Changes in Double Eleven: From traffic competition to reconstruction of high-quality supply

As Double Eleven enters its 16th year, the competition among e-commerce platforms has shifted from the early traffic dividend to refined operations. This article deeply analyzes the four stages of e-commerce traffic changes and explores how e-commerce platforms can achieve a win-win situation for platforms, merchants and consumers by optimizing traffic distribution, reducing merchant costs and restructuring the supply chain in the context of increasing traffic costs.

01 The Evolution of E-commerce Traffic

Traffic is the lifeline of e-commerce platforms. In the more than 20 years of development of e-commerce in China, the mode of traffic acquisition and distribution has undergone profound changes. From the early days of the wild growth of various players "snatching" traffic to the current refined operation and competition among platforms, the traffic pattern of e-commerce has undergone earth-shaking changes.

These changes have reached a new node in the Double Eleven of 2024. Price wars are still one of the most concerned perspectives for consumers, but traffic breakthroughs on the merchant side are also becoming the focus of competition.

Alibaba resumed the "pre-sale system" after canceling the 618 shopping festival, providing merchants with more certain sales expectations. Pinduoduo continued to deepen the "10 billion subsidies" and launched the "10 billion exemptions" to support new quality merchants. JD.com launched the "50% discount" banner for some products. Douyin launched the "First Enjoy Good Goods Festival" on October 8.

E-commerce platforms have generally extended their activity cycles to facilitate merchants to prepare goods and conduct marketing. To put it bluntly, this is because traffic is becoming more and more expensive, and correspondingly, merchants have a lower and lower tolerance for errors in their operations.

Let's go back to the first principles. What is the essence of traffic? It represents consumers' attention, time and purchasing power. The changes behind Double Eleven reflect the profound transformation of the entire e-commerce industry in the traffic distribution model.

E-commerce platforms are two-sided markets. More buyers will attract more sellers, and better sellers can attract more buyers. Because of this, two-sided markets cannot only pursue short-term profits, but need to be balanced so that both sellers and buyers can benefit.

In the second half of the year when traffic dividends fade and traffic costs rise, how can e-commerce platforms break through the siege and achieve a win-win situation for platforms, merchants and consumers?

We believe that the core issue facing e-commerce platforms has shifted from simple competition for traffic to how to make limited traffic truly serve high-quality supply and achieve win-win development for platforms and merchants.

This not only concerns the sustainable development of the industry, but is also the key to the platform breaking through the growth bottleneck.

02 Four stages of e-commerce traffic changes

1. The era of traffic gold rush (2000-early 2010s): wild growth dividends

In the early days of Internet e-commerce, traffic was like inexhaustible "gold", and various platforms were scrambling to seize this new blue ocean. At that time, traffic mainly came from search engines, which were relatively cheap, and SEO optimization became a compulsory course for merchants. Shopping guide and rebate platforms such as Mogujie and Fanli.com flourished, and even off-site communities such as Douban contributed massive traffic to e-commerce platforms.

In 2012, when Three Squirrels was first established, its founder Zhang Liaoyuan posted an article online. He wrote: A new era has arrived. E-commerce has a five-year opportunity. Within five years, it can build an Internet e-commerce brand; but after five years, it will be the beginning of its demise.

This sentence vividly reflects the characteristics of the era when "traffic is opportunity".

2. The era of traffic bidding (2010-2015): the rise of platforms and traffic monetization

As e-commerce platforms gradually rose to prominence, they began to build their own traffic pools. During this period, e-commerce platforms themselves became the main source of traffic, and merchants relied on platform rules to obtain traffic, such as through keyword bidding.

In order to obtain better display positions, merchants have to participate in increasingly fierce bidding wars, and traffic costs have begun to rise rapidly.

During this period, Jack Ma put forward the famous view that "traffic entrances should be grasslands rather than forests", which aims to emphasize that platforms cannot rely too much on certain large traffic entrances and must maintain diversified traffic sources.

This judgment is forward-looking. Mogujie and Meilishuo later declined. But a few years later, after being nurtured by e-commerce, Douyin itself became an e-commerce platform. The threat of Douyin is not easy to deal with.

3. The era of social fission (2015-2018): social dividends and breakthroughs in penetration

With the popularization of mobile Internet, social e-commerce has begun to rise. The WeChat ecosystem has brought new traffic dividends, and the innovation of the group buying model has activated a powerful social fission effect.

