Lower-tier cities gaining greater prominence in e-commerce battle

Major Chinese e-commerce players are accelerating efforts to seek new growth points and further tap the consumption potential from lower-tier cities and towns through providing exclusive offers and promotions during this year's June 18 shopping carnival, said industry insiders.

JD, which initially coined the June 18 campaign, reported its sales increased 65 percent in the first hour of trading from midnight to 1 am on June 18, compared with same period last year. Up to 2 pm, its sales reached a staggering 179.5 billion yuan ($25.9 billion), exceeding 159.2 billion yuan a year ago.

Sales in the home appliances category surpassed 1 billion yuan in just two minutes and 36 seconds, while air conditioners worth more than 100 million yuan were sold in just seven seconds. Sales of refrigerators and washing machines surpassed 400 million in just two minutes, and more than 100,000 smartphones were sold in the first three minutes.

Alibaba Group Holding Ltd's Tmall saw its sales from Apple, Midea, Nike, Aux, Haier, L'Oreal, Lancome each topping over 100 million yuan.

At 00:16 am on June 18, the sales revenue of electronic devices exceeded that of the first 60 minutes last year. The turnover of 183 homegrown beauty brands surged over 1,000 percent year-on-year, with Shanghai, Guangzhou and Hangzhou recording the fastest growth.

Xu Lei, chief executive officer of JD Retail, said with the ongoing consumption upgrade in China, high-quality and imported products are favored by consumers. Moreover, sales from lower-tier cities and towns had witnessed robust growth during this year's June 18 shopping gala, Xu added.

According to JD, orders from fourth-tier cities and below surged 108 percent on June 1, when the 18-day promotional event officially kicked off. In addition, more than 90 percent of key brands on JD have launched millions of new items during the shopping event.

"E-commerce platforms are seeking to unleash the consumption potential from fourth-tier cities and below this year, as the growth of online shopping in first and second-tier cities is slowing down," said Cao Lei, director of China E-Commerce Research Center.

Suning Holdings Group Ltd said orders within the first 12 hours on June 18 surged 171 percent compared with same period last year, with online sales of air conditioners jumping 183 percent year-on-year. Sales of televisions sized 65 inches and above surged 211 percent.

The June 18 sale has become the second-largest shopping event in China, next to Alibaba's Singles Day's 24-hour shopping blitz.

"Different from the Nov 11 promotion, the June 18 shopping festival puts an emphasis on products used in summer, such as air conditioners, fans and T-shirts," said Chen Tao, a senior analyst from market consultancy Analysis.

"Online sellers don't want to lose the opportunity to gain more online traffic during this mid-year festival," Chen said, adding that people in smaller cities and towns are seeking high-end products, along with the rising e-commerce penetration rate in these lower-tier cities.