Alibaba Group Holding reported “encouraging” user engagement and merchant growth during the 618 midyear online shopping festival, while rival Xiaohongshu, often referred to as China’s Instagram, announced its online sales had tripled compared to the previous year.
Alibaba’s domestic e-commerce unit, Taobao and Tmall Group, has adopted a new strategy focusing on consumers and small merchants for this year’s festival, which spans from May 20 to June 20, as it aims to maintain its leading position in China’s online shopping market. Alibaba owns the South China Morning Post.
Xiaohongshu, a social media app that allows users to share lifestyle and travel content, reported a tripling of its e-commerce turnover during the festival by encouraging influencers to try live-streaming e-commerce.
Orders placed through the platform’s live-streaming sessions from May 19 to June 10 increased more than fivefold from last year, the company stated.
Neither Alibaba nor Xiaohongshu, also known as Little Red Book, disclosed their gross merchandise value (GMV), a metric that measures total online sales within a specific period.
Sales performance during the 618 festival, China’s second-largest online sales event after Singles’ Day in the fourth quarter, is closely monitored by analysts and investors as an indicator of a company’s competitiveness in a highly competitive market.
In 2023, China’s online retail sales reached 15.4 trillion yuan (US$2.12 trillion), an 11 percent increase from the previous year, according to the commerce ministry.
Alibaba faces increasing competition from emerging rivals, including ByteDance’s Douyin (the Chinese version of TikTok) and Pinduoduo, the budget shopping app by PDD Holdings.
In the previous year, Alibaba’s GMV was 7.2 trillion yuan, compared to Pinduoduo’s 4.05 trillion yuan and Douyin’s 2.7 trillion yuan, as reported by Chinese tech media outlet 36Kr.
Newcomers such as Xiaohongshu and Tencent Holdings’ short-video platform have also been expanding their footprint in the crowded market.
Shanghai-based Xiaohongshu is among China’s fastest-growing social platforms, particularly popular among young female consumers. The firm, which counts Alibaba and Tencent as investors, had 312 million monthly active users in 2023, marking a 20 percent increase from the previous year, according to a Financial Times report.
Sophia Meng, a 30-year-old Beijing resident, spends one to two hours daily on Xiaohongshu and has purchased clothes and tote bags recommended by the app’s algorithm.
Another user, who identified herself as Rose, said she spends nearly four hours a day on the app. “I buy products based on recommendations from influencers I follow,” she noted, adding that she finds the package tracking system on Xiaohongshu less efficient compared to traditional e-commerce platforms.