E-commerce platforms began to penetrate the lower-tier markets and gain incremental users through social media. At the same time, Pinduoduo's C2M (customer-to-manufacturing) model began to take shape, laying the groundwork for subsequent supply-side reforms.

4. The era of live streaming e-commerce (2018 to present): traffic upstarts and cost pain

The rise of live streaming initially brought a new traffic entry point to e-commerce. Top anchors such as Li Jiaqi, Xiao Yangge, and Simba showed amazing sales capabilities, and short video platforms quickly emerged as an important e-commerce battlefield. However, the cost of traffic acquisition during this period also reached a historical high.

As live streaming e-commerce becomes more popular, merchants and brands are also facing huge cost pressures. In order to obtain high-quality anchor resources and traffic, brands often need to pay high commissions and cooperation fees. Even if merchants broadcast themselves, the costs of live streaming rooms, anchors, models, backstage, design, etc. are getting higher and higher.

Short video and live streaming e-commerce represented by Douyin have also begun to focus on shelf e-commerce like traditional e-commerce giants.

At this point, platform traffic, social traffic and live broadcast traffic coexist.

The fact is that fierce market competition has forced merchants and brands to increase their investment in promotion and marketing, improve the price competitiveness of their products, and reduce their overall profit margins. In the long run, although there is no shortage of ways to acquire traffic, the high cost that comes with it has also brought challenges to many merchants and brands.

03 Traffic Dilemma, Structural Challenges of E-commerce

1. Ceiling and involution: nodes of growth

From the platform's perspective, the root cause of the traffic dilemma is that growth has reached a ceiling.

In recent years, the average customer acquisition cost of e-commerce platforms represented by JD.com, Alibaba, Meituan, Pinduoduo, etc. has been rising. According to the analysis of Titanium Media in 2023, the average customer acquisition cost of the four mainstream e-commerce platforms has reached 800 yuan. In 2022, Alibaba's customer acquisition cost has reached 1,302 yuan.

As the trend of traffic centralization intensifies, major platforms are forced to compete more fiercely in an environment with limited incremental markets.

This competition has already affected the important marketing nodes of the platform. In the Double Eleven of 2024, all major platforms started pre-sales a month in advance, trying to import more traffic to the platform during the holiday. But in this "traffic battle", both platforms and merchants are facing unprecedented pressure.

2. Merchants’ dilemma: triple cost pressure

For merchants, this pressure is first reflected in direct traffic costs. At present, the promotion costs of many merchants on the platform have accounted for more than 50% of the total cost. In order to maintain exposure, merchants have to continue to increase investment, but the profit margin is constantly being compressed.

What is more challenging is the increase in operating costs. In order to improve traffic conversion efficiency, merchants need to invest a lot of resources in content production, live broadcast operations, warehousing and logistics, etc. These necessary "hidden costs" are eroding the survival space of merchants.

The most critical thing is that merchants are increasingly dependent on platform traffic. Especially small and medium-sized merchants, due to the lack of brand accumulation and user awareness, are more vulnerable to changes in traffic distribution rules. This high degree of dependence has caused merchants to lose their operational autonomy and weakened their motivation for innovation.

But user demand is constantly upgrading, and the quality of supply needs to keep up.

3. Policy guidance: traffic is tilted towards small and medium-sized entities

Faced with the traffic dilemma of small and medium-sized micro-businesses, the regulatory level has also begun to take action. The State Administration for Market Regulation recently issued the "Opinions on Guiding Online Trading Platforms to Play a Positive Role in Traffic to Support the Development of Small and Medium-sized Micro-Business Entities", proposing 18 measures from six aspects, focusing on agricultural product operators, innovative and characteristic operators, and newly settled operators.

This policy reflects a deeper industry demand: how to maximize the effectiveness of limited traffic resources and help small and medium-sized enterprises seize the opportunities of digital transformation. The policy requires that platforms, in addition to supporting traffic, also need to provide comprehensive service measures such as product development, supply chain optimization, and data analysis to help business entities improve their operational capabilities.

04 How to break the deadlock in platform traffic distribution

Faced with the above dilemma, major e-commerce platforms have also begun to provide various solutions. The motivation behind this is that in recent years, merchants have not only had to bear high traffic promotion costs, but also had to deal with rising return rates and freight insurance costs. As a result, many merchants have fallen into losses.

