Employees package and sort express parcels at an e-commerce company on Nov. 1, 2024, around the Double 11 Shopping Festival in Lianyungang, Jiangsu Province of China.
Vcg | Visual China Group | Getty Images
BEIJING — Early indicators of China’s biggest shopping event of the year reveal a pickup in select categories amid expectations of relatively modest growth in overall sales.
China’s version of Black Friday kicked off on Oct. 14, more than a week earlier than last year, as e-commerce players Alibaba and JD.com grapple with tepid consumer spending. The shopping festival, also known as Singles Day or 11.11, has in recent years evolved into a weeks-long promotional period since Alibaba launched it in 2008 on Nov. 11.
“What we’re seeing so far, it’s going to be slightly better in terms of GMV growth over last year,” Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBCThursday. The company helps foreign brands — such as Vitamix and IS Clinical — sell online in China and other parts of Asia.
GMV refers to gross merchandise value, an industry measure of sales over time. China’s e-commerce giants stopped reporting Singles Day GMV in 2022 during the pandemic. In 2021, Alibaba said its GMV rose by 8% while JD’s climbed by 28%, totaling more than $139 billion.
Singles Day GMV this year as of Oct. 30 was 845 billion yuan ($119.1 billion), according to research firm Syntun. It was not clear how the GMV figures compared to 2023 given the extended promotional period this year.
Around 80%, or roughly $95 billion, came from Alibaba, JD.com and PDD, while nearly 20% was generated via livestreaming sales platforms Kuaishou and ByteDance’s Douyin, the Syntun report showed.
While Singles Day GMV no longer grows by 30%, Cooke said he expects around 15% growth this year, better than the 11% increase in 2023, when the festival lasted for 19 days, according to his company’s data.
“Things that are experiential-based are starting to do really well, less on the Louis Vuitton luxury and more on the lululemon is kind of what we’ve said about this for a while,” Cooke said. “It’s just that consumer habits have really changed.”
Subsidies boost appliances
Helping boost sales this Singles Day are China’s subsidies for trade-ins of home appliances, launched in late July. Chinese authorities since late September have started doubling down on stimulus efforts by cutting rates on existing mortgages and signaling further support.
“We believe [the] 11.11 festival this year will be a critical point and is poised to reflect on the recovery trajectory in 3Q24 and 4Q24,” analysts at UOB Kay Hian said in a report.
They predict 4% to 5% growth in Singles Day GMV, with sales in the home appliance category supported by the trade-in program.
Alibaba said government subsidies and platform benefits contributed to a more than seven-fold surge in presales of home appliances during the first hour on Oct. 14, compared with the first hour of presales last year.
JD.com said that between Oct. 14 and Oct. 31, transaction volume grew by double-digits versus the same period a year ago. The company claimed record sales in consumer electronics and home appliances, without disclosing figures.
“This year, it seems that the price war of e-commerce platforms has slowed down overall, returning to a certain degree of rationality after the intense price competition,” Dave Xie, partner at Oliver Wyman, said in a statement. He also noted Beijing’s stimulus announcements and a recovery in consumer sentiment.
“In the initial phase of Singles Day, categories such as home appliances and consumer electronics, outdoor gear, beauty and cosmetics, and pet supplies have all performed well,” Xie said.
‘Micro’ shopping trend
A consumer trend that’s emerged this year is in toys and collectibles, often from a game or popular animated series. The category is usually referred to as IP in China.
”A lot of international brands have been fighting for licenses to try to get in here and do this as well,” Cooke said.
There’s always “a micro trend in every year’s 11.11 and this really seems to be it this year,” he said. “Something that kind of came out of nowhere, into all of a sudden really, really big numbers.”
More than 100,000 products based on licenses for over 1,000 characters — such as the games Genshin Impact and Arknights — are being launched on Alibaba’s Tmall this Singles Day, according to Yuke Liang, a representative for the business’ designer and collectable toy category. Products include collectable cards, figurines and clothes.
The category also includes Lego and British toy company Jellycat, which launched a Valentine’s Day plush dog in China for Singles Day, Liang said. The 7,000 dogs, priced at around $50 each, sold out in seconds, she said.
