Zhang Yiming is no longer competing with Huang Zheng for the king of white cards

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2024-08-06 15:16Posted in Beijing, creators in the field of science and technology

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01 E-commerce platforms have successively weakened the concept of low prices, and Douyin e-commerce will increase its price power more refined in the second half of the year, and no longer pursue absolute low prices.

02However, Douyin e-commerce is still facing pressure from the low-price war, such as damaging the platform's advertising revenue and word of mouth.

03Due to the poor effect of the low-price war, Douyin e-commerce has been adjusting its strategy internally and starting to improve its brand advantages.

04At the same time, competitors such as Pinduoduo are also adjusting their business focus and putting GMV back to the first target.

05In the future, the competition of e-commerce platforms will turn to multi-dimensional warfare, including price, user volume, GMV and monetization rate.

The above content is generated by Tencent's hybrid model and is for reference only

Zhang Yiming is no longer competing with Huang Zheng for the king of white cards

A low-price war that has lasted for 6 years, and the intensity is about to be downgraded.

In the past month, e-commerce platforms have successively weakened the concept of low prices. Taobao weakened the "five-star price power" system, Douyin re-listed GMV (total merchandise transaction) as the first target, and even Pinduoduo, which set off this round of low-price war, also began to put GMV in a more important position.

Douyin's weakening of the adjustment of low prices somewhat surprised the outside world. In May, Douyin also took the lead in opening the book price comparison system and testing the automatic price change function.

However, at the end of July, Wei Wenwen, president of Douyin e-commerce, revealed at the internal communication meeting that Douyin e-commerce should improve its price power more refined in the second half of the year, "The price power of Douyin e-commerce is by no means simply the pursuit of absolute low prices." ”

In the past year, several major e-commerce platforms have poured into the low-price battlefield one after another, and their ideal state is to rely on low prices to win more orders and market size from Pinduoduo.

But the fact is that even if the traffic is abundant like Douyin, the traffic is limited, and tilting the traffic towards white-label products and low-priced products will inevitably hurt the platform's advertising revenue. If the price paid can allow the platform to obtain higher returns in the future, the platform can still delay gratification.

But the problem is that when Pinduoduo excavates the sinking market, the sinking market is still in a blank, and Pinduoduo has established a supply chain advantage. In the past six years, Pinduoduo has built an iron wall in the absolutely low-cost white label market, and the platforms that rushed to find that they could not beat Pinduoduo at all. The low-price strategy did not allow the platform to gain a higher market size, or the expected higher market size.

In the brand market of Pinduoduo, which is not dominant, no platform can obtain an absolute price advantage, and low prices only exist in specific products in a specific period of time.

The end result is that they have not been able to grab more orders and more users from Pinduoduo, but have reduced their customer unit price and profits.

As a result, e-commerce platforms that failed to obtain ideal returns have stepped out of the low-price battlefield with one foot, which is also a timely stop loss for them.

In fact, before going all out to pursue Pinduoduo, e-commerce platforms were also on par with GMV, and they missed the best opportunity to compete with Pinduoduo for the sinking market; Since last year, they have been trying their best to catch up with Pinduoduo, but Douyin is one step late. Now, they have finally decided to retreat to their base camp and return to their sphere of influence.

The core reason why Douyin does not pursue absolute low prices, but instead focuses on GMV is that in the field of low prices, it cannot beat Pinduoduo and cannot obtain absolute price advantages.

The main form of Douyin is live e-commerce, not shelf e-commerce, and the form of live e-commerce is destined to have brand products occupy a large share of the commodity pool.

The founder of a live broadcast agency MCN told Alphabet List (ID: wujicaijing) that the reason why many anchors are reluctant to go to Pinduoduo live broadcast is that Pinduoduo's advantageous products are white labels, and white label products often do not have much marketing budget, and it is difficult to squeeze out profits for anchors.

The white label in the Douyin live broadcast room, due to the need to set aside commissions for anchors and other links, naturally cannot compete with Pinduoduo-style white label products at low prices.

