By CHENG Lu, YU Hao
CHEN Liang has been at home for over two months. Working from home was not a problem for him as he runs an online store for a furniture brand, but with everyone locked up at home, the decoration business has ground to a halt. The 618 shopping festival is his only hope.
When lockdown bites – especially for those in Shanghai and Beijing –most of the spending goes on food and groceries. Clothing and furniture take a hit. JD.com’s CEO XU Lei has said that many traders have made “no red ink” their only goal. “The whole clothing industry is stuck in warehouses,” he said. And more or less the whole clothing industry is betting their shirts on 618, China's second-largest shopping event that falls on June 18.
Good old brick-and-mortar
For some, 618 is an opportunity to cut inventories and get some money back, but many are so badly hurt by lockdown that they know that won’t recover any time soon. They have all but given up on the event.
April and May used to be high seasons for clothing, but not this year. CHEN Yun of fashion brand Mark Fairwhale ordered spring and summer wear six months ahead in September last year when sales plans were made. But Mark Fairwhale’s warehouse in Shanghai has been shut since April, so online orders are being fulfilled by what stock there is in brick-and-mortar stores.
“Luckily, we have another warehouse in Suzhou, we can now rely on that to prepare for the 618,” Chen said. Mark Fairwhale’s promotion this year is that the more clothes you buy, the more discount you get. “We have to sell as much as possible to clear the inventory and keep the cash flowing.”
Chen said if the event went well, H1 revenue should be enough to break even for the year. As for the fall and winter wear, the factories are in provinces where no strict lockdowns have been imposed.
Can’t pay? Must pay!
Not all have the money or resources to join the 618 melee. ZHOU Tao sells water flossers on Tmall. Until June 2021, he sold more than 15,000 flossers every month. Then big names like Lenovo, Midea and Xiaomi started to sell flossers. Many were cheaper. And then came the lockdown.
“We are based in Zhejiang, next to Shanghai. Covid control destroyed our logistics,” Zhou said. “Most of our products could not reach buyers.”
Platforms offer “compensation” when goods are not delivered on time. Except they don’t. Platforms almost never offer anything. They simply instruct vendors of the discounts and services they must provide to join in the fun and frolics. It’s the vendors who pay.
“Ninety percent of our customer service is dealing with refunds and returns. The compensation costs us a fortune we don’t have.”
Feed the people
Zhou used to have three Tmall shops but closed two last month. His marketing team used to be a dozen, now there are three and those three are on half pay.
“I’m struggling to feed my employees now,” Zhou said. “I have no stock for 618, and no plans to acquire any.”
Zhou said in 2020, every click on an ad cost the company 1.5 yuan (25 US cents). Now it cost 5 yuan. The 618 festival is offering the biggest discounts ever, but those discounts don’t come out of nowhere. They come straight out of Zhou’s pocket. Zhou has no reason to join the 618 party.
