It’s time for e-commerce pre-sales to “die”

From initially alleviating inventory pressure and server burden to today’s consumer confusion and dissatisfaction, the pre-sale mechanism seems to have reached a crossroads. This article will explore how this model has gradually lost its original meaning and how it may accelerate the decline of traditional e-commerce promotion activities.

"We knew that complicated pre-sale rules would harm user experience and do more harm than good. There were even many people cursing and criticizing them on the intranet, but they still did this on Double 11 this year. We have seen how terrible the company's organizational inertia and path dependence are," a Taotianyi employee complained privately.

During the 618 shopping festival this year, Taobao, Tmall, JD.com and other leading e-commerce platforms cancelled the pre-sale mechanism that had been used for many years and directly started selling products in stock. However, during this Double 11 shopping festival, Taobao restarted the pre-sale mechanism.

According to the rules officially announced by Taobao, the entire Double 11 period showed a three-wave outbreak. The first wave of pre-sales was launched on October 14, followed by the first and second waves of official sales on October 20 and October 28 respectively. At a time when consumers generally pursue logistics speed and instant gratification, this arrangement seems somewhat out of place, and many consumers are confused and dissatisfied.

"I saw that everything I needed to buy was on pre-sale, so I just placed an order on another platform." There are many complaints about Taobao's restart of Double 11. Especially in the context of competitors such as JD.com and Pinduoduo insisting on a no-pre-sale strategy, Taobao's strategy seems out of place.

01 Pre-sale changed

Double 11 began in 2009. In 2012, in order to reduce the pressure on servers and inventory, Tmall introduced the pre-sale mechanism used in the real estate industry for the first time in its Double 11 promotion activities. This innovation of Tmall not only brought new gameplay to the e-commerce platform, but also achieved a win-win situation for merchants, platforms and consumers.

For merchants, the pre-sale model enables them to obtain market feedback in advance, and use it to determine the cycle production, which can effectively reduce inventory backlogs and resource waste. In addition, pre-sales can also recover funds in advance and ease the tension in the capital chain.

For consumers, since pre-sale goods require a certain waiting time, merchants usually provide some discounts or gifts as compensation, so consumers can enjoy certain price discounts or additional benefits.

For the e-commerce platform itself, pre-sale helps to disperse the technical pressure on Double 11 and reduce the operating burden of the platform. At the same time, the pre-sale model extends the promotion cycle and helps to increase the total sales during the entire promotion period.

However, after 12 years of pre-sales, the market is gradually deviating from its original intention.

The essence of the pre-sale model is an effective way to avoid waste caused by mass production and conduct market research, but now the platform seems to have forgotten the true meaning of pre-sale. E-commerce practitioner Jiang Xia revealed to "Shi Xiang": "For products participating in pre-sale, the platform's regulations require that products must be on the shelves for more than 90 days, and new products need to be reported to the store separately. Usually only large merchants with sufficient budget for pre-heating can pass. "

In addition to the essence of the pre-sale model becoming unclear, its practical significance to merchants has also been greatly weakened.

"Shi Xiang" observed that in the official flagship store of a beauty brand, the same product is available for purchase in two ways: pre-sale and spot. Pre-sale products are marked to be shipped within 48 hours after the final payment is made on the 21st, while spot products are promised to be shipped within 48 hours after the order is placed.

It is worth noting that after the Tmall event officially started on the 21st, the prices of spot goods were exactly the same as those of pre-sale goods. "Shi Xiang" asked the merchants about this and received the reply that "the platform requires two links to be set up." Obviously, even if the goods are sold directly in the form of spot goods, the merchants are fully capable of meeting the needs of the event.

"Initially, pre-sales were necessary for merchants. For example, when they were under great financial pressure and could not accurately estimate sales and dared not prepare large quantities of goods, they could produce according to the number of pre-sale orders," Jiang Xia explained. However, the significance of the pre-sale model during the big promotion period is no longer significant.

Pre-sales are a problem for small and medium-sized businesses. Jiang Xia pointed out: " Only products with good data performance can participate in the event, and signing up for pre-sales means that the products cannot be sold normally during the deposit payment period, which will result in a very low conversion rate, which may even be lower than usual. "

Regarding pre-sales, some consumers bluntly said: "This year's Tmall Double 11 deposit pre-sales are the biggest scam."

Zhang Wen, a consumer who participated in the Double 11 pre-sale event, reported to Shi Xiang that he encountered a situation during Double 11 where the price of pre-sale products was higher than that of direct purchase. "I bought a cat food at a pet food flagship store. The price of direct purchase on the 14th was 374.25 yuan, and it was shipped the next day. However, if I bought it through the pre-sale link, I had to pay a deposit of 100 yuan and a balance of 305 yuan, a total of 405 yuan. After I paid the balance and applied for a refund, I checked the product again and found that the price had been adjusted to 399 yuan, and the pre-sale price was still higher than this price."

In addition to Zhang Wen's situation where the pre-sale price was higher than the spot price, another consumer, Tang Zhen, also encountered the problem of price changes for pre-sale goods. Tang Zhen bought a pre-sale product in the "Mushrooms Are Coming" live broadcast room. When he paid the deposit, the page showed that the balance was 99 yuan, but when he went to the product details page to claim the coupon after paying the deposit, he found that there was no entrance to claim the coupon.

So he asked the customer service, who first gave him a perfunctory reply, and then simply read his message without replying. A few days later, Tang Zhen discovered that the price of the final payment on the order page had been changed. Under Tang Zhen's post, other consumers also reported that the prices of other products they purchased had also changed.

02 Behind the repeated jumps

This year, Taotian Group, led by Alibaba CEO Wu Yongming, made an important decision during the 618 shopping festival: canceling pre-sales. Before this decision, Alibaba's internal understanding of the "customer" in the core value of "customer first" seemed to be wavering.

In the second half of 2020, Zhang Yong, then CEO of Alibaba, answered employees’ questions about who is the No. 1 customer. He said: “It is meaningless to discuss whether the buyer is first or the seller is first. It is not appropriate to put either one first. We still need to look at the specific situation.”

However, the rise of Pinduoduo has forced Alibaba to re-examine the priorities between merchants and consumers. At that time, it was difficult for Alibaba to be completely consumer-centric, which was in stark contrast to Pinduoduo's "user-first" and low-price strategy.

Faced with challenges, Alibaba has been discussing the "first customer" internally. From Zhang Yong's vague statement in response to employees questioning Alibaba's following JD.com's lowest price during the 618 period, to Dai Shan's call to stop the development model with GMV as the target and to carry out systematic reforms around "the buyer as the first customer", to last year, when Alibaba bid farewell to the Zhang Yong era, Wu Yongming and Cai Chongxin stepped to the front and formed a new management team. The question of who the "first customer" is finally has a clear answer.

In an interview video released by Norwegian sovereign wealth fund Norges Bank Investment in April, Alibaba co-founder and chairman Joseph Tsai said, "In the past few years, when we looked internally and reflected on ourselves, we knew that Alibaba fell behind because we forgot who our real customers were. Our customers are the people who use our apps to shop, and we did not give them the best experience."

However, less than half a year later, Taotian restarted pre-sales on Double 11.

At this year's Double 11 media communication meeting, when asked why the pre-sale model was cancelled during the 618 period and re-enabled during Double 11, Jia Luo, vice president of Alibaba Group and president of Tmall Business Unit, said that pre-sales can help consumers lock in product inventory in advance, provide longer decision-making time for purchasing high-value products, and give consumers clearer discount information. This is the latest adjustment made in consideration of the consumption characteristics and average order value in the second half of the year.

However, judging from actual feedback from consumers, the pre-sale model has obviously had a negative impact on their shopping experience. Once the Double 11 pre-sale news was released, consumers generally expressed dissatisfaction with the pre-sale mechanism. One consumer complained to "Shi Xiang" that "I really dislike the Double 11 pre-sale. Can it go back to the original simplicity and directness, with a direct discount on the day of purchase? The pre-sale was clearly cancelled during 618, but now it's on again during Double 11. It's confusing."

In addition, the controversy caused by the restart of pre-sales is not limited to the pre-sale mechanism itself. This year, more problems derived from pre-sales have emerged. The experiences of Zhang Wen and Tang Zhen have fully revealed these problems. Not only Zhang Wen and Tang Zhen, there are many discussions on social platforms about "pre-sales are higher than spot prices" and "pre-sales price changes".

Regarding the restart of pre-sales on Double 11, Chu Duan, vice president of Alibaba Group and president of Taobao Platform Division, said in an interview with the media: "The reason for restarting pre-sales is that many merchants feel that pre-sales are very important to their business. After we surveyed merchants, we found that pre-sales can bring incremental business opportunities, and consumers also accept their pre-sales. In this case, we will do (pre-sales) openly."

However, some merchants disagreed with Chuduan's remarks. A leading merchant in the category said: "As a leading merchant in our category, I did not receive any survey questionnaires, and the information about when the consumer survey was conducted, the sample size, and the proportion of support for pre-sales are not transparent. We have been calling for the big promotion activities to return to the original form, but after the pre-sale was cancelled on June 18, it was restarted on Double 11, and the big promotion time was also earlier."

In addition, Tmall stipulates that merchants who sign up for pre-sale must sign the "2024 Tmall Double Eleven Official Pre-sale Automatic Price Following Cooperation Agreement", and cannot withdraw from the agreement after signing. Automatic price following means that the platform will monitor the price performance of the same products on