Exclusive article by China's well-off network
Text: "Xiaokang", reporter of China's well-off network, Yuan Kai
In the past ten years, the protagonists of the consumption carnival have changed again and again: head brands, Internet celebrities, live broadcast talents, and small and medium-sized businesses have never grabbed a place.
Photo / Haruko
The market never lies, and this year's Singles' Day is slightly on the wane.
In the past few years, on Double 11, the rookie post station in the community was piled up like a mountain of express delivery, and the trucks drove to the post station one by one, unloading the residents' harvest on time the night before. The staff of the rookie post station called several times a day to urge the owner to pick up the express, and they couldn't wait for the space of the post station to expand several times, and more of them were piled up on the road and the square of all kinds of packages. This year's Double 11, the rookie station seems to have become much more "idle", the successive reminder calls did not ring, and the stacked old cardboard in the scrap station was more than half the size. Before Double 11, the promotion games on various platforms are no longer hot on social software. Throwing meow candy, stacking cats, the content of the first two years of activities still exists in our memory, if you ask how the activities of each platform on this year's Double 11 are carried out, many people may not understand.
For Singles' Day, it is the small and medium-sized businesses that have lost their enthusiasm as much as consumers. On November 11, 2009, with a five-fold promotion as a gimmick, only more than 20 brands participated in the first Double 11, with a turnover of 50 million to make the online "shopping festival" an instant hit. In the past ten years, the protagonists of the consumption carnival have changed again and again: head brands, Internet celebrities, live broadcast talents, and small and medium-sized businesses have never grabbed a place. Marginalized, they have come to realize more and more what "the honey of the other is, the arsenic of mine".
"The lowest price on the whole network" kicked off Double 11
Unlike previous years, which kicked off with dazzling preferential activities, what started this year's Double 11 was the controversy of "the lowest price on the whole network". Due to the pricing problems of the brand in different channels, Hai's, JD.com, and the head anchor were involved in a Rashomon, and behind the multiple rounds of pulling by several parties, the core contradiction of "the lowest price on the whole network" entered the public eye.
Hai's claimed that JD.com lowered the price without authorization, making the price inconsistent across the network, and making Hai's bear the losses caused by the price reduction. Hai vehemently objected and issued a lawyer's letter, as a result of which JD.com further lowered the price to 5% off. JD.com responded that the price change was paid by JD.com out of its own pocket, and Hai's opposition was because it signed the lowest price agreement on the whole network with Li Jiaqi. Subsequently, Hai and Li Jiaqi both denied that there was such a "reserve price agreement". Haishi said that it had reported JD.com to the State Administration for Market Regulation in real name.
The full details of the incident are unknown, but it is not difficult to deduce a rough idea of such a commercial dispute. Generally speaking, the "lowest price on the whole network" is the core competitiveness of the top anchors. In order to enforce such agreements, brands must enter into price agreements with a large number of their distributors. Therefore, behind a "lowest price on the whole network", there are actually countless "negotiated prices" that cannot be lower than this price.
"Choosing one of the two" is a reasonable business means on the surface, but the essential purpose is very clear, not to "gather wool", nor to ensure the competition between upstream and downstream, but to squeeze out opponents and occupy the market with a higher attitude. Such actions ultimately harm the interests of consumers and the market as a whole. Inhibition of market competition may lead to damage to the rights and interests of suppliers and consumers, limit innovation capabilities, and is not conducive to long-term market stability. And for suppliers or merchants who rely on the platform, they may not dare to cooperate with other platforms for fear of punitive damages, which will limit their business expansion and growth. For small and medium-sized businesses, how to normalize their operations has become a problem after the price of their goods is at a disadvantage.