In the past two years, Douyin has also continued to attack shelf e-commerce, in March this year, Douyin launched the Douyin mall version, which is different from the mall channel in the Douyin APP, the Douyin mall version of the APP puts the "low-price seckill" below the banner recommendation position, giving a more important display position.

In May 2023, Wei Wenwen, president of Douyin e-commerce, mentioned in her speech that the content scene accounted for 56% of the product traffic, and the shelf scene accounted for 44% of the product traffic, and in the past year, the GMV of the shelf scene accounted for 30% of the overall situation, "In the future, I hope that the content and the shelf scene will account for half each." ”

Even so, Douyin's circle of competence is still live broadcast, not shelf e-commerce. According to a previous report by Growth Works, the GMV of Douyin Mall mainly comes from repeat buyers. These consumers engage with brands through short videos or live streams and generate purchase behaviors. When they want to buy again, they may do so through a marketplace or merchandise card channel.

In other words, as long as live e-commerce is still the main customer acquisition and conversion channel for Douyin merchants, then Douyin will not be able to compete with Pinduoduo white-label merchants for absolute low prices.

In July, 36kr reported that Douyin was reducing the proportion of traffic allocated to influencer live broadcasts and tilting traffic towards high-quality short videos and brand store broadcasts, although Douyin denied this view.

Even if the brand saves the commission to the talent through self-broadcasting, the commission will not be directly transferred to the consumer, after all, whether it is a brand or a white label, it will not be easy to break the price, and once the price is broken, it will be more passive when pricing with the anchor in the future.

And if the merchant's self-broadcast live broadcast room wants to compete with influencers for traffic in a big pool, it also has to pay more streaming costs. In the final analysis, it is difficult for the live broadcast e-commerce ecosystem to breed absolutely low-priced products.

According to a report by Latepost, Douyin's current standard products still have to compare prices, but non-standard products have weakened the price comparison.

Obviously, Douyin has withdrawn from the battlefield of the white label low-price war with one foot.

To fight a low-price war, the platform also has to pay a lot of price, especially for products like Douyin that rely on a paid streaming system.

Tilting traffic towards white-label products and low-priced products will inevitably hurt the platform's advertising revenue. If the price paid can be higher returns, the platform can still delay gratification, but the problem is that the low-price strategy has not brought the expected effect, but has fallen into the dilemma of "killing both volume and price": the price has gone down, and the GMV has not met expectations.

According to Analysys' analysis, in 2024, the turnover of major platforms (Taobao Tmall/JD.com/Pinduoduo/Douyin/Kuaishou) in the full cycle of "618" increased by 13.6% year-on-year, of which Pinduoduo increased by 17.7% year-on-year and Douyin increased by 26.2% year-on-year, which are the two fastest growing platforms.

Although in horizontal comparison, Douyin's GMV growth rate is still very fast, but compared with the previously set goals, there is still a big gap.

In May this year, according to an exclusive report by 36kr, in 2023, the GMV of Douyin e-commerce will be about 2.7 trillion yuan, and the GMV target for 2024 will be 4 trillion yuan, an increase of nearly 50%.

Judging from the 618 data, Douyin is still quite far from the growth rate of 50%. Low prices can bring more users, higher order frequency, and more order volume to the platform, but because e-commerce has already entered the stock competition, the new users that each platform can bring are very limited, and the order frequency and order volume do not contribute more GMV to the platform, but make the profits of merchants suffer.

If there is no white card king of Pinduoduo standing in front of Douyin, there is still room for maneuver at low prices, but the low-price strategy has been implemented for a year and a half, and everyone has realized that it is difficult for them to win Pinduoduo in the competition for white cards.

Obviously, Douyin has also realized that in the long run, the benefits that white-label merchants can bring to Douyin are far less than domestic or international brands, even high-margin brands such as cosmetics.

In the past two months, Douyin has been adjusting its strategy internally. The research report released by Cinda Securities in July mentioned that the white label advantage of Douyin channel has weakened slightly recently, and the brand advantage is relatively significant. "The sluggish growth of white cards in the past two months may be related to the adjustment of platform policies."

