Chinese E-Commerce Giants Pivot to Selling Inexpensive Goods

livemint.com:

Alibaba Group Holding and JD.com this year have embarked on campaigns to promote low-price goods to cater to penny-pinching shoppers through new services and incentives for merchants. In May, Alibaba’s flagship platform Taobao launched “Taobao Good Price" within the app where users can buy low-price merchandise such as butter cookies for 40 cents a box and rubber gloves for 14 cents a pair. During this year’s June 18 Shopping Festival, an annual e-commerce event, Taobao required merchants to offer at least a 10% discount for the goods they were selling and gave priority to merchandise at lower prices or with steeper discounts.

Earlier this year, JD.com kicked off a $1.4 billion subsidy program to offer discounts on products, an initiative promoted as “Everyday Low Price," and started a big push to recruit third-party merchants. “We try to give users an experience that good merchandise doesn’t have to be expensive," said Trudy Dai, chief executive of Taobao and Tmall Group, Alibaba’s China commerce arm, during a call with analysts this month. Its platforms have seen rapid growth in the number of price-sensitive buyers from lower-tier cities as well as young people and the elderly, she said.

China’s recovery has been losing steam. In July, consumer prices in the world’s second-biggest economy tipped into deflationary territory for the first time in two years. Other key data from July showed slowing spending growth by consumers and businesses.

Youth unemployment set a series of record highs in recent months and hit 21.3% in June. On the day Beijing was expected to release the July figure, it suspended publication of that data. For Alibaba and JD.com, so far their adjustments are paying off, asboth companies recently beat