The "automatic price following" launched by e-commerce platforms has forced hundreds of millions of merchants to be anxious

Entertainment Capital

2024-06-06 23:43Posted on the official account of Beijing Entertainment Capital

Author |Not empty

Hundreds of millions of merchants should not have expected that in this year's particularly difficult 618, they were "cut" by the platform first.

At the end of May, the mid-year promotion was in full swing, and Pinduoduo, the "catfish" in the e-commerce industry, took the lead in throwing out a thunderbolt: a new tool for automatic price matching was launched for merchants. According to the official, this function is to help merchants turn on the automatic price matching of resource slots and reduce the drop of resource slots. In other words, automatic price matching has formed a certain degree of binding relationship with the traffic and sales volume that merchants can obtain.

Once the merchant turns on this feature, Pinduoduo can analyze the selling price of competing products in real time and help the merchant automatically adjust the price to grab users at a lower price. In the e-commerce environment where low-price competition is becoming more and more fierce, Pinduoduo's move is tantamount to a strong medicine, and merchants are constrained by traffic, or actively or passively join the price comparison war, and pierce the lower limit of the price of goods back and forth.

From the perspective of consequentiatry, the more fierce the confrontation between merchants at the price level, the greater the room for consumers to benefit, and the strong stimulus from the outside world can also awaken the slightly sluggish consumption power, which seems to be a perfect inference in the current e-commerce era.

At present, this price comparison function gives merchants the right to participate independently, but merchants tend to be cautious about this function.

"As long as you open the page of the back-end marketing campaign, this pop-up window will pop up from time to time." Qiqi (pseudonym) and her husband run a jewelry store in Pinduoduo, "The profit margin of small commodities is not high, and if the price is reduced, it will really be a loss." ”

Some brands have shown a tough stance, "I will never open this function, and I will close the store if it's a big deal." "A women's clothing brand that has grown rapidly in the past two years has opened a store in Pinduoduo, and its founder Xie Jin (pseudonym) said Xiang Chop.

图源:pexels

Although the reaction of merchants is not yet completely clear, the actions of many e-commerce platforms are already menacing.

Before Pinduoduo, Douyin e-commerce had tested the "automatic price change" function on a small scale. The "preferential price promoter" launched in early March is also a warm-up for the price comparison function. Taobao's recent actions are also exerting efforts in the low-price war, and even began to limit the flow of high-priced goods. Jingdong is led by the increasingly popular procurement and sales team, and has raised the banner of "manual price comparison".

A new low-price tug-of-war has begun.

Although this e-commerce price comparison war is not a mandatory move, hundreds of millions of merchants have been involved.

"In the past two days, we have received several calls from Xiao Er, urging us to open automatic price following, saying that if we don't open it again, we will lose our resource position." Compared with the promotion of previous marketing campaigns, Qiqi can clearly feel Pinduoduo's eagerness this time.

Some brand merchants also revealed to Chop Pepper, "Pinduoduo Xiaoer directly asked about the profit margin of our store, just to let us open this function." ”

What makes merchants most anxious is the traffic allocation behind the price comparison system.

Price is increasingly becoming a core element of traffic allocation for e-commerce platforms. Compared with traditional e-commerce platforms such as Taobao and JD.com, the decision-making process of users in Pinduoduo is simpler and more direct, mainly driven by price. If the prices converge, the platform's recommendation mechanism comes into play, which directly affects the sales of the product.

It has become one of the trends of e-commerce that traffic is tilted towards low-priced goods. Xie Jin is deeply aware of this, and his women's clothing brands have layouts in Taobao, Jingdong, and Douyin. "Taobao and Douyin invariably restricted the flow of high-priced goods during this year's 618 period, and many stores with high customer unit prices had no traffic at all."

图源:pexels

JD.com is not far behind. Screenshots of JD's procurement and sales team's request for "low price" have been circulated on social media, and the label of "lower than XX (e-commerce platform)" is clearly hung on the product page of JD.com.

When the platform redistributes the traffic on the site in the way of circular price comparison, many merchants will fall into a passive situation. Qiqi said that after refusing to turn on this function, the store's sales plummeted, "The platform obviously doesn't push us anymore." ”

It seems that merchants have the right to choose, but the associated effects of rejecting option links have blocked the back path of many merchants. "The platform uses traffic to urge at the front desk, and Xiao Er calls to chase behind."

It is not unreasonable for merchants to be particularly sensitive to the automatic price matching function. The main reason is that the uncertainty caused by the setting of the price comparison system has shifted the pricing power that was originally held in the hands of merchants.

"Although the background system shows that merchants can automatically modify the price reduction ratio and range, after we change it, the platform will still change it back, and we have no way to control the price at all." After trying the price comparison function of Pinduoduo and Douyin, Zhang Ting, an e-commerce operator of a book brand, found this problem, "This means that books that cost thirty or forty may be sold for a few yuan in this price comparison system." ”

Stimulating sales through extremely low prices is indeed an operational strategy for merchants. However, this strategy has its own targeted commodities and sales nodes, "Generally, it is the inventory book or the expiring product that will choose to sell quickly at a low price to reduce the inventory pressure." After all, this kind of product, even if it is sold at a loss, is better than smashing it in your own hands, and it can reduce some losses. ”

"When it comes to the big promotion node, the brand will also launch several low-priced products to attract traffic to the store in the form of welfare products." In Zhang Ting's view, behind these low-price operation strategies, merchants still enjoy pricing power. However, once participating in automatic price comparison, the active position of merchants will decline, which will affect the overall operation of e-commerce.

In fact, platforms have long been involved in the merchant's pricing process.

