Double 11 price war, what is the consumption logic behind the low price

No. 4052 Cultural Industries Review

"You can buy expensive, you can't buy expensive" has become the main trend of young people's consumption, and the low-price model has once again become one of the most effective strategies for merchants. This year's Double 11, the e-commerce platform changed the bells and whistles of previous years' consumption rules, directly announced the rejection of routines, started a price war, and more offline retail launched a counteroffensive, physical supermarkets launched more discounted goods, and with the label of "limited rush to buy" to promote consumers to offline consumption, different from the past marketing model of planting grass and then promoting consumer behavior, the path of platform and brand transformation began to promote consumption action first - placing an order, Then, data-driven refined behavioral insights should be the top priority in the next step of brand strategy.

author

| wheat

(Author of Cultural Industry Review, Researcher of Sanchuan Huiwen Cultural Tourism and Sports Research Institute)

Editorial 

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Edit | peninsula

Source | Cultural Industries Review

According to the book "The Psychology of Shopping: What Customers Really Want", shopping is a way to be happy. The underlying psychological logic of shopping is also one of the important factors affecting consumers' mood.

Recall that the original intention of Taobao Mall to launch Double 11 is to use low prices to "let consumers have fun once a year", and obtain the happiness and satisfaction of shopping in the simple and crude but real "5% off" discount.

In today's digital world, once-happy consumers are gradually desensitized in the turnover of new and old platforms and complex gameplay. E-commerce platforms have undoubtedly entered the era of stock that urgently needs to find a new direction from the era of exploration and the expansion of the territory in the end.

When Singles' Day enters a "mid-life crisis"

In 2009, the "Double 11 Singles' Day" was born, and consumers at that time looked at the products on the e-commerce platform with their eyes shining just like the "singles" promoted by Taobao when they saw the objects of their hearts.

15 years have passed, Double 11 has become more and more durable, but consumers are becoming more and more tired in the complex business routines.

The strong advocacy of e-commerce anchors, the overwhelming shopping advertisements, and the frequent rules of Double 11 just verify this, "receiving allowances", "grabbing red envelopes", "consumption vouchers" and "paying deposits", making the annual Double 11 a math test.

What's even more outrageous is that the operation is as fierce as a tiger, and the result is only two dollars and five. This is the promotion period, in order to ensure their own interests, merchants often screen customers at the level of willingness to pay by raising prices first and then reducing prices.

And consumers are also gradually returning to reason in the impulsive consumption of the initial "honeymoon period", rather than dizzy research rules, it is better to lie flat directly. Last year's Double 11, Ali said that for the first time, it did not announce the GMV record to the outside world, and only ended the game with a sentence of "stable and good, and the transaction scale is the same as last year". This also shows from the side that consumers and e-commerce have gradually entered a "mid-life crisis".

Competitors who have entered the game have unanimously said the lowest price

Over the years, Double 11 can be regarded as an e-commerce battle, the battle for low prices makes this year's war more intense, of course, this is also closely related to the change of the industry pattern, in addition to the fight of the old traditional e-commerce, there is also the rise of upstart social e-commerce, at the same time, all kinds of offline supermarkets have also begun to enter the game.

Consumers are unwilling to stand up, and sellers will sink. On this year's Singles' Day, the strategies of various platforms have become surprisingly unified – emphasizing the lowest price.

The battle between the old traditional e-commerce companies is still fierce

Pinduoduo, which was once ridiculed by the group as a "fake goods distribution center", has become an e-commerce platform alongside Taobao and Jingdong by relying on "tens of billions of subsidies". The birth of tens of billions of subsidies not only turned Pinduoduo into a profit in the second quarter of 2021, but also impacted the low-price shopping model that was originally exclusive to the big promotion node.

Since the end of last year, Liu Qiangdong emphasized in internal meetings that "low price is the only basic weapon", and this year's Double 11 began to re-use "low price" as its own label. And adjusted the organizational structure, opened up self-operation and POP, increased support for the participation of small and medium-sized businesses, and followed the example of Pinduoduo to launch a subsidy channel of 10 billion yuan, so that merchants with lower prices will be given priority to be selected. In addition, JD.com has also launched the price insurance function and spot sales model, using its own logistics advantages to provide more than 400,000 physical stores with "free shipping hours for all categories" service, and through online traffic to feed offline stores, to achieve omni-channel growth.

Taobao has also set the "lowest price on the whole network" as the core goal of this Double 11, and the assessment goals of previous big promotions have often focused on indicators such as turnover and the number of daily active users. On the basis of the original cross-store 300 minus 50, the official direct reduction model was launched on a large scale for the first time, returning to the original intention of the Double 11 launch - simple and direct benefit to consumers.

The upstart social e-commerce has entered the situation like a bamboo

Douyin, the transformation of short video, also vigorously supported the platform's mall in this Double Eleven, and opened the rush mode, since October 20, the official opening of the Good Things Festival, according to the official website data, as of October 23 alone, the overall GMV of Douyin Mall was 200% of the same period last year, of which clothing, food and beverage, beauty, daily chemical mother and child, 3C home appliances Many brands in the five major industries have shown explosive growth in the first week.

