Alibaba, Xiaohongshu tout sales growth in China's midyear e-commerce festival

Alibaba Group Holding said it is seeing "encouraging" user engagement and merchant growth during the 618 midyear online shopping festival, as rival Xiaohongshu, China's answer to Instagram, said its online sales have tripled from a year ago.

Taobao and Tmall Group, Alibaba's domestic e-commerce unit, has switched to a new strategy that focuses on consumers and small merchants during this year's festival, which runs from May 20 to June 20, as the company seeks to defend its dominant position in China's online shopping market.

Alibaba owns the South China Morning Post.

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Xiaohongshu, a social media app that lets users share lifestyle and travel content, has seen its e-commerce turnover triple during the festival by encouraging influencers to test out live-streaming e-commerce, the company said. Orders placed through the platform's live-streaming sessions from May 19 to June 10 jumped more than five times from last year, it said.

Neither Alibaba nor Xiaohongshu, also known as Little Red Book, disclosed their gross merchandise value (GMV), a measure of total online sales in a given period.

Sales performance during 618, the country's second-largest online sales season after Singles' Day in the fourth quarter, is closely watched by analysts and investors as an indicator of a company's competitiveness in a cutthroat market.

In 2023, China's online retails sales amounted to 15.4 trillion yuan (US$2.12 trillion), up 11 per cent from the previous year, according to China's commerce ministry.

Alibaba faces the onslaught of rising competitors, including ByteDance's Douyin - the Chinese version of TikTok - and Pinduoduo, the domestic budget shopping app of PDD Holdings.

Last year, Alibaba's GMV reached 7.2 trillion yuan, compared to Pinduoduo's 4.05 trillion yuan and Douyin's 2.7 trillion yuan, according to a report by Chinese tech media outlet 36Kr. Newcomers such as Xiaohongshu and Tencent Holdings' short-video platform have also expanded their presence in the crowded sector.

Shanghai-based Xiaohongshu is one of China's fastest-growing social platforms, especially among young female consumers. The firm, which counts Alibaba and Tencent as investors, had 312 million monthly active users in 2023, a 20 per cent increase from the previous year, according to a Financial Times report.

Sophia Meng, a 30-year-old Beijing resident who spends one to two hours a day on Xiaohongshu, said she has bought clothes and tote bags on the platform, recommended to her by the app's algorithm.

Another user, who only gave her name as Rose, said she spends nearly four hours a day on the app. "I buy products based on recommendations from influencers I follow," she said, adding that she finds the package tracking system on Xiaohongshu inferior to those of traditional e-commerce platforms.

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