Sunday, 2024 July 21

Why has China’s 618 shopping festival gained popularity among B2B buyers?

Over the past 21 years, JD.com has transformed its 618 shopping festival into the largest mid-year consumer event, attracting significant attention from both consumers and businesses. Traditionally, enterprise customers have been somewhat overlooked in this frenzy of late-night deals, flash sales, and bulk discounts, which naturally seem at odds with the rational, cost-focused, and paced nature of enterprise procurement.

However, in recent years, this situation has quietly changed. Increasingly, savvy enterprise procurement decision-makers are discovering new ways, channels, and methods to achieve cost reduction and efficiency improvements through JD’s 618 event. This year, the transaction volume attributable to enterprise procurement saw a year-on-year increase of 58% during JD’s 618 “enterprise savings month” campaign.

What new tactics lie behind this 618 event? And how does it correspond to changes in enterprise procurement needs, or highlight the transformation of the platform’s capabilities?

JD.com CEO Sandy Xu launching the 2024 JD 618 shopping festival. Source: JD.com

Enterprise needs differ significantly from personal consumption

Why did enterprise customers show little interest in 618 at its nascency? This discrepancy can perhaps be explained by the fundamental differences between enterprise procurement and personal consumption.

From the perspective of enterprise operations, for the past few decades, China’s economy has been in a phase of rapid growth. During this period, businesses focused more on seeking new opportunities and growth, prioritizing business expansion. Speed and growth were more important than cost reduction, leading to a just-in-time (JIT) procurement strategy rather than stockpiling needs for concentrated purchasing.

Moreover, the unique characteristics of enterprise procurement create a mismatch with 618’s consumer-oriented offerings at three levels:

  • “B-end goods” refer to products better suited for enterprise use. For example, while bathroom tissues used by households generally have a diameter of 11–13 centimeters, office properties often utilize rolls that are up to half a meter in diameter, known as jumbo rolls. Similarly, enterprises prefer bulk packaging for snacks to serve multiple users simultaneously, unlike smaller packs designed for single use.
  • “B-end services” involve enhanced service capabilities to fulfill enterprise procurement requirements, differing significantly from personal consumer purchases. Using logistics as an example, individual consumers need a single delivery address per order, while large enterprises may command nationwide operations requiring centralized procurement for numerous branches. Traditional fulfillment models, which might not support multi-address deliveries for single orders, could force enterprises to either centralize delivery to the headquarters for redistribution, or split orders into multiple smaller ones—both inefficient and costly.
  • “B-end scenarios” pertain to the specific use cases in which procured goods are utilized, be it office supplies, marketing materials, and more. These scenarios generate distinct needs from those that drive personal consumption. For instance, during the Dragon Boat Festival, individuals may buy rice dumplings for personal or family consumption, while enterprises procure them to serve as business gifts, or for marketing purposes and employee welfare, therefore requiring customized packaging.

Enterprise procurement is not simply a scaled version of personal consumption, and should not be viewed as such. Without targeting the unique requirements of enterprises and providing products and services commensurate with those needs, merely offering low prices or marketing hype during events like 618 will likely still fall short in attracting enterprise users.

The perfected “enterprise version” of 618

Why have a large number of enterprises begun to pay attention to 618 this year? This can be understood from two perspectives: the enterprises’ internal needs and the procurement service market’s evolution.

In recent years, China’s economy has transitioned from rapid growth to high-quality growth, prompting businesses to shift from blind expansion to meticulous management, with a greater emphasis on cost reduction and efficiency. ByteDance, for one, has sought to adopt strategies that “trim the fat,” while Xiaomi has established a CFO-led task force to reduce costs and improve internal performance and efficiency.

Procurement, as a major operational cost, naturally becomes a key focal point for cost reduction and efficiency. According to Kearney’s white paper on the enterprise service market in China, 74.5% of enterprises aim to reduce costs and improve efficiency by purchasing enterprise services, with 64.2% seeking digital transformation. Among these, procurement logistics and supply chain services are the most widely used, with a utilization rate of 45%.

In this trend, enterprises are consolidating less urgent and predictable procurement of consumables to be exercised during 618 for better cost savings.

Externally, the procurement service market’s iteration and upgrades in recent years have made 618 a more reliable option for enterprise procurement. Platforms have significantly improved in terms of enterprise considerations regarding goods, services, and scenarios, making them more confident to carry out procurement during 618.

Screenshot of the b2b version of JD (b.jd.com)

For instance, in terms of goods, procurement platforms represented by JD’s enterprise business have been promoting ecosystem integration of the B-end supply chain. This year, JD’s enterprise business has established partnerships with well-known brands such as Xiaomi, Cofco, G&G, and Deli, continuously strengthening B-end supply chain service capabilities, efficiently bringing products and services that meet enterprise needs to the market.

Additionally, more brands are choosing 618 as an important launchpad for new B-end products. Previously, brands relied on commercial intuition and experience to time new product launches. With 618, brands now have fertile ground for new product growth, with comprehensive support from e-commerce platforms to help incubate and boost new products.

From the perspective of product variety, today’s 618 can well meet enterprise procurement needs for B-end products, facilitated by a more open and collaborative ecosystem.

In terms of promotional tactics, traditional 618 promotions like threshold discounts are less appealing to enterprises making large purchases. This year, platforms are simply emphasizing low prices, with many brands offering additional discounts and promotions for 618, allowing enterprises to procure needed goods at significantly lower prices than usual. JD’s enterprise business also offers exclusive prices, group-buying rates, volume rebates, and other exclusive discounts proportional to the procurement scale.

618 has become an essential cost-saving tool for enterprises

Through the confluence of both internal and external factors, 618’s appeal has gradually expanded from the consumer side to the industrial side, with more enterprises viewing 618 as a critical annual event for procurement. Data from JD’s enterprise business indicates that, since the launch of its enterprise savings month campaign, categories like 3C digital products, home appliances, and construction supplies have seen rapid growth. JD’s procurement-focused live streams, featuring attractive deals on office supplies, snacks, workplace cleaning products, and more, have been highly popular, with many products selling out immediately upon release.

A medium-sized enterprise in Shandong, facing issues such as numerous suppliers, inconsistent product standards, and weak bargaining power, deferred its procurement of office supplies and consumables to JD during 618 for the first time this year. According to a representative of the enterprise, this approach helped save about 20–30% in cost while experiencing faster delivery speeds. Additionally, JD’s efficient settlement process was noted to have improved the company’s financial work efficiency, ensuring compliance.

A fast-moving consumer goods (FMCG) company planned a public WeChat raffle for its members during 618, requiring a variety of prizes from different categories and custom logos on each item. Traditionally, such cross-brand, multi-category custom services involve high costs and long cycles. Through JD, the company was able to quickly complete gift customization, ensuring the smooth execution of its marketing activities.

Currently, during 618, JD’s enterprise business focuses on high-frequency enterprise procurement scenarios, establishing a series of scenario-based solutions to ensure that enterprises can conveniently conduct one-stop procurement.

From a nationwide consumer event to a highly focused procurement milestone for industries, the evolution of 618 also reflects changes in the consumer market and the Chinese economy.

KrASIA Connection
KrASIA Connection
KrASIA Connection features translated and adapted high-quality insights published on 36Kr.com, the largest and most influential technology portal in Chinese language with over 150 million readers across the globe.
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