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Saturday, August 6, 2022

This Retail Giant Just Posted Sales That Blow Away Amazon’s Prime Day

Amazon.com (AMZN 3.58%) announced its annual Prime Day event will be held on July 12 and 13, the seventh consecutive year the e-commerce giant has run the sales extravaganza.

Last year it sold an estimated $11.2 billion worth of goods during the event, according to Digital Commerce 360, nearly an 8% increase over 2020, but that actually represents a slowdown in the growth rate from the year before when it saw sales expand 45% during the pandemic-wracked year.

Image source: Getty Images.

Obviously, sales were responding to most stores being closed for months by the COVID outbreak, but this year Amazon faces many grueling headwinds. From rampant inflation and higher gas prices to a still-stalled supply chain, and consumers spending more on the necessities rather than gadgets and gear.

While it’s still likely the online retailer will sell more goods this year than last, a rival e-commerce giant just held its own sales event, an older and more extensive shopping festival, and it blows Amazon’s annual event sales out of the water. But even then, there are words of caution for Prime Day.

A massive opportunity

Chinese e-tailer JD.com (JD 3.41%) just concluded its annual 618 shopping event and recorded five times greater sales than Amazon did last year, or $56.5 billion, up 10.3% year over year.

There were some surprising results from the promotional event, particularly that services figured highly in consumer shopping decisions. 

Woman with credit card looking at shopping bags.

Image source: Getty Images.

For example, JD saw sales of robot vacuums and air purifiers triple this year, but that’s likely due to the gadgets now coming with a 180-day “replacement over repair” guarantee. Similarly, cracked phone screen insurance sales quadrupled from 2021, with 80% of those buying it choosing the unlimited repair option.

It did see a big jump in gaming gear, with laptops jumping 120% and TVs rising fivefold. JD also said transaction volume on outdoor and camping products rose 300%, while sun protection clothing was 500% higher than last year.

The e-commerce company also reported higher sales of health-related services through JD Health, supermarket sales surged through its omnichannel grocery stores, and green products like electric cars were extremely popular. Despite that, the 10% rise in total transaction volume for 618 was almost a third less than the 27.7% gain last year. 

Although other retailers like Alibaba (BABA 4.92%) and Pinduoduo also glom onto the 618 coattails, they don’t publish their results. Analysts estimate total 618 sales were about $86.75 billion this year, essentially flat from 2021.

Apples to oranges

Admittedly 618 and Prime are not quite comparable. First launched in 2004 to celebrate the founding of JD.com, the Chinese e-commerce giant actually started the shopping spectacle on May 31 and let it run a full 21 days.

A pre-sale period of discounts also began on May 23, meaning it was almost a full month of sales. Amazon does something similar, as deals began on June 21.

And if you divvy up the $56 billion worth of JD’s sales over its full 30-day run, it comes out to about $1.9 billion a day, whereas Amazon is selling about a half-billion dollars worth of goods daily over its three-week sales period.

Chinese consumers also have another shopping festival to satiate their desire to spend in November when Alibaba’s annual Singles Day event occurs, a shopping tsunami in comparison to either 618 or Prime Day.

The biggest of them all

Singles Day is a cultural phenomenon that began as a way for Chinese college students to celebrate being single. The holiday of sorts falls on Nov. 11, or 11-11, which in Chinese culture represents “bare branches,” which is also a way of saying someone is single.

Alibaba began using it as a way to sell more goods in 2009, and it too has grown beyond just a one-day affair. It now stretches across 11 days, and last year Alibaba said $84.5 billion worth of goods were sold, or some $7.6 billion worth of merchandise per day. 

When you include JD’s tally in the total, a total of $139 billion in goods were sold. To put that in perspective, Cyber Week in the U.S. in 2021 — Thanksgiving Day through Cyber Monday, the five biggest sales days of the year — generated only $33.9 billion.

A stock to watch

Make no mistake — Prime Day is still a big deal because China’s target market is simply orders of magnitude larger than the U.S. Still, JD.com is an e-commerce behemoth that investors should not ignore.

With Chinese regulators signaling they’re winding down their investigations into tech companies and will now be more supportive of them going forward, JD.com is a stock to keep on your radar.

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