Inflection points, innovation and cycles: A new narrative of "Double 11"

In the development history of China's e-commerce, the Double 11 Shopping Festival has always been an important window for observing market changes. This article explores the new narrative of Double 11 in depth and analyzes the future opportunities of China's e-commerce after experiencing inflection points, innovations and cyclical changes.

Discussions about Double 11 every year have always been an enduring topic over the years.

This e-commerce promotion concept, proposed by Alibaba in 2009, has been regarded by the industry as a barometer for understanding changes in China's e-commerce for a long time: while countless high-frequency transactions take place here, a large number of new business opportunities have also emerged, as reflected in the fact that every year a large number of cutting-edge brands emerge from here and become known to the public.

But this year is different.

Compared with the early Double 11, today's Chinese e-commerce landscape has undergone tremendous changes. Although the rise of new formats such as live streaming and hobby e-commerce has made people realize that e-commerce still has great potential, the refund storm and irrational low-price competition have gradually deviated from the normal track of the market. A large number of brand merchants have been "kidnapped", and the product innovation capacity and cycle have been greatly squeezed.

So much so that many people are worried about the future of China's e-commerce, but some people also believe that it is a signal of the beginning of a new cycle.

iResearch pointed out in its 2024 China E-commerce Market Research Report that as China's e-commerce market as a whole enters a bottleneck period, the supply and demand relationship in the e-commerce market has undergone fundamental changes. The most obvious change is that consumer demand is increasingly stratified and classified, especially the demand for improving the quality of life has been amplified.

This is indeed the case.

According to data released by Tmall, from the start of Double 11 to the evening of the 31st, a total of 373 brands had sales exceeding 100 million yuan, among which big-name products in various industries saw significant growth. Take cosmetics as an example. Within 4 hours of the start of sales, the number of Tmall beauty brands with sales exceeding 100 million yuan reached 40. The familiar La Mer and PROYA had a strong explosion, with sales exceeding 100 million yuan within 10 minutes of the start of sales.

This is a very interesting transformation.

On the one hand, after experiencing the impact of various e-commerce formats, Taobao is still the main battlefield for the explosion of various branded products. Compared with other platforms, it has stronger new product incubation and consumption leading capabilities; on the other hand, as a mirror witnessing the changes in China's e-commerce, the concentrated outbreak of branded products on Double 11 means that the consumption capacity and confidence of the middle class are gradually returning.

The key to the problem is how to understand the recovery of the consumer market and what kind of structural opportunities exist in it?

01 Consumers, merchants, and platforms are changing

Double 11 is now in its 16th year. From shopping on Taobao and Tmall in the traditional sense to “looking for hot products on Taobao and Tmall”, Taotian Group’s understanding of Double 11 is no longer just a trading venue, but a return to a consumption venue that the public loves and interests.

Jia Luo, vice president of Alibaba Group and president of Tmall business unit, once said that the biggest difference between this year's Double 11 and previous years is that it is a critical time window to activate the overall consumer market and increase national consumption.

According to Jialuo's logic, as we enter a new cycle of e-commerce promotions, as a platform, it is far from enough to just think about how to achieve more transactions.

More importantly, it is to serve as a connector between consumers and brand merchants. Only by truly understanding what consumers care about and what they lack, and providing them with targeted quality goods and services, can the flywheel of consumer confidence truly turn, rather than being stimulated by irrational low prices.

Take cycling, which has been popular in recent years, for example. From the twin star competition between Wengerg and Pogacar in the Tour de France to the high popularity of different road bike brands and their supporting peripherals, this trend has also emerged in China.

But what’s interesting is that even though cycling has only been popular for a few years, you can still find a large number of quality products by searching for cycling keywords on Tmall. Take the domestic cycling wear brand Lampada as an example. This year is its 13th time participating in Double 11. Thanks to its long-term investment in Tmall, it won the top spot in both the scale and growth rate of the cycling equipment category on the first day of pre-sale.

You know, these cycling equipments are expensive in themselves, and the "one king and four queens" road bike brands that are popular among insiders often cost tens of thousands. In other words, consumers pay more attention to brand culture, workmanship and the social attributes behind these products than to lower prices, which is exactly what was easily overlooked by the market in the past.

In fact, it is not just outdoor sports, but also emerging categories such as the familiar trendy toys and pets that have exploded in this Tmall Double 11. According to data agency Jiuqian Research, as the main incubation platform for the rapid growth of new categories, trendy toys, pets, and outdoor markets accounted for 69.7%, 66.0%, and 56.5% respectively.

All signs indicate that e-commerce consumption is about to enter a new cycle. Howard Musk, a world-renowned investor, once talked about this view in his classic masterpiece "The Cycle", "To study the cycle, you must first study people. To study people, you must first study human nature, and human nature is manifested in psychology and emotions."

This logic still works in today's e-commerce consumer sector. When the "lowest price on the entire network" is available in every corner, the previous state of consumers who "buy something as soon as they see it" has ended. Their attention has been drawn back to brands with better quality assurance, and they buy them in bulk when they offer great discounts.

This is reflected in this year's Double 11. The previous bold promotional strategies are no longer used. Instead, they are replaced by more intensive and targeted activities that both understand consumers and match the brands and merchants.

02 Brand products burst out in a concentrated manner, soil cultivation is crucial

Many people explain the delicate situation of traditional e-commerce in recent years as being caused by the impact of new forces that have emerged, but they ignore the fact that there is no distinction between new and old e-commerce. It is just that today's Chinese e-commerce has reached a historic crossroads - users are changing, user needs are changing, technology is reshaping the old rules and order, but it also brings huge opportunities.

Amazon founder Jeff Bezos once made a bold prediction about this. He believed that in the next 20, 30, or even 50 years, there will be three things in the retail industry that will not change: first, customers like low-priced items; second, customers like faster delivery; and third, customers want more and faster choices.

To a certain extent, fast delivery and lower prices are essentially issues of supply chain efficiency, and more product choices are because consumers are always changing. They will not be satisfied with a certain lifestyle, nor will they stop when a certain desire is achieved.

According to the retail key points described by Jeff Bezos, we will find that the e-commerce upstarts on the market under various banners have not changed the essential elements of retail, but have made more model and technological innovations on this basis. On the contrary, the system standards established in the e-commerce field over 20 years, led by Taotian, are exactly what these new players lack the most.

What's worse is that due to the fierce competition among platforms and the endless pursuit of low-price strategies, the e-commerce market in the past showed a short-term irrational prosperity, but problems also followed. The quality of goods and service levels were constantly discounted, malicious refunds and wool-pulling were rampant, and what's worse, R&D, innovation and quality could all be compromised in the face of price comparison.

Obviously, the top players are also aware of this problem. If you want to get rid of this low-quality internal circulation, you must make some changes and respond, especially for the top e-commerce platforms, which connect a large number of brand merchants and source factories on one end and hundreds of millions of consumers on the other end, which is even more critical for the cultivation of good soil.

Take Taobao for example. This year, they have focused their efforts on improving the business environment and "loosening restrictions" on merchants. On the one hand, the support for new products and new brands is unprecedented. Taking this year's TOPTALIK as an example, Tmall announced that it will continue to invest in super IPs such as Super Brand Day to promote the dual upgrade of brand marketing and operations. It also announced that it will create 5,000 new black box super products and 100 new brands with sales of over 100 million this year.

On the other hand, just before the Double 11, a series of measures were launched, including relaxing the "refund only" policy, launching the "return treasure", using "experience points" to break the industry's low-price cycle, and coupled with the joint promotion of government subsidies, interconnection and other factors, the certainty of a positive marketing environment is increasing, making this Double 11 back to the way it was at the beginning - seeking growth for merchants and benefits for consumers.

The effects of this shift are obvious.

According to the monitoring data released by the State Post Bureau, during the Double 11 shopping festival, the number of parcels collected and delivered by the national postal express delivery industry increased significantly. Among them, 729 million parcels were collected on October 22, a year-on-year increase of 74%, setting a new record for single-day business volume. For brand merchants and source factories, each parcel and order is a reflection of the consumption vitality of the industry belt and the return of consumer confidence.

03 Summary and some new discoveries

Compared with the previous pursuit of growth in e-commerce sales (GMV), the focus of this year's Double Eleven has changed significantly, with more emphasis on brand products, quality, user experience and e-commerce ecology. This was mentioned as early as this year's TOPTALIK conference. As an annual strategic communication meeting, Tmall once proposed that the focus of this year's work is to "focus on brand growth."

Considering the explosion of branded products on Double 11, the result is not surprising. In addition, there are some interesting phenomena worth further study: Take 88VIP members as an example. Since the start of Double 11 pre-sale, as of the 31st, the number of 88VIP members placing orders has increased by more than 60% year-on-year, the average purchase amount per person has increased by more than 30% year-on-year, and the number of 88VIP members’ visits has increased by 50% year-on-year.

This is a data that deserves attention.

You know, a successful membership system is not only the goal of the leading e-commerce companies, but also the ultimate pursuit of many retail formats. The underlying logic of the traditional membership system is "the wool comes from the sheep, taking the money earned from consumers and returning part of it to consumers"; on the other hand, the design idea of ​​88VIP is "starting from the customer experience, designing a membership product system, attracting a large number of consumers through a good experience, and then operating traffic and strategies."

As the most valuable population asset of Taobao and Tmall, 88VIP members browse the Taobao app 25 days a month on average. Compared with ordinary members, they not only have higher purchasing power, but also have a stronger sense of brand identification. The number of high-quality members is often directly linked to the maturity of the platform, and their performance in this Double 11 is enough to explain some problems.

Back to the topic at the beginning, although the tension in this Double 11 is much less than in the past, from a higher dimension, when quality and branded goods return to the public eye, and the consumer market returns to rationality and shows strong signs of recovery, it is far more meaningful than talking about Double 11 itself.

Author | Sang Mingqiang This article is written by the author of Operation Party [Xin Mou], WeChat public account: [Xin Mou], 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.