Japanese manga Chiikawa opened a Tmall store in late September, and saw more than 100,000 shoppers simultaneously order a $9.72limited edition plush, Liang said.
Liang said Taobao and Tmall started developing the IP category in 2017, and elevated it in 2021 to one of its few tier-one segments in terms of product promotion and business priority. She said most buyers are in their early thirties or younger, and prefer to spend on products perceived as bringing happiness or other emotional satisfaction.
Sentiment is ‘much calmer’
Despite such pockets of growth, China’s Singles Day remains more toned down than in prior years.
“Sentiment is quite different this year, much calmer,” wrote Ashley Dudarenok, founder of ChoZan, a China marketing consultancy. “Chinese consumers are not caught up in the ‘buy buy buy frenzy,’ they are hunting [for] more expensive products that they actually need vs just lower prices.”
She expects that at best, Singles Day this year may be “slightly better” and driven by different categories.
The shopping promotions officially wrap up on Nov. 11.
James Yang, head of Greater China retail at consultancy Bain & Company, said the firm has “muted expectations” for Singles Day this year, continuing the trend of the last two years.
JD is set to release quarterly results on Nov. 14, while Alibaba is scheduled to release earnings on Nov. 15.
Check out the companies making headlines in extended trading: Rivian — The electric vehicle maker added nearly 2% despite missing on both top and bottom lines in the third quarter. Rivian posted an adjusted loss of 99 cents per share on $874 million in revenue. Analysts polled by LSEG had forecast a loss of 92 cents per share on revenue of $990 million. Pinterest — Shares tumbled 11% after the social media company posted weak guidance for its fourth-quarter revenue. Pinterest guided revenue to fall between $1.125 million and $1.145 million. The midpoint of the fourth-quarter guidance, $1.135 million, came below analysts’ estimates of $1.143 million, per LSEG. The company posted beats on the top and bottom lines in the third quarter. Block — Shares dipped 2% after the fintech firm reported a third-quarter revenue miss . Block posted sales of $5.98 billion, while analysts polled by LSEG had anticipated $6.24 billion. On the other hand, Block’s adjusted earnings of 88 cents per share beat analysts’ estimates by one cent. Airbnb — Shares of the online homestays company slipped nearly 3%. Airbnb posted third-quarter earnings of $2.13 per share, 1 cent shy of the consensus forecast, per LSEG. Quarterly revenue of $3.73 billion was slightly above analysts’ estimates for $3.72 billion. Akamai Technologies — Shares slid 6% as the cloud computing company issued disappointing full-year guidance. Akamai said its adjusted earnings for the period will range between $6.31 and $6.38 per share on revenue of $3.966 billion to $3.991 billion. Analysts polled by FactSet anticipated $6.43 per share in earnings and $3.99 billion in revenue. DraftKings — The sports betting company tumbled 4% after guidance missed the mark. DraftKings said its fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization will range between $240 million and $280 million. Analysts polled by LSEG sought $340 million to $420 million. The company also fell short of the Street’s expectations in the third quarter. Sweetgreen — The salad chain dropped more than 10% after missing on top and bottom lines in the third quarter. Sweetgreen announced losses of 18 cents per share, while analysts had expected a loss of 13 cents per share, according to LSEG. Revenue of $173 million also fell short of the $175 million forecast by analysts. Toast — Shares of the restaurant management software company surged 19% on strong fourth-quarter guidance. Toast guided fourth-quarter adjusted EBITDA between $90 million and $100 million. Analysts polled by StreetAccount estimated $74.8 million. Third-quarter results also beat estimates on both top and bottom lines. Expedia Group — Shares of the travel service company jumped 3%. Expedia’s adjusted earnings for the third quarter came in at $6.13 per share, beating analysts’ call for $6.04 a share, per LSEG. Revenue came in at $4.06 billion and narrowly missing analysts’ forecast for $4.11 billion. The company also said Chief Financial Officer Julie Whalen will be stepping down from her role. Arista Networks — The computer networking company fell 6% despite third-quarter results that topped estimates. Arista Networks reported third-quarter adjusted earnings of $2.40 per share on revenue of $1.81 billion. Analysts had expected earnings of $2.08 per share on $1.74 billion in revenue. The company’s fourth-quarter revenue guidance range also beat forecasts. Arista Networks also announced a 4-for-1 stock split. Lucid Group — The electric car manufacturer advanced 6% after narrowly beating analysts’ expectations in the third quarter. Lucid reported an adjusted loss of 28 cents per share on revenue of $200 million in the period. Analysts polled by LSEG expected a loss of 30 cents per share and revenue of $198 million. The company also reaffirmed plans to produce about 9,000 vehicles this year, up 6.8% from 2023. Capri Holdings — The owner of Jimmy Choo lost 7% after results in the fiscal second quarter missed analysts’ estimates. Capri reported adjusted earnings of 65 cents per share on revenue of $1.08 billion, while the Street sought 75 cents a share in earnings and $1.18 billion in revenue, per LSEG. Revenue for Michael Kors and Versace also came up short of expectations. — CNBC’s Darla Mercado, Lisa Kailai Han and Alex Harring contributed reporting.
