How Chinese New Year Drives Revenue

Ronald Wu

February 23, 2022

Spring Festival–often recognized in the U.S. by the name ‘Chinese New Year’—is a growing opportunity for brands. Between the rise of online shopping and the spreading popularity of the week-long celebration, we’ve seen staggering revenue increases for brands who invest.

Spring Festival, a changing tradition driven by the rise of ecommerce

Traditionally marked with shopping—as buying new items is seen as an embodiment of a brand-new start in the new year—Spring Festival is an important period for brands. Top selling products vary from festive food, seasonal flowers and accessories, to clothes, furniture, and electric appliances.

Chinese New Year, or Spring Festival, usually falls between late January and mid-February, aligning with the start of the Chinese Lunar calendar. What you might not realize about Spring Festival is that this week-long holiday is growing into a promising ecommerce opportunity, comparable to Singles’ Day.

This year, Pattern has leveraged its expertise on local marketplaces, such as Tmall and JD.com, to take advantage of the changing Chinese New Year shopping behaviour, helping some of its brand partners achieve 500% year-over-year sales growth during the period.

The switch to celebrate online

During the Chinese New Year, historical retail sales rose for more than a decade until the COVID-19 pandemic struck in 2020. The pandemic disrupted not only the country’s economy, but also a traditional custom of the Chinese—those who move from the countryside to cities for livelihood returning to their hometown during the Spring Festival to reunite with families. The Chinese government called for its people to stay put during the festival's celebrations to fight the pandemic, resulting in less need to buy festive foods and gifts. That is, until ecommerce saved the day.

The revenue results of an online celebration

At the Spring Festival in 2021, while still adhering to the stay-put call, the Chinese government joined hands with some local online marketplaces and logistics companies to initiate an online Spring Festival shopping event that ran for 30 days and eventually brought in RMB 906 billion (USD 140.2 billion). As a benchmark, the 2021 Single’s Day raked around RMB 965 billion (USD 152 billion) in sales value. These encouraging results rallied the administration and business community together to create the second edition of the month-long shopping event for 2022’s Spring Festival.

Driven by the government-business joint effort, physical retail sales during the 2021 Spring Festival period also saw a noticeable rebound, as official data shows that total revenue made by key companies in the retail and catering categories stood at RMB 821 billion (USD 127.1 billion) during the 2021 Spring Festival, rising 28.7% year over year and 4.9% higher than pre-pandemic sales in 2019.

The growth momentum continued in the 2022 Spring Festival. During the first five days of the Spring Festival holiday, the People's Bank of China’s clearinghouse platform processed online payment transactions worth RMB 4.2 trillion (USD 660.3 billion), rising 11.6% year-over-year. Leading Chinese marketplace JD.com also announced that its turnover during the first six days of the holiday increased by more than 50% year over year.

The “non-stop” fulfilment surge

Before the pandemic, China's logistics and express delivery sectors tended to grind to a halt during the Spring Festival week, so orders were expected to be dispatched more than a week before the holiday. Things changed since 2021, as industry players started responding to the government’s call to provide “non-stop” fulfilment services during the period to enable Chinese shoppers to “stay put, buy online.”

The effort yielded a remarkable result, as official data showed China's postal industry collected and delivered a total of 660 million parcels during the 2021 Spring Festival week, which was a 260% increase on a year-over-year basis. During the 2022 Spring Festival week, we even saw some 749 million parcels being handled by the country’s delivery sector, as Chinese marketplaces have worked with logistic operators to ramp up the scale of non-stop fulfilment services.

While Chinese marketplaces still reserve this non-stop fulfilment service to the most highly competitive brands on their platforms, Pattern has helped our partners secure this offer. Thanks to the fulfilment advantage at this Spring Festival, we saw some of our partners yield exciting results of more than 500% in sales growth compared with the same period last year.

The ongoing benefits of Spring Festival

Thanks to the convenience of the ecommerce ecosystem, the hottest selling items are getting more and more diversified. For example, in 2021 Alibaba found that the sales for floor-sweeping robots, window cleaning robots, and floor washing machines increased by 100%, 300% and 1,800% respectively, year-over-year, as younger shoppers often bought such gadgets as a gift for parents.

