This Double 11, e-commerce is getting back on track

As the bell of Double 11 rings again, the e-commerce industry seems to have seen a slight sign of recovery. This article will take us to a deeper understanding of how merchants can find new vitality at this critical node of Double 11, against the backdrop of slowing consumption growth and single-digit e-commerce growth.

"We are counting on these few days this year." In order to put the last batch of leftover goods on the shelves for Double 11, Wang Fei intensively contacted various anchors.

On October 18, the National Bureau of Statistics released data showing that in the first three quarters of this year, my country's total retail sales of consumer goods was about 35.36 trillion yuan, a year-on-year increase of 3.3%. In the first three quarters, the national online retail sales reached 10.9 trillion yuan, an increase of 8.6%.

The overall consumption growth rate has slowed down, and e-commerce has entered a single-digit growth. Faced with such a consumption and e-commerce environment, merchants feel it most directly.

This year is Wang Fei's seventh year in e-commerce. In his description, he has experienced the e-commerce industry from the time when you could make money by opening a store and investing in traffic to the current situation where e-commerce is almost crazy. In the past two years, more and more people have been trying to get refunds just to get the money, and the price war has pushed down the profits of online stores, causing his store to almost go bankrupt this year.

Fortunately, Wang Fei managed to make it to Double 11.

"When I first entered the industry, I was really looking forward to Double 11 every time. There were so many orders that I couldn't handle them all. Now is definitely not as good as it was then. However, Double 11 is still the best time of the year. The overall online store traffic and sales are better, and there are fewer returns and refunds." Wang Fei feels that such a Double 11 at least allows him to see the hope of better business.

The latest data from Double 11 shows that from the start of Double 11 to the evening of the 31st, a total of 373 brands on Tmall’s official website had sales exceeding 100 million yuan, and 79 beauty brands alone had sales exceeding 100 million yuan.

The overall e-commerce environment is gradually warming up, but how do merchants really feel about it? Will consumers buy on this Double 11?

1. Stay alive

It is easy to go from frugality to luxury, but it is difficult to go from luxury to frugality. For many merchants who have experienced the rapid development of e-commerce, it has become much more difficult to grow and make money in the past two years.

Talking about his experience in the first half of the year, toy merchant Wu Le's impression was mainly that only refunds were given, "Even if there were no refunds, the shipping insurance for returns and refunds would be enough to make our stores suffer." As an old store, he has accumulated more than 80,000 loyal fans. After checking the accounts in the first half of the year, he found that although he was able to break even, he did not make much money.

The difficulties these merchants encounter are just a microcosm of the majority of merchants. Rules such as "refund only" and "shipping insurance" are used by a large number of freeloaders, who even offer courses to form a "freeloader industry chain".

However, merchants seem to have changed their feelings on Double 11. "My monthly orders have slowly returned to around 1,500, which is definitely much better than six months ago, and there are fewer things to worry about," said Wang Fei, who felt that the speed of order recovery on Double 11 exceeded expectations.

From the perspective of the entire industry, Star Map data shows that as of October 30, the total online sales exceeded 845 billion yuan, setting a new October sales record.

Image source: Star Chart Data

Monitoring data released by the State Post Bureau recently also showed that from October 21 to 23, the national postal express delivery industry collected about 1.92 billion parcels, a year-on-year increase of 48.7%; and delivered about 1.655 billion parcels, a year-on-year increase of 29.5%. Among them, on October 22, 729 million parcels were collected, a year-on-year increase of 74%, setting a new single-day business record.

Taking Taobao and Tmall as an example, as of 0:00 on November 11, there were more than 100 Taobao live broadcast rooms with transaction exceeding 100 million yuan, a record high. Among them, 32 live broadcast rooms with transaction exceeding 100% increased by year-on-year.

When the big river has water, the small rivers are full; when the big river has no water, the small rivers are dry. Merchants who have survived this "winter" can feel a little warmth, behind which is the change in the overall e-commerce environment.

2. Are there fewer people who only get refunds to take advantage of the situation?

In the past two years, the e-commerce industry has gone through a period of rapid growth. The excess profit space caused by information gap and cognitive gap has been squeezed. Merchants have begun to adapt to the changes in the overall environment. Many merchants always say that survival is more realistic than making a lot of money.

Especially since this year, incidents such as "a washing machine worth 1,400 yuan was asked to be refunded because it could not be installed", "the merchant was required to compensate 800 yuan after only refunding clothes worth 11 yuan purchased online" and "20,000 sellers jointly boycotted refunds without reason" have occurred frequently.

The refund and freight insurance were abused, causing not only the loss of profits but also the direct erosion of costs for merchants. This became the "last straw" that crushed many merchants and stores.

Merchants are suffering, and e-commerce platforms that rely on merchants to do business have begun to adjust their rules.

Taobao was the first to loosen the "refund only" policy, and officially launched the "refund only" optimization strategy on August 9. Data shows that two months after the new strategy was launched, Taobao intercepted more than 400,000 unreasonable "refund only" transactions per day. In early September, Taobao launched the Return Treasure, which not only directly reduces costs for merchants, but also can strengthen the identification of wool parties based on historical behavior data.

Image source: Return Bao is online

Merchants feel these rule changes most directly. In Xu Wei's opinion, the decrease in refunds only started in the second half of the year. "In the past, we would encounter three to five refunds only orders on average every day. In recent months, the platform has become more strict in handling refund only requests. Now we almost never encounter frequent and regular malicious refunds only."

Wang Fei and Xu Wei have similar feelings. "I feel much more comfortable about this Double 11, because my store experience score is relatively high, and I am not always worried about the 'refund only' problem like before. I no longer see those obviously unreasonable refund only and return and refund requests from before. For reasonable 'refund only' requests, we can usually communicate and resolve them with customers normally."

Faced with the dilemma of merchants struggling to make ends meet, in addition to some platforms trying their best to improve the business environment for merchants, regulators have also begun to pay attention to the reasonable protection of e-commerce merchants.

Article 24 of the "Interim Provisions on Anti-Unfair Competition on the Internet" of the State Administration for Market Regulation, which officially came into effect on September 1, clearly requires that platform operators shall not use service agreements, transaction rules and other means to impose unreasonable restrictions or attach unreasonable conditions on transactions, transaction prices and transactions with other operators within the platform.

Taobao took the lead in the shift, and under the general trend, many e-commerce platforms chose to follow suit "tacitly".

JD.com launched a reverse insurance service, providing direct compensation services to merchants who have insured "freight insurance". 1688 also began to crack down on malicious "wool-pulling" and malicious "refund only" behaviors in early September, and optimized the "refund only" rules. Platforms such as Douyin and Pinduoduo have also successively implemented preferential policies such as reducing merchant commissions and deposits.

As the refund-only review of some platforms becomes more reasonable, the space for the freeloaders to exploit the loopholes of refund-only and freight insurance has decreased. Freeloaders can only flock to other platforms that are more lenient with refund-only. However, the regulatory authorities have made the merchant policies of e-commerce platforms clearer, which has locked out the "little tricks" of some platforms that sacrifice the interests of merchants in order to attract customer traffic and increase growth, and the entire industry has returned to the right track of healthy competition.

3. Is it still possible for businesses to return to doing business?

In recent years, being an e-commerce merchant seems to have become an extremely complicated matter. Faced with consumers' "tightening" wallets, merchants need promoters; faced with platforms' increasing demands for refunds, freight insurance, and price wars, merchants need to be auditors, couriers, and price checkers; faced with buyers' attempts to take advantage of them, merchants need to be lawyers or even "police."

Being a businessman who simply does business seems to be a very difficult thing.

Merchants cannot devote themselves wholeheartedly to doing business well. On the one hand, e-commerce has developed into a highly developed segmented division of labor. On some platforms, the "big fish eat small fish" fierce competition among merchants is becoming a reality. On the other hand, some platforms have transformed selling into a "growth game" of continuously attracting buyers through their own business models and rule-making. Merchants have become a platform tool for attracting buyers and have lost their sales autonomy, existing only as one of the thousands of suppliers in the system.

The result of this trend is that on some platforms, big brands are becoming increasingly oligopolistic, small and medium-sized businesses have lost their autonomy, and have to obey the game of some platforms competing for the lowest prices, and collectively become platform tool suppliers. Buyers have lost the possibility of obtaining diversified product supply and diversified services.

Ultimately, sellers are no longer autonomous sellers, and buyers are becoming buyers who are overwhelmed by standardization. Platforms that control big brands are gradually becoming brand sales channels, while platforms that gather small and medium-sized brands are emerging as the ultimate "big merchants."

The three major participants in the e-commerce industry have begun to go off track and consciously or unconsciously alienate and be alienated. There are no winners, neither consumers nor merchants.

Some participants noticed the signs of the industry going off track and began to pull back. Taobao provided merchants with a zero-fee, extremely fast payment service during the Double 11 shopping festival to ease the financial pressure on merchants, especially small and medium-sized merchants during the promotion period. At the same time, it reduced costs for small and medium-sized merchants and launched a series of measures to optimize the business environment, such as experience points, loosening the refund-only policy, and launching a return treasure. Douyin adjusted "same product low price" to "same product preferred", no longer emphasizing absolute low prices.

In addition to adjusting the rules, "tearing down the walls" between Internet platforms is also the effort and sacrifice made by some platforms to attract merchants and drive sales growth.

In September, Taobao was fully integrated into WeChat Pay, and Taobao links could also be posted under WeChat video accounts, so Taobao shopping could be completed without any jumps on the WeChat side.

Wang Qing, who thought his parents would never shop online, shared with us, "These days, my dad, who almost never shops online, has started to receive express deliveries home. When I asked him, I found out that he is used to watching video accounts. Taobao links have been posted under the video accounts in the past few days, and he clicked on them and bought them."

Image source: Taobao order payment page

The benefits and growth brought by interconnection to platforms and merchants are visible to the naked eye. According to QuestMobile data, in September, the scale of newly installed users of Taobao APP increased by 55% year-on-year, reaching the highest level in the past four years; JPMorgan Chase also said that platform interconnection is expected to increase Taobao's users by more than 20%. CICC said that more than 80 million WeChat users will become Taobao's long-term user growth. These users can be converted into new customers for merchants at any time.

As long as there is growth, merchants’ problems can be solved.

Toy merchant Wu Le believes that the ability to directly purchase Taobao products on WeChat has brought direct growth to his store. "Many nicknames with real names and phone numbers, who are obviously first-time buyers of WeChat, appeared in the store. It was quite unexpected. Later I learned that the conversion was brought by WeChat. They should be middle-aged and elderly buyers buying them for their grandchildren at home."

Some growth also comes from consumption promotion and stimulus policies at the national level.

With the implementation of the national large-scale home appliance replacement subsidy policy, this year's "national subsidy" can be superimposed on the "Double 11" platform discount. According to statistics, within one hour after the "Double 11" event was launched, Tmall's large home appliance transaction volume increased by 765% compared with the first day of pre-sale of "Double 11" last year.

On the basis of streamlining the platform rules, with traffic and sales growth, merchants only need to do their job of selling goods and the platform needs to build the e-commerce infrastructure, and buyers will naturally be able to obtain a variety of goods and services.

Author: Zhu Yongkang Editor: Ding Li This article is written by the author of Operation Party [Xinou], WeChat public account: [Xinshi Research Institute], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.