Xiaohongshu, which has always been focusing on "planting grass", has made wedding dresses for old e-commerce companies for many years, and also cut off the external link of cooperation with Taobao on this Double 11, supported bloggers such as Xiaohui and Dong Jie in the platform, and implemented the strategy of "integrating one store", evolving from a traffic pool that diverts traffic for e-commerce platforms to a path of building a mature e-commerce platform.

Offline supermarkets participate in the melee

The low-price model has not only penetrated into e-commerce, but also opened up offline. With the recovery of supermarket consumption after the epidemic, the real economy has also begun to study more tricks, and local life vouchers such as meal coupons, hotel coupons, and transportation coupons have also become one of the consumption trends of this year's Double 11.

Hema even directly stated that "online and offline prices are different", announced the launch of discount reforms, and comprehensively optimized the supply chain, and more than 350 Hema fresh stores across the country launched "offline exclusive prices" at the same time. Through the price comparison of netizens, it was found that the price was basically more favorable than the market of the same quality and specifications.

Yonghui Supermarket is directly adding "authentic discount stores" in the store, and select a part of the new products, Internet celebrity products and conventional products to enter the discount product pool every day, and sell them at a discount according to the specific situation.

Chen Liping, a professor at Capital University of Economics and Business, once said at the 2022 CCFA Supermarket Development Strategy Summit Forum that discount stores are not a retail industry that only relies on low-price sales of goods, but an innovative format in the development of supermarkets. He pointed out that the core of business innovation is how to create a low-cost management system and system.

The consumption logic behind "low prices".

There are thousands of routines in the world, and low prices can certainly win people's hearts, but the low prices that the whole industry is rolling up have also brought heavy pressure to sellers.

When it comes to the battle for the "low price" strategy of Double 11, there are different opinions.

Dong Mingzhu, chairman of Gree Electric Appliances, said, "From the perspective of cost, the price online should be more expensive than the offline, and it must be unreasonable for the online to be cheaper than the offline. If it (excessively) fights low prices, it must cut corners, otherwise it will not be able to support it. ”

Bai Wenxi, chief economist of IPG China, also pointed out that discounters need to continue to provide low-cost goods, and also need to ensure the quality and profit of goods, and controlling costs has become a new challenge for enterprises.

It can be seen that whether it is online or offline, there are high risks in the low-price model.

So why do merchants still have to "lose money and make money"?

Compete for market share: Earn before you make money

In the mature market structure of China's Internet industry, the era of a small number of deep-pocketed players grabbing a large share of the market is over.

Not only are new and old e-commerce forces fiercely competitive, but offline local merchants have also begun to digitalize their operation models.

The market is saturated with the entry of multiple forces, and as the boundaries between businesses become increasingly blurred, the industry will also usher in a period of brutal price wars pointing to declining profits and difficult prospects.

In order to gain more market share and a more loyal user mind, the strategy of fighting low prices is obviously more immediate.

Crowd data capture: Establish platform assets from the behavioral side

The current low-price competition pattern is essentially a change in the consumption logic of consumers, and the younger generation of consumers is difficult to be changed by the brand tonality in the advertisement, but they are willing to place an order for the real discount in one second.

From a behavioral point of view, the benefits brought to the platform by placing orders at a "low price" are not only the sales of goods during the node promotion, but more importantly, the connection between the platform and consumers through the behavior of "placing an order" and establishing a relationship.

The era of self-talk propaganda has passed, and marketing in the digital era has begun to rely on behavioral data, through the analysis of crowd assets refined to the granularity of commodity SPUs, to help brands gain insight into the cognition, attraction, planting and conversion of the crowd from the product dimension, open up the connection with consumers in the full-link marketing link, and accumulate massive data.

Therefore, trapping these users who place orders is equivalent to establishing a huge crowd asset pool for the platform and brand, and on this basis, follow-up operations will be carried out, which will become an effective way out under the current involution pattern.

Conclusion: The next step for the merchant is to point to "the flower"

Compared with shopping, the voice of "saving money" is obviously more popular among young people. This is also the reason why each company emphasizes low prices.

However, as long as you observe the transaction data of various e-commerce platforms, you can know that the proportion of young people's consumption is still far ahead, and "saving money" is more like a challenge game for them.

The hot pot of 200 is said to be eaten, and the napkin of two yuan is resolutely not used.

For the new trend, in line with their own preferences of large-value goods, young people are not soft when placing orders, for goods that are not worth it, even if they are cheap, they are also deducted and searched, behind these seemingly contradictory consumption concepts, it is precisely the unique consumption self-consistency of young people - the province should be flowery.

According to the "2023 Douyin Consumer Goods Marketing Report", consumers tend to "pragmatic consumption upgrades", and the consumer market is showing a trend of rationality and the pursuit of cost performance, which shows that the lowest price is not the main demand of consumers, and the sense of quality and cost performance are equally important.

As for how to "spend the flowers", it is also necessary to have in-depth insight into the data crowd assets established by the platform, and the multiple needs of the subdivided consumers are the benign development of the platform and enterprises.

bibliography

Blue Whale Finance

 "Supermarkets blow "outlet wind", Yonghui and Wumart open discount stores to "save themselves"

Nanfang Daily "The Competitive Puzzle Behind the "Low Price" of Double 11"

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