"When we put products on the shelves, the platform will check the price of the goods, and judge the merchant's pricing based on the price of the same product on the site, and if the price is too high, the platform will issue a warning to the merchant." Kiki reluctantly said that small commodities such as headbands, necklaces, and rings do not have excessively high commodity barriers, and can only be rolled up at an accelerated rate.

In this round of price comparison war on e-commerce platforms, merchants of different types and sizes have also suffered different degrees of impact.

A brand merchant judged to Chop Pepper, "The most affected by the automatic price matching function is definitely the small merchants and white-label merchants with single-channel operations, which are relatively weak in terms of overall operation and supply chain, and are more likely to be affected by platform policies." ”

As he said, there are indeed many individual businesses and white-label businesses that have been affected.

Kiki's experience is the epitome of self-employment. "Merchants like us often take goods from familiar factories, and the profit margin is not high, and it is difficult to continue to compress the price. In addition, the cost of normalized investment for self-employed individuals like ours will not be very high. This means that it is not only difficult for individual merchants represented by Qiqi to occupy an advantage in the price comparison system, but also difficult to break through their own operational capabilities after rejecting the platform's price comparison requirements.

"In the past two days, I have heard intermittently about the news that the sales volume of merchants are hanging zero." Speaking of this, Kiki couldn't help but become anxious again.

In fact, in the face of the strict price comparison system, the investment methodology accumulated by e-commerce operations is currently powerless. A home textile brand operator told Chop Pepper that after the price comparison system was implemented on the e-commerce platform, it was difficult for merchants to obtain traffic growth even if they used heavy money to invest in Qianchuan. Only by doing low prices can we get the tilt of traffic.

A similar situation happened last year on the TEMU platform. At the beginning of 2023, TEMU sellers have received requests from the platform to reduce the supply price, and the platform will automatically reduce the product price according to the market situation, with price reductions ranging from 20% to 30%. If the seller refuses to reduce the price, it is likely to encounter the risk of removing the product from the platform. TEMU, which originally had a low threshold, forced back many small-scale sellers due to this policy, which once caused controversy in the market.

图源:pexels

Chop pepper learned that the focus of the domestic e-commerce platform price comparison is mainly on the side of white-label merchants. Through active intervention, the platform screened out a group of white-label merchants with more advantages in supply chain and quality control, and the white-label merchants who blindly followed the trend and flowed at low prices will be accelerated in this round of washing.

For brand merchants who already have consumer cognition, the price comparison of the platform mainly occurs between brands of the same magnitude, and Ping will not force brands to be on par with white labels, nor will it force brands to blindly roll up at low prices.

However, this does not mean that brands can stay out of the e-commerce price comparison. With the maturity of white-label merchants, it will also have an impact and impact on brand merchants to a certain extent. At the same time, the price competition between platforms has also exacerbated the difficulty of price control for brands.

"Every platform will take the initiative to ask us to make low-priced goods, and there will be comparisons between platforms, for example, platform A will clearly require that the price we give must be lower than the price on platform B." Zhang Ting revealed to Chop Pepper that in order to take into account the brand's price system and the rules of the e-commerce platform, they currently only control the price of books with exclusive attributes, "I don't care about those regular books at all." ”

Although this round of e-commerce price comparison war is regarded as a rally of the 618 promotion, the price comparison mechanism is not new in the OTA industry.

OTA platforms have long been screened for price comparison and screening of accommodation, travel and other products. On the one hand, OTA platforms will conduct horizontal price comparisons from the dimension of product types, and guide consumers to make decisions in the form of lists. On the other hand, OTA platforms will also make longitudinal comparisons of a single product, and once there is a price difference between a hotel and a flight on different platforms, it will affect the platform's traffic allocation to the product.

In the economic context of increasingly fierce e-commerce competition and the shift of consumption concepts to cost-effectiveness, the automatic price comparison currently pursued by e-commerce platforms is a further transfer to consumer rights.

The platform allocates prices based on market supply and tilts the balance of traffic to more cost-effective products, which is in line with the needs of current consumers. From the perspective of consumption trends, cross-platform price comparison and strategy have become a fixed consumption path for young consumers. From this point of view, this move by the e-commerce platform also has its reasonableness.

However, when low prices become the market supply orientation, when the profit margins of merchants are infinitely squeezed, the order established by the e-commerce market for many years will usher in a strong impact.

"After the profit margin is getting lower and lower, businesses can only find ways to save costs, and the way is nothing more than to reduce the standard from the raw material end and the R&D end, resulting in lower and lower product quality." The white-label merchant said that the low-price orientation is likely to make the e-commerce market fall into the phenomenon of bad money driving out good money.

图源:pexels

Behind the platform's strict price comparison mechanism, the rights and interests of consumers may not be protected. Taking the women's clothing industry as an example, once a popular single product appears, white-label merchants and labels can copy a large number of low-priced and low-quality products, and then push low-priced and inferior goods to countless ordinary consumers through traffic distribution. One possible situation is that merchants can't sell goods, and consumers can't buy the right clothes. In the long run, the creativity of the industry and the possibility of brand development will be compromised.

For the price comparison of e-commerce platforms, policy-level controls have also followed.

In May, the State Administration for Market Regulation (SAMR) issued the Interim Provisions on Anti-Unfair Competition (the "Provisions"), which clearly stipulates price competition and many other behaviors of e-commerce platforms. Among them, the "Provisions" indicate that e-commerce platforms shall not impose unreasonable restrictions on the price of goods. It is understood that this "provision" will come into effect on September 1 this year.

No matter how external factors change, the transfer to cost-effective low-priced goods has been an inevitable trend in the development of e-commerce, and the intervention of the e-commerce platform is one of the signals. It is worth pondering that how to balance the rights and interests of platforms, merchants and users is still a more long-term proposition.

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