The positive hard bar between platform-based e-commerce and live broadcast e-commerce seems to indicate that the home of online sales has shifted from online stores to live broadcast rooms. This is undoubtedly another dilemma for small and medium-sized businesses. "It's hard to see the performance growth during the big promotion, and users basically go to the live broadcast room of the big anchor, and it's difficult to have traffic even if they spend money. The more hyped the event outside, the more uncomfortable it became. Xiaoya runs an online store for pet supplies, and in previous years she was able to rub off on the popularity of various shopping festivals, but this year she has no hope. The results of "Double 11" largely determine the performance of the store throughout the year. In previous years, Xiaoya would set up various lucky draws, full reductions, and free order activities in the store in anticipation of the popularity of the store. This year, Xiaoya has become Buddhist and no longer hollows out her mind to do activities. "My price has almost no advantage over the live broadcast room, and the calculation of various discounts is more cumbersome. ”
In fact, after the rapid rise of the sinking market, major e-commerce platforms have already adjusted their strategies. Following the sinking users who have not yet been activated by Pinduoduo circle fans, after the daily active users surpassed the mobile Taobao App for the first time in February 2021, Taobao launched "Taote" and JD.com launched "Jingxi", both aimed at benchmarking Pinduoduo. At the end of 2022, JD.com, which has long focused on high-quality purchase experience, took the lead in making changes, Liu Qiangdong said in an internal speech: "Low price is the most important weapon for JD's success in the past, and it will also be the only basic weapon of JD in the future." In June this year, Ma Yun reiterated the strategy of "returning to Taobao" in an internal speech of the Taotian Group that had undergone a split, which was also led by low prices. According to data from Huachuang Securities, Pinduoduo's GMV increased by 25% year-on-year in the second quarter of this year, higher than the industry average, and the growth rate is expected to be 22% in the third quarter, which will still lead the industry significantly.
On the one hand. Live e-commerce is eyeing up; On the other hand, e-commerce giants are collectively turning to low prices. Obviously, without subsidies, small and medium-sized businesses that cannot earn traffic have lost their way forward.
The rise of domestic products, the white card broke through
This year's Double 11 is the best example of the double-edged sword of low prices.
Taotian Group established a small and medium-sized enterprise development center, and JD.com's "Chunxiao Plan" drove a large number of small and medium-sized businesses to settle in...... Even so, in the face of the "lowest price on the whole network", most small and medium-sized businesses have to face problems such as cost compression. Some of them are "open" like Xiaoya, and some of them seize the heat to "emerge".
Although small and medium-sized businesses are still suffering from low prices, what makes them feel a little consolation is that the platform has given a lot of support. The efforts of e-commerce platforms in the long-tail market have enabled a series of unbranded and low-profile brands to seize the opportunity. JD.com, which is strong in self-operated channels, has launched hundreds of industrial belts in the "9.9 yuan free shipping" channel, and the turnover has increased by more than 10 times month-on-month, of which the number of merchants in the clothing industry belt, home appliance and furniture industry belt, and hardware city industry belt has increased by 248%, 141%, and 150% respectively. The number of individual and self-employed stores increased by more than 21 times year-on-year, and the managers of these new stores are all under the age of 30, and many star stores are from the industrial belt. Tao Factory is the main channel for Taobao white label products, directly connecting the source factories and consumers of the industrial belt through the M2C (Manufacturer to Consumer) model, and has successfully connected 1,800 core industrial belt manufacturers in 240 cities in 30 provinces and cities.
Brother Zhang, who operates casual clothing, took the plunge to participate in this Double 11, but what he didn't expect was that the result was not bad. Brother Zhang's store will have 100,000 fans. Previously, the only way for the store to get traffic was the "Juhuasuan" channel: "As long as the registration is successful, the probability of a hit is much higher than usual." However, the strict review of the platform has made small and medium-sized businesses more than they can handle. It is understood that for "Juhuasuan" products, the platform has extremely high requirements for the service, product quality and delivery speed of the store, and the overall evaluation of the reported products must be higher than 4.5 points. This year, the threshold for small and medium-sized businesses to participate in the event has been lowered a lot. Counting Double 11, Brother Zhang has now successfully participated in 4 platform promotions, which means that the store has obtained 3~5 times the usual customer flow.
Xiaoya believes that her pet products are all well-known brands, and there is very little room for price reduction, which is the most essential difference from some "white label" products. "Correspondingly, their costs are much lower, and there is much more room for price reduction. In addition, unbranded products will hardly enter the live broadcast room. Xiaoya said.
"The brand is not necessarily good, the white label is not necessarily bad, consumer demand is diversified, some things must be bought brand goods, such as mobile phones, and some things are enough to buy white labels, such as garbage bags. Wang Hai, president of the small and medium-sized enterprise development center of Taotian Group, believes that hundreds of millions of white-label goods contain a huge market.
In addition, domestic products have become the first beneficiary group of this round of price war. Before Double 11, the Huaxizi incident had already started the heat for domestic brands. On this basis, this year's Double 11, domestic products have become a rare winner. The data shows that on Tmall, 243 domestic brands have entered the "100 million yuan club"; On Pinduoduo, the sales of domestic beauty products such as Bee Flower, Yu Meijing, Shanghai Medicated Soap, Kong Fengchun, Pechoin, and Proya have increased significantly, and the sales of some hot-selling products have increased by more than 20 times; At Vipshop, the post-95s generation has become one of the fastest-growing groups in the purchase volume of domestic products on the platform, and the post-80s and post-70s generations are also increasingly recognizing domestic brands.