Another observation is regarding the synergy between Spring Festival and other significant holidays or events happening in the period. The 2022 Spring Festival week coincided with the Winter Olympics in Beijing, resulting in sales of ice sports gear and ski equipment on Tmall increasing by 300% and 180% respectively, year-over-year. In 2021, Valentine’s Day fell in the middle of the Spring Festival week. and JD.com observed that the demand for jewellery, beauty, watches, and other gifts rose significantly during this period. For example, the amount of women’s karat gold necklaces and yellow gold pendants sold increased 6.2 times compared with the same period in the previous year.

How to tackle the opportunity with Pattern

To exploit the thriving opportunity from Spring Festival, brands need to have a strong team of industry experts in the local market to stand out from the stiff competition from local and overseas players.

Pattern can accelerate your marketplace business around the world—we partner with brands through a unique model where we purchase our partner’s stock and sell it for them on online marketplaces, such as Tmall, JD.com, Lazada, Amazon, Shopee, Coupang and eBay.

Not only is Pattern in the top 5% of authorized Tmall Trade Partners, we also have boots on the ground. Pattern has a local team in China providing brand partners with a comprehensive service that help them protect their brand, drive growth, and scale distribution.

Interested in tackling the Chinese ecommerce opportunity? Get in touch and learn what we can do for your brand.

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Improve Your Amazon Advertising Strategy With One Simple Metric: True RoAS
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Improve Your Amazon Advertising Strategy With One Simple Metric: True RoAS

The purpose of advertising on Amazon is simple: increase traffic and conversions. But the approach to get those conversions is not always so simple. Your Amazon advertising strategy is based on current ad data and performance results such as your return on ad spend (RoAS). 

At a minimum, your RoAS number tells you how well you’re maximizing your ad spend. The problem is the RoAS you’re getting from Amazon or an advertising agency isn’t always accurate. 

As a top 3P seller on Amazon, Pattern helps brands improve their Amazon advertising strategy and results by providing them with one simple metric: true RoAS.

Understanding True RoAS

To understand why true RoAS is helpful to brands, you need to understand how Amazon and other agencies calculate and present your RoAS.

The key to growing your brand and maximizing your ad spend is to drive incremental traffic, rather than cannibalizing what has already taken place. For example, if you are selling probiotics, and paying for sponsored ads to win the keyword “probiotics for women”, but also organically ranked in the top results with the same keyword, that’s cannibalization. The RoAS score you would receive from Amazon includes that level of cannibalism, which inflates the number, causing you to pay more on ad spend. The best ads drive incremental growth instead of cannibalizing organic sales. 

At Pattern, we’ve created the acceleration software to make sure brands are getting their “true RoAS”. Pattern’s patented tool applies artificial intelligence to advertising to maximize incremental growth or true return on investment. 

Our software helps brands optimize their efforts by providing live and updated information on where your brand is not organically ranking, and what you should be paying for. If your ranking improves in one area, the ad spend will automatically decrease for those words or phrases until the software detects a drop in ranking, signaling that your ad spend should go up again. This dynamic monitoring of ad spend will help you maximize incremental growth and improve your RoAS.

Improve Your Amazon Ad Strategy with Pattern

Knowing your true RoAS is key to improving your Amazon performance. Advertising agencies and marketplace account managers often give you an inaccurate RoAS ratio or value, which only incentivizes you to spend more on advertising, ultimately increasing revenue for the agencies and/or marketplaces.

At Pattern, a 3P partner on Amazon and other marketplaces, we view our brands just as that: a partnership. When you win, we win. You succeed on Amazon by maximizing your ad spend and we have the data and resources to help you do just that. Accurate, transparent data and reporting will help improve your advertising strategy to drive more traffic to and conversions on your products. 

Ready to finally get your true RoAS? Contact us.   

Slowing Inflation is Music to Consumers’ Ears
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Slowing Inflation is Music to Consumers’ Ears

