E-commerce, live-streaming help drive recovery in China’s retail scene amid coronavirus slump

Online sales of physical goods surged 36.3 per cent year-on-year during the Labour Day holiday in China
Total retail sales of consumer goods fell by 20.5 per cent year-on-year nominally in the first two months of the year

Coronavirus pandemic

Sarah Daiin Beijing

Published: 6:00am, 9 May 2020

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Online sales of physical goods surged 36.3 per cent year-on-year during the Labour Day holiday in China, helping to drive the recovery of the country’s retail scene which has been suffering from the impact of the coronavirus pandemic, China’s Ministry of Commerce said at a briefing on Friday.

“The epidemic has given rise to increasing interest in new types of consumption such as online grocery shopping, online education and telemedicine,” said vice-minister for commerce Wang Bingnan at the briefing.

Live-streaming, in particular, has become a “hot trend” in e-commerce, according to Wang. The number of live-streamed online sales campaigns doubled during the five-day national holiday that ended on Tuesday, with some events recording sales of as much as 140 million yuan (US$19.8 million), Wang said.

He added that the volume of sales from live-streams over the holiday this year was 4.7 times of that from the same period last year.

The online shopping boom comes amid Beijing’s efforts to reverse dampened consumer sentiment and revive the world’s second largest economy, which showed its first contraction in nearly three decades in the first quarter of this year.

Offline retailers have been hit particularly hard by the outbreak, with shopping malls and stores closed and most consumers staying home after coronavirus lockdowns were imposed across the country from late January.

Online retailers, on the other hand, have been among the few beneficiaries of the pandemic, seeing a surge in activity amid a strong move from offline to online activity because of the lockdowns.

China extended the annual Labour Day holiday starting May 1 from the original three days to five this year to boost consumption, with many cities announcing plans to distribute digital coupons worth millions of yuan for use in shopping malls and restaurants.

Shanghai shopping festival sees US$2.2 billion of sales in first 24 hours

But observers have been sceptical that consumers would be in the mood to splurge with more uncertainty ahead. Total retail sales of consumer goods fell by 20.5 per cent year-on-year nominally in the first two months of the year, according to a research note by Hong Kong-based Fung Business Intelligence.

And a recent survey of 28,000 people suggests the effects of the pandemic on consumer sentiment may be long-lasting: more than half of Chinese households surveyed said they planned to increase their savings and cut back on spending even after the outbreak is contained.

Still, with the strong online sales over the long weekend, Wang said he expects e-commerce to “play a vital role” in alleviating the impact of the pandemic and drive the recovery of China’s retail sector.

Over the Labour Day holiday, automobile sales in Shanghai, Chongqing, and Zhejiang increased by 49.6 per cent, 28.5 per cent and 8.8 per cent respectively year-on-year, Wang said, citing figures from key companies. He added that sales of home appliances on some e-commerce platforms doubled year-on-year.

“To sustain their business, department stores and shopping malls have to accelerate the ongoing diversification of sales channels, including going online,” Fung Business Intelligence analysts said in the research note.

However, they added that “while large brands and merchants are well prepared to seize new opportunities provided by department stores and malls, small and medium merchants may not have the resources and technological know-how to set up and manage their online stores.”

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