts, have offered all sorts of retail products, from iPhones to designer bags, at fractions of their original prices. And consumers usually bite.
This year, they've started to hold off on going all in on big spending.
The 2024 run of the 618 sale, held by e-commerce giant JD.com and other online retailers like Alibaba Group's Tmall and Pinduoduo, suffered its first dip in sales in eight years, retail data provider Syntun estimated.
The shopping festival, which, scale-wise, compares only to the November 11 Singles' Day festival, brought in $102.3 billion worth of sales this year.
This was a 7% drop compared to 2023, when the 618 sales raked in about $109 billion. The data provider told CNBC in June that this was the first dip in 618's sales since it started monitoring the event in 2016.
One reason for the dip in sales is that the Chinese have tightened their purse strings.
Historically, e-commerce has accounted for a hefty chunk of China's retail spending.
In 2023, online retail sales nationwide reached $2.12 trillion, accounting for 27.6% of the total retail sales of consumer goods in the country, according to the National Bureau of Statistics.
But with a sinking number of buyers, the e-commerce giants of China are increasingly using massive discounts to woo customers to their sales.
For example, Alibaba recently offered a 50% discount on Lululemon clothing, and JD.com sold Apple iPhones with discounts as high as 20%.
The platforms also hold multiple sales throughout the year, from the Lunar New Year to Christmas, instead of concentrating them all on Singles' Day or the 618 sale day.
China's post-pandemic economy being slow to recover may have more to do with internal, rather than external factors.
The country has reported sluggish domestic demand, with its official Purchasing Managers' Index — which represents larger companies and state-owned enterprises — contracting for the second straight month in June.
One reason for this is low consumer confidence and people being more discerning about their purchases, Allison Malmsten, a director at Daxue Consulting, told Business Insider.
"Consumer confidence is lower; people are more selective on what they spend money on and, therefore, will buy things because they need them, not because of a flashy discount," she said.
With an excess of sales all year round, these annual mega sales are also gradually losing their luster, according to Yaling Jiang, a China consumer research expert behind the newsletter "Following the Yuan."
"The excess of sales events, which caused marketing fatigue, isn't new," she said to BI.
But the shift in consumer behavior is deeper than just marketing fatigue, as the Chinese are "becoming rational, increasingly focusing on cost-effectiveness and necessity," she said.
And if people are spending less, that's because they're also not making big bucks in China's post-pandemic economy.
"The economic downturn is making them want to avoid paying premiums as much as possible, and uncertainty about the future makes them want to save for a rainy day," China consumer expert Jiang told BI.
China's youth unemployment rate stood at 14.9% as of December, according to China's National Bureau of Statistics.
And the average per capita income in China in the first quarter of 2024 was $905, according to the National Bureau of Statistics.
Another reason consumer confidence is low is due to China's real estate crisis, which is set to get much worse.
In May, new home prices suffered their biggest fall in nearly a decade. Figures from the National Bureau of Statistics showed that new home prices in 70 major Chinese cities were down 0.7% from April.
"Traditionally, Chinese consumers view real estate investment as an anchor and what gives them a great sense of security," Jiang told BI. "Since the downfall of Evergrande and other giants, sentiment has changed drastically, with a growing consensus that property values will continue to decline."
