Given the weak economic backdrop, the current emphasis is on value for money and better consumer experiences.
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The focus of singles day is changing. Consumers are attracted by experiential, immersive and interactive opportunities to spend.
This is reflected in some of the innovations in China's e-commerce landscape, including a focus on using influencers in videos and the gamification of shopping.
Singles day 2023 is an opportunity for companies to adapt to the evolving demands of consumers.
Improved distribution and a focus on smaller cities could offset the impact of weak consumer sentiment. Government policies to encourage consumption should create a positive backdrop for the 2023 shopping event.
Innovations in Chinese e-commerce shopping
Short form videos and live streaming is an evolution of the home shopping channel, but with some unique Chinese characteristics.
The business is based on a closed loop model. Merchants on the platform leverage mobile payment and fulfilment infrastructure. The most popular categories include apparel, cosmetics and jewellery.
Live streaming strives to create immediate, impulsive sales via interactions with viewers. The most popular categories include: apparel, cosmetics, and fast moving consumer goods. The channel accounted for 28% of total retail sales in H1 2023, compared to 3% in 2019.
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Gamification of shopping is also a unique approach to e-commerce that has gained popularity in Asia. It centres on a shopping experience which promotes engagement. It provides rewards to shoppers who complete specific tasks, including collecting virtual tokens.
User generated content. These sites feature independent influencers, and individual customers sharing their product experiences. Little Red Book is the leading platform. It is favoured by women, who make up 85% of its user base. This consumer trend is built on trust with an emphasis on individual user experiences.
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According to CNIIC, 49% internet users engaged in livestream shopping. It is estimated that the total revenue of China's livestream e-commerce will reach CNY 5.3trn ($720bn) in 2023.
Putting this number in context, it is equivalent to almost 12% of total Chinese retail sales in 2022.
First post Covid-19 Singles Day
This year's singles day event is the first once since China emerged from Covid-19.
The economic picture is soft, impacted by softness in the real estate and manufacturing sectors.
Nevertheless, the October golden week saw increased travel and spending. There was a focus on domestic travel, which was 4% above the comparable pre Covid-19 period in 2019.
Reverse Tourism
This year's Golden Week also saw growth in the idea of "reverse tourism". This centres on consumers searching for new experiences in less well-known destinations.
It reflects negative publicity in prior years from the high volume of tourists converging on popular landmarks. This led to long queues and negative user experiences.
The preference for new experiences could also be a feature of singles day 2023. Authentic user generated content may have a greater impact on sales trends compared to prior years.
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This reflects the social changes in China, leading to less conspicuous consumption.
These trends could be negative for large international brands and potentially positive for home grown ones.
There is some evidence of increased price sensitivity amongst Chinese consumers. This includes the growth of low-priced coffee chains taking market share from higher priced brands.
However, it does not appear to have extended to services. This could reflect a willingness amongst consumers to pay for unique experiences
Chetan Sehgal is lead portfolio manager of Templeton Emerging Markets Investment Trust (TEMIT)