Small and medium-sized businesses should not be involved in disorderly competition at low prices
"Tens of billions of subsidies" has become a high-frequency word this year. In recent years, various platforms have put forward the concept of "low price and high quality", and launched a series of merchant support and traffic subsidy measures.
Although low price is important, it is only one dimension of e-commerce in the final analysis. Forcing low prices for the sake of traffic is not good for the health of the industry as a whole. "Nowadays, low-price competition seems to have become the basic trick of e-commerce platforms, but merchants can really make money and not fall into the dilemma of losing money and making money, so that the industry can usher in the next wave of growth. Many e-commerce practitioners said.
The implementation of low prices, high quality is the key. In the run-up to Double 11, major domestic e-commerce platforms have successively announced low-price marketing strategies. Tmall directly put forward the concepts of "the lowest price on the whole network" and "dynamic price comparison on the whole network", while Jingdong put forward the concepts of "really cheap" and "tens of billions of subsidies" with a clear goal, and the two sides carried out propaganda around "buy expensive and pay for it". Douyin chose to advance the pre-sale time and directly launched "direct drop" discounts, while Kuaishou proposed promotion concepts such as "price competitiveness" and "big brand supplement" for the platform to subsidize top brands and products. Xiaohongshu superimposes platform coupons on the basis of the buyer sales model, and also puts forward the concept of "good goods are not expensive". Pinduoduo, which has always regarded low prices as the feature of the platform, has also played slogans such as "every day is Double Eleven" and "single piece reduction" to increase subsidies. However, blindly emphasizing low prices will inevitably give unscrupulous people an opportunity to take advantage of the product quality. This year's Double 11, fakes have sprung up like mushrooms after a rain: fakes are rampant on e-commerce overseas shopping platforms, and the price of Japan's SK-II big red bottle cream is only three or four hundred, and all of them have been identified as fakes. Wang Hai, a professional anti-counterfeiter, also claimed that the Hetian jade necklaces sold in some head live broadcast rooms were not made of Hetian jade, which caused a controversy.
Ensuring consumers' "good goods, good prices" and "good goods are not expensive" is inseparable from another key part of the ecology - upstream supply brands and merchants. If you insist on the "low price" that allows merchants to make profits, merchants will not be able to improve the cost performance of goods, and will only fall into a vicious circle of low quality and low price, and it is almost impossible to achieve a win-win situation for the platform, merchants and consumers. What should be noted more is that compared with the head merchants, small and medium-sized businesses do not have the ability to frequently make profits at low prices.
Low price does not equal cheapness, let alone low quality. There are multiple reasons for low prices, such as new product promotions, destocking, supply chain, etc. In general, the low price brought by optimizing the supply chain or the cost advantage of large-scale procurement is a healthy business consideration. Industry insiders believe that the low-price strategy should abandon the disorderly competition and ineffective competition purely based on price considerations, and low prices are not the same as consumption downgrades, and consumers pursue higher cost performance, which is both a challenge and an opportunity for the supply chain of small and medium-sized enterprises.
Taking JD as an example, at this year's JD Double 11 Media Open Day, JD Retail CEO Xin Lijun said that JD's low prices have always been to provide consumers with more abundant low-cost goods at the same time, with more quality and service as support. Through the method of "no pit fees and no talent commissions", JD.com hopes to make money for brand manufacturers and the upstream and downstream of the industrial chain, and also allow consumers to enjoy the benefits to the greatest extent.
Under the wave of low prices, where should small and medium-sized businesses go? The person in charge of the ecological operation center of the small and medium-sized enterprise development department of Taotian Group pointed out that businesses in different segments have different development aspects. Fan-type featured sellers can meet the needs of users for curiosity and new hunting; The source of the industrial belt can meet the needs of users for cost performance; Original brand merchants can grow with the advent of the content era; Channel trade-oriented merchants have the advantage of scale and can "exchange price for volume".
In the fifteenth year of "Double Eleven", after the tide of low prices recedes, creating value and stimulating the economy may still be the original intention that all kinds of e-commerce companies should adhere to.
("Xiaokang", exclusive article of China's well-off network)
This article was published in the early December 2023 issue of Xiaokang