**Instrument Pricing Changes Tune Amid Record Inflation** Compared to 2022, consumers should expect to pay more for musical instruments, but the rate of inflation shows signs of slowing. **The backstory:** America’s most popular musical instruments saw a notable price increase in 2022 compared to 2021, but the rate of inflation eased in Q4 ’22. **Why it matters:** Slowing inflation within this product category could indicate economic pressures like increased demand, rising labor costs, and supply chain disruptions are easing across the consumer landscape. **What we’re seeing:** The average cost of musical instruments increased 7.5% from 2021 – 2022; however, when analyzing individual increases year over year, some instruments saw price increases as high as 21%. <iframe title="YOY Price Change for Instruments — 2022 vs. 2021" aria-label="Bar Chart" id="datawrapper-chart-02Lwk" src="https://datawrapper.dwcdn.net/02Lwk/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="379" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * Trombones experienced a 21.73% increase compared to 2021 * Trumpets +20.08% * Flutes +18.6% * Recorders +16.13% * Saxophones +13.63% * Clarinets +10.55% * Drums +5.41% * Ukuleles +5.17% **However:** Inflation among these same instruments was significantly less in Q4 ’22 compared to Q4 ’21. In some cases, prices decreased from Q4 ’21 – Q4 ‘22: <iframe title="Price Change for Instruments — Q4 2022 vs. Q4 2021" aria-label="Bar Chart" id="datawrapper-chart-6X6GZ" src="https://datawrapper.dwcdn.net/6X6GZ/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="379" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * Trombones +11.23% * Flutes +10.41% * Saxophones +5.94% * Clarinets +5.59% * Trumpets +3.10% * Recorders +2.85% * Drums -2.59% * Ukuleles -8.46% **Moreover:** Certain instruments saw inflation reverse in 2022. On average, prices for melodicas, guitars, and violas saw their prices decrease by 4.41%, 3.19%, and 0.97%, respectively. <iframe title="YOY Price Change for Instruments — 2022 vs. 2021" aria-label="Bar Chart" id="datawrapper-chart-0Tefk" src="https://datawrapper.dwcdn.net/0Tefk/3/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="259" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> **Diving Deeper:** Inflation was more significant when comparing Q4 ’21 to Q4 ’20 than when comparing Q4 ’22 to Q4 ’21, indicating a slowing down of price increases for consumers. <iframe title="YOY Q4 Price Change for Instruments — 2020 – 2022" aria-label="Stacked Bars" id="datawrapper-chart-p6iqt" src="https://datawrapper.dwcdn.net/p6iqt/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="206" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * In Q4 ’21, average prices for all instruments were up 8.89% compared to Q4 ’20. * When comparing Q4 ’22 to Q4 ’21, the average price for all instruments only increased by 2.65%. **The takeaway:** While consumers should expect to pay higher prices for instruments this year, overall inflation impact within this product category appears to be slowing down. With National Ukulele Day coming up on February 2, now is a great time for ecommerce brands to take advantage of slowing economic worries and reach new consumers. * Want Pattern’s data science team to power your brand with consumer insights like these? Contact us to [request more information](https://pattern.com/contact-us/) today.

Slowing Inflation? What Musical Instrument Pricing Tells Us
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Slowing Inflation? What Musical Instrument Pricing Tells Us

It’s safe to say consumers and brands alike are eager for a change to the pattern of rising inflation, steadily increasing in many ecommerce categories . Pattern’s internal team’s data scientists analysis of instrument pricing shows a glimmer of hope that inflation may be slowing, which would be great news for brands selling online.

At Pattern, we’re interested in and monitoring trends and news related to pricing since price is a key factor in a brand’s profitability (as explained in the Ecommerce Equation). When brands are able to optimize their price, conversions, and traffic, they can optimize their profitability. And profitability leads to better allocation of resources, better brand control, and gives leaders the ability to expand their presence to new markets worldwide.

YoY Instrument Pricing Increased at a Slower Pace

When analyzing the pricing changes of instruments from 2021 to 2022, our teams found that prices increased, but at a slower rate than from 2020 to 2021.

As shown below, the year over year Q4 changes show quite a lower rate of increase.

Inflation Improvements Raise Profitability

Because inflation impacts online shopping behaviors, lower inflation can lead to better overall profitability for brands. This idea, of course, is nuanced, but Pattern’s Ecommerce Equation can help illustrate the general principle.

When inflation rises, consumers change their spending habits. Shoppers spend more time researching products, forego premium, higher-priced brands, and buy more in bulk. Brands tend to see a loss of loyalty as they’re forced to raise prices.

Price is a key variable in the Ecommerce Equation: price x conversion x traffic = profitability. As inflation lowers, brands can expect better performance in all of these areas—more traffic as spending habits return to normal, higher conversion from returning customers, and price that better fits consumer demand. As inflation lowers and these variables stabilize, brands will see profitability increase.

Raise Your Profitability with Pattern

As an ecommerce accelerator, Pattern is obsessed with gathering data that helps our brand partners succeed. We’ve created best-in-class technology, models, and analytics to understand changes on the horizon and inform our decisions. With an incredible team of data obsessed Pattern employees, we see what makes the difference in truly great ecommerce performance and apply those learnings for brand partners. 

Ready to improve your profitability? Contact us here.