Pinduoduo transforms Double 11

The Double 11 e-commerce promotion has entered its fifteenth year, and the focus of competition on major platforms has returned to low prices.

On the eve of the big promotion, Taobao and Tmall set the "lowest price on the whole network" as the core KPI of Double 11, claiming that the prices of more than 80 million products will drop to the low point of the year; JD.com announced that the theme of Double 11 is "Really Cheap"; Pinduoduo proposes "every day is really low"; Douyin announced that "single products will be reduced by 15%"; Kuaishou also announced the "big name 10 billion supplement" policy.

Behind the fancy slogan is the price power competition of major e-commerce platforms. In order to allow consumers to feel the low price more intuitively, major platforms have taken the official direct drop as the core gameplay, and the cross-store full discount, coupons, etc. are still retained, but they no longer occupy the most eye-catching position.

The anchors with goods have also made a fuss about the price. Taking Taobao Live "First Brother" Li Jiaqi as an example, the theme of its Double 11 is "Low, Low, Low, Look at Li Jiaqi on Double 11", and the five "lows" point to the low-cost pallets provided by the platform, various preferential subsidies, and Li Jiaqi's unique gameplay such as red envelope rain in the live broadcast room.

Up to now, major e-commerce platforms have announced the first phase of Double 11. Driven by low-priced pallets and large-scale advertising, all major platforms have made a good start, and sales of major categories have increased significantly.

On October 26, Pinduoduo released the battle report for the first three days of the Double 11 promotion, and the number of brands and products participating in the promotion hit a new high, and more than 20 categories doubled; Sales of fruits, tea drinks, beauty, small household appliances, computer hardware, high-end musical instruments and other goods increased by more than 110% year-on-year.

Cost-effective ratio has always been Pinduoduo's strength. This year's Double 11, Pinduoduo's 10 billion subsidy has launched a variety of new ways to play, such as "single piece reduction" and "daily discount", etc., and launched services such as buying expensive and compensating, price reduction and making up the difference. This makes the already affordable items on the platform even more appealing.

According to the statistics of 36Kr survey, in the four main e-commerce categories of cosmetics, shoes, clothing and bags, 3C electronics and food and beverage, Pinduoduo occupies a certain price advantage in the three categories of cosmetics, 3C digital and food and beverage.

However, Pinduoduo does not want to get involved in a one-sided price war. Unlike other platforms that have anchored the lowest price, Pinduoduo is trying to buck the trend and redefine "consumption upgrading".

Consumption upgrading is not a new concept. It emerged around 2016, and under the advocacy of some e-commerce platforms, it became the focus and direction of Internet retail for a while. Replacing affordable and affordable goods with so-called "light luxury" is not only an advertising trick for merchants, but also a new consumption habit for many people.

But after 2020, the magic of consumption upgrading has gradually dissipated. Consumers are more price-sensitive and are no longer willing to pay for the "added value" of goods under various names, which promotes the sinking of e-commerce prices and evolves into the battle for the lowest price on Double 11.

At the same time, consumers who have experienced the last round of consumption upgrades, although most of them have given up "light luxury", have formed an intuitive perception and consumption preferences for high-quality goods. They don't blindly go for cheap, but want to create a new balance between price, quality and brand, and buy the right products at a reasonable price.

This new balance to be established is the new connotation that Pinduoduo hopes to give to consumption upgrading on this year's Double 11. It hopes to meet the rational consumption needs of new middle-class, white-collar workers, Bao Ma, post-00s and other global consumer groups on the basis of more favorable prices than usual, as well as better user experience and platform services. This consumption upgrade is not only against the wind, but also for the future.

A

Price power has always been one of Pinduoduo's core capabilities. Driven by Pinduoduo, the supply of goods and consumer demand scattered in different time and space are accurately connected through the mobile Internet platform to improve matching efficiency and reduce intermediate links, thereby greatly reducing costs and ultimately achieving high cost performance on the consumer side.

The 10 billion subsidy launched in June 2019 is a key piece of the puzzle for Pinduoduo's price power. As a concentrated demonstration of Pinduoduo's comprehensive combat capabilities, the 10 billion subsidy started from 3C digital, and soon covered all categories, including agricultural products, and rose to a long-term strategy. In just 100 days, the active users of Pinduoduo's 10 billion subsidy entrance exceeded 100 million.

Pinduoduo has built an "affordable" user mindset. At the same time, competitors are picking up the pace.

Major e-commerce players such as Tao, JD.com, and Douyin have taken lowering prices as the direction of their efforts after going around and around. Especially after 2023, in the two big promotions of 618 and Double 11, the price has become the commanding heights of the competition.