Federal Reserve Chair Jerome Powell speaks during a news conference following the Nov. 6-7, 2024, Federal Open Market Committee meeting at William McChesney Martin Jr. Federal Reserve Board Building in Washington, D.C., on Nov. 7, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
Expectations for a December interest rate cut remained strong after the Federal Reserve trimmed rates by a quarter percentage point in November, but market pricing is suggesting the likelihood of a “skip” in January.
On Thursday afternoon, the U.S. central bank lowered the federal funds rate, which determines what banks charge each other for overnight lending, to a target range of 4.5% to 4.75%.
Before the Fed released this decision at 2 p.m. ET, market pricing pointed toward a 67% chance of another quarter-point cut in December and a 33% chance of a pause that month, according to the CME FedWatch Tool.
The probability of a quarter-point December rate cut rose to more than 70% following the meeting, while the chances of a pause slipped to nearly 29%. Future rate probabilities found in the CME FedWatch Tool are derived from trading in 30-day fed funds futures contracts.
Meanwhile, the odds that the Federal Reserve would skip an interest rate cut in January was around 71%. This was slightly higher from 67% before the release of the Fed’s November decision on Thursday afternoon.
Jeffrey Gundlach speaks at the 24th Annual Sohn Investment Conference in New York, May 6, 2019.
Adam Jeffery | CNBC
DoubleLine Capital CEO Jeffrey Gundlach said Thursday that interest rates could shoot higher if Republicans end up controlling the House, securing a governing trifecta that gives President-elect Donald Trump free rein to spend as he pleases.
Gundlach, a noted fixed-income investor whose firm manages over $96 billion, believes the higher government spending would require more borrowing through Treasury issuance, putting upward pressure on bond yields.
“If the House goes to Republicans, there’s going to be a lot of debt, there’s going to be higher interest rates at the long end, and it’ll be interesting to see how the Fed reacts to that,” Gundlach said on CNBC’s “Closing Bell.”
The race to control the House is undecided as of Thursday after Republicans clinched their new Senate majority. The Federal Reserve cut rates Thursday, and traders expect the central bank to cut again in December and several times in 2025.
Notable investors such as Gundlach have been voicing concerns about the challenging fiscal situation. Fiscal 2024 just ended with the government running a budget deficit in excess of $1.8 trillion, including more than $1.1 trillion dedicated solely to paying financing costs on the $36 trillion U.S. debt.
“Trump says he’s going to cut taxes … he’s very pro cyclical stimulus,” Gundlach said. “So it looks to me that there will be some pressure on interest rates, and particularly at the long end. I think that this election result is very, very consequential.”
If the Trump administration extends the 2017 tax cuts or introduces new reductions, it could add a significant amount to the nation’s debt in the next few years, worsening the already troublesome fiscal picture.
Still, Gundlach, who had predicted a recession in the U.S., said the Trump presidency makes such an economic downturn less likely.
“I do think that it’s right to see the Trump victory as being as reducing the odds for near-term recession fairly substantially,” Gundlach said. “Certainly, the odds of recession drop when you have this type of agenda being promoted in plain English for the past three months by Mr. Trump.”