Withdrawing from the low-priced market is more like a timely stop-loss action from Douyin.

Among the major Internet companies, Douyin can be said to be the one that values ROI the most. This is not the first time that Zhang Yiming has changed his strategy in the investment business.

In 2021, Douyin will be diverting traffic for a number of WeChat mini games, and users can directly jump to the WeChat mini program game interface through the link to achieve diversion between platforms. Although mini games are also an important source of revenue for Douyin, in order to maximize efficiency, Douyin will still sell traffic to competitors, rather than just supplying traffic to its own business.

Another reason that prompted Douyin to withdraw from the low-price war is that there is an invisible danger in competing for low prices - it is easy to damage the reputation of the platform. In the past few years, relying on the introduction of brand merchants, Douyin e-commerce has formed a high quality mentality, but the sudden shift to low prices, or too many low-price drainage methods on the platform, is tantamount to pushing users back to Taobao and JD.com.

One user found that in order to cope with the platform's price comparison system, some brands have also begun to take countermeasures and launch products with smaller single packaging specifications, which is especially obvious in daily necessities such as paper pumping and rolling paper. Users who receive goods that are cheap but whose specifications are far from what they expected will naturally be disappointed with the platform.

This is also the reason why Pinduoduo previously launched a refund-only one. According to an e-commerce operator, white-label products are easy to be mismatched, which can easily damage users' trust and experience on the platform.

Obviously, Pinduoduo, which has been fighting in the white label market for many years, has done a better job in this regard. In addition to the absolute low price, the platform also needs to build a complete operating system. The implementation of refunds alone has greatly improved the user experience.

In May this year, Douyin e-commerce issued a new regulation: the price of SKUs is unreasonably set for the same product link, that is, the price difference between different SKUs within the same product link is not allowed to be too large (the price is set extremely low or very high). This rule is aimed at the low-cost drainage method of merchants taking advantage of the loopholes of the platform. For example, the cover shows that it is a product, but in fact, when you click on the link, you find that it is only an accessory of the product.

At the above-mentioned internal meeting, Wei Wenwen pointed out that "improving consumer experience is the basic skill of e-commerce platforms, and it is the direction of Douyin e-commerce's long-term efforts."

E-commerce platforms weaken low-price competition, but it does not mean that the low-price war is completely over, and the low-price war around the brand is still ongoing. There are two characteristics of the brand low price war, one is that the low price only exists in a specific product in a specific time period, and no platform can win the absolute price; Second, in the case of a small price difference between various platforms, this war tests the loyalty of users to the platform.

At this point, Taotian and JD.com have their own high-value membership systems and shopping minds, and this part of the population is the group that will focus on competing for in the second half of the year. Douyin's big killer is still the number of users and user activity. This change in the dimension of war is also the reason why Douyin must be a shelf e-commerce.

Judging from the current situation, the low-price war has weakened, but it has not completely ended.

In July, Douyin e-commerce also adjusted the investment rules for low-price seckill channels again, and lowered the price from 150 yuan for ≤ to 100 yuan for ≤; The minimum list price retrospective period has been extended from 1 day to 14 days.

At present, the "low-price seckill" in the Douyin mall still occupies a prominent position on the Home, and the slogan is "3 yuan and 3 pieces" free shipping.

In the current situation of consumption downgrading, low prices are still important, but this strategy, which has been listed as the first priority by various companies in the past six months, is making way for higher business goals under the pressure of ROI and GMV, that is, price, user volume, GMV, and monetization rate.

Not only Zhang Yiming doesn't want to compete for the king of white cards, but Huang Zheng doesn't want to just be the king of white cards. According to a later report, Pinduoduo adjusted its business focus in the second quarter of this year, shifting from pursuing commercialization and improving profits to putting GMV back to the first target. Pinduoduo also wants to maintain its advantage and market share.

The competition of e-commerce platforms is shifting from focusing on price competition in the past six months to a multi-dimensional war. A new competition with more elements is playing out between these e-commerce platforms.

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