The gene of Double 11 is low price. It is not surprising that e-commerce platforms have resumed price wars on 11.11; Taotian has listed the "lowest price on the whole network" as a key assessment indicator for each business department. The price competition of this year's Double 11 is fierce and rare in recent years. Some people joke that the e-commerce industry is "pinduoduo" on the whole network.

In the face of approaching competitors, even if Pinduoduo has a strong foundation of tens of billions of subsidies, it cannot easily "lie flat". In recent years, it has been increasing its participation in e-commerce promotions such as Double 11, and tens of billions of subsidies are still the main starting point.

On the one hand, more and more branded goods are included in the scope of subsidies. The relevant person in charge of Pinduoduo's 10 billion subsidy said that compared with last year, this year's double 11 billion subsidy brand commodity pool is expected to increase by 110% year-on-year, and the growth of domestic goods such as beauty, toiletry, stationery, clothing, and cleaning is the most significant.

On the other hand, the gameplay of tens of billions of subsidies is also more abundant. On this year's Double 11, Pinduoduo launched the "single piece reduction" for the first time, superimposing the price drop on the basis of subsidies, and there is no upper limit on platform investment; More than 20,000 brand products participated in the first batch of this event.

In addition, at the main venue of the promotion, Pinduoduo launched an annual price reduction list, brand discounts, direct 100 yuan and other activity areas to meet the diverse needs of different consumers for cost-effective products; It also cooperates with hundreds of domestic and foreign head brands in the fields of mobile phones, home appliances, beauty, clothing, mother and child, FMCG, cleaning and care, etc., to launch the "Ten Billion Big Brand Day" to facilitate consumers to purchase cost-effective brand products in different vertical categories.

In addition to price competition, e-commerce platforms also spend more resources on price to attract consumers with experience and services.

For example, Taobao Tmall, JD.com, Pinduoduo, etc. have all made promises such as "if you buy expensive, you will pay for it" to reduce consumers' worries as much as possible. In addition, JD.com and Pinduoduo have also raised the banner of "no pre-sale" to reduce the complexity of shopping.

The experience improvement and high-quality service on top of the low price of Double 11 are the incremental value provided by major e-commerce platforms. However, these games still do not go beyond the low-price category; If e-commerce wants to maintain low prices and upgrade consumption, it will inevitably involve more extensive and in-depth all-round changes, and this is also the direction that Pinduoduo is exploring.

B

The last wave of consumption upgrades on Double 11, led by platforms such as Taobao, Tmall and JD.com, was once vigorous, but eventually died down, and the aftermath of the failure continues to this day.

Around 2016, consumption upgrading has become a hot spot in the entire Internet business ecology, and e-commerce platforms and major brands are at the forefront. Taking the beauty track as an example, in this artificially driven wave, the prices of domestic brands such as Huaxizi, which have not been born for a long time, continue to rise, and even reach the same level as international brands.

However, the unilateral price increase that lacks solid support is only an illusory consumption upgrade after all.

After 2020, as consumers reduced their non-essential spending and the consumption upgrade bubble burst, a large number of emerging brands showed their true colors and lost their former glory. A symbolic event is that on this year's Double 11, Huaxizi fell out of the TOP20 of the first-day pre-sale list of Tmall makeup category.

The end of the first wave of consumption upgrades not only proves that low prices are the first competitiveness of Internet retail, but also makes people think about the true connotation of this new concept. A gradually formed consensus is that consumption upgrading is not about extravagant consumption beyond our ability, but about buying better goods at preferential prices.

Rational consumption has always been the background color of consumption upgrading. It is not for Shanghainese to live the life of a Parisian, but for consumers in Anqing, Anhui Province, to have kitchen towels to use and high-quality fruits to eat. This also means that in order to promote consumption upgrading, e-commerce platforms need to do not provide high-premium products, but exceed user expectations and provide consumers with cost-effective products.

This year's Double 11, consumers are redefining consumption upgrading with practical actions. The relevant person in charge of Pinduoduo's 10 billion subsidy said, "During the big promotion, the user's consumption concept is to be rational and upgrade at the same time. For example, white-collar workers and middle-class people in first-tier cities have purchased more fruits, cat food and digital products with tens of billions of subsidies; Bao Ma and post-00s in third- and fourth-tier cities have purchased more big-name domestic products in categories such as beauty, home appliances and sports with tens of billions of subsidies. ”

In the face of the new consumption concept, Pinduoduo has upgraded its brand product pool, user experience and platform services.

On this year's Double 11, Pinduoduo's 10 billion subsidies continued to expand its coverage, and the brand product pool more than doubled compared with last year. The number of domestic brands and high-quality agricultural merchants participating in it has increased by more than 2 times, and there are more than 700 first-line beauty brands at home and abroad.

In addition, Pinduoduo's preferential strength and service capabilities are also improving. On the basis of tens of billions of subsidies, "single piece reduction", "daily discount", annual price reduction list, brand discount area and other ways to further reduce prices; There are no pre-sales, expensive purchases must be compensated, price reduction to make up the difference and other services, continue to improve the consumer experience and after-sales protection.

The breadth and depth of the brand product pool, coupled with higher cost performance, better service and experience, provides ample space for consumption upgrades and stimulates consumers' willingness to participate.

During the Double 11 period, the number of subsidized users of Pinduoduo exceeded 620 million. Among them, the order volume of users in first-tier cities increased by 113% year-on-year, and the order amount in fourth- and fifth-tier cities increased by 167% year-on-year.

In addition to the increase in orders and spending, consumers are also showing a greater preference for improved products. During the promotion period, the sales of Pinduoduo seafood, imported snacks, computer hardware, high-end musical instruments and other vertical products increased by more than 110% year-on-year, and the sales of pet brands increased by more than 600% year-on-year.

Taking digital home appliances as an example, during the Double 11 period, brands and products such as iPhone, Huawei, Honor, Xiaomi, OPPO, OnePlus, Midea, Haier, Galanz, and TCL got off to a good start, and more than 20 sub-categories doubled.

At the same time, many users in second- and third-tier cities bought new home appliances in Pinduoduo, driving the sales of high-end home appliances to increase by 4 times, of which Xiaomi, TCL and other brands of popular TV products increased by 258%. New high-tech home appliances such as washing and drying sets, sweeping and mopping integrated robots, floor scrubbers, dishwashers, and high-speed hair dryers have also become hot-selling products.

The relevant person in charge of Pinduoduo's promotion said: "From the perspective of momentum, the consumer demand for this year's promotion is full of stamina, and the subsidy of 10 billion yuan has also become the preferred platform for user consumption upgrading and replacement." ”

C

As the most important e-commerce promotion of the year, Double 11 is facing a completely different market environment after 15 years and is in urgent need of a self-innovation.

At the beginning, low price was the most important label of Double 11. More than 20 brands that participated in the inaugural Double 11 in 2009 increased their sales by 10 times with amazing discounts on the same day. By 2012, Double 11 had been on the rise, and Jack Ma declared that he wanted to take the opportunity to get rid of the "inflated prices of commercial real estate", and in the final analysis, he still regarded low prices as the top priority. In 2023, after an unsuccessful price increase, Double 11 seems to have returned to the origin of price competition.

But compared with fifteen years ago, there are many new elements in this year's 11.11 low-price competition.

After years of baptism in Internet retail, consumers have a new understanding of the connotation of low prices. Many people are very price-sensitive, but they don't demand the lowest price, but want to strike a balance between price, quality and brand, preferably with identity attributes and aesthetic value.

Double 11 in 2023 also needs such a new concept. The major e-commerce platforms have sounded the clarion call for a price war, but the connotation of this war should not be limited to low-level, high-intensity hand-to-hand combat, but all-round competition on the basis of low prices.

Looking at the broader e-commerce market, consumers' pursuit of "good prices and good products" has become a trend. According to the "2022 New Middle Class White Paper" released by Wu Xiaobo's channel, the new middle class with an annual income of hundreds of thousands of yuan buys the ultimate cost-effective products from Pinduoduo on the one hand, and spends more money on the other hand to pursue spiritual "luxury experiences", such as camping, fitness, and watching performances.

This prompts e-commerce platforms to seek to establish new value dimensions in addition to price wars, and then precipitate into competitive advantages.

Pinduoduo's solution is to redefine "consumption upgrading" through tens of billions of subsidies. By continuing to subsidize high-quality brands and products on a large scale, the platform has lowered the overall price of high-quality pallets, and consumers have gradually moved up the price range of shopping in Pinduoduo; Mid-to-high-end items that used to exceed spending budgets are now affordable, and even repurchased frequently.

Chilean cherries, for example, are expensive and difficult to store and transport. On this year's Double 11, Pinduoduo subsidized this category, and the sales of Chilean cherries for the first pre-sale increased by more than 80% year-on-year.

For another example, the graphics card, which is the core component of a game computer, costs thousands of yuan for a single chip, and the price of the flagship model is as high as more than 10,000 yuan. During the promotion period, NVIDIA's high-end gaming graphics cards on the platform were the most popular, and the sales of single products increased by more than 300% year-on-year. Pinduoduo is becoming one of the main e-commerce channels for gamers to update their devices.

This ongoing consumption upgrade is bound to continue beyond Double 11. Pinduoduo previously put forward the slogan of "Double 11 every day"; In addition to more cost-effective goods, its connotation obviously also includes all dimensions of consumption upgrading.

11.11 has always been the vane of the e-commerce industry, and now it is standing at the crossroads of change. This year's Double 11, major e-commerce platforms have given their own answers, and consumption upgrades with new connotations are expected to become the mainstream direction in the future.