Faced with this dilemma, major platforms have shifted their focus from pure traffic competition to supply-side innovation and reform. This shift is reflected in three key aspects:

1. Optimization of cost structure

E-commerce platforms have begun to re-examine their charging models and stimulate supply vitality by reducing business operating costs. For example, during this year’s Double Eleven, some e-commerce platforms also introduced burden-reduction measures.

For example, Pinduoduo implemented the "10 billion reduction" plan to reduce transaction fees for high-quality merchants, lower withdrawal thresholds and logistics costs, and improve the complaint mechanism to enhance merchants' capital liquidity and operational efficiency.

These measures are essentially the platform actively giving up some of its interests in exchange for the healthy operation of merchants.

2. Reconstruction of supply

This is also more important because for businesses, it is better to teach people how to fish than to give them fish.

The ultimate source of traffic is user awareness. Only by truly helping merchants provide cost-effective products can we gain the trust and choice of users. Taking Pinduoduo as an example, the platform actively ceded its interests and reduced the operating costs of merchants through measures such as "10 billion yuan reduction and exemption" in exchange for better quality supply.

New quality supply will inevitably lead to supply chain optimization. Product matching is what traditional e-commerce does. Pinduoduo's differentiation lies in supporting high-quality merchants and helping them improve their operating efficiency, truly implementing the C2M model, and aggregating orders directly to factories and industrial belts. This is also what distinguishes it from traditional e-commerce giants.

The role of the platform has shifted from participating in traffic distribution to supporting the industrial economy. It can be seen that Pinduoduo has deeply integrated the supply chain capabilities of merchants with the digital capabilities of the platform, and cultivated a group of "new quality merchants" with product innovation capabilities. For example, Bozhou herbal tea, Pinghua eyelashes, Dandong kiwifruit and other high-quality merchants in the industrial belt.

The essence of Pinduoduo's mechanism design is to directly pass on traditional marketing costs to consumers and obtain natural traffic through cost-effectiveness. Going a step further, it is necessary to closely bind traffic allocation with supply quality. The platform's algorithm is more inclined to allocate traffic to merchants who can provide high-cost-effective products. This mechanism not only reduces the marketing pressure of merchants, but also ensures that users can get a better shopping experience.

When both supply and demand are effectively activated, a virtuous cycle will be formed: high-quality supply attracts users, user feedback guides supply, and supply improvements create new user value. This virtuous cycle is the real moat of the platform.

3. Internet demolishes the wall

Alibaba and JD.com are both tearing down the original walls, such as Taobao connecting to WeChat Pay and JD.com connecting to Alipay. They are both trying their best to get traffic growth from different links.

The above changes are by no means simple adjustments in attitude. They require the platform to rethink its own positioning: no longer a "toll road" between merchants and consumers, but an "infrastructure" for industrial upgrading. This means that the platform needs to invest a lot of resources in building basic capabilities such as supply chain optimization, technology research and development, and logistics construction. The payback period of these investments is often long, which tests the strategic determination of the platform.

05 The Ultimate Value of Traffic

What is the essence of traffic? It is not only about traffic allocation based on algorithms and operations, but also about the platform’s recognition and support for high-quality supply.

Only when traffic truly serves high-quality supply can the platform establish a sustainable competitive advantage.

In recent years, users' requirements for products have been increasing. In fact, consumers need not only affordable prices, but also products that are truly worth the money.

This change in demand is driving e-commerce platforms to rethink the logic of traffic distribution.

When traffic resources tilt toward high-quality merchants, the following cycle will be formed:

• Merchants have more resources to invest in product innovation
• Better products lead to higher customer satisfaction
• Word-of-mouth effect brings natural traffic growth
• Both the platform and merchants can achieve sustainable growth

Returning to the essence of business, the essence of traffic distribution problem is resource allocation problem.

In this process, the platform must balance short-term interests and long-term development. The current practice of some new quality supply shows that giving part of the profits to high-quality merchants can bring more sustainable growth.

The competition among e-commerce platforms in the future will not be a simple competition for traffic, but a competition for high-quality supply. Whoever can make traffic truly serve high-quality supply will win merchants and users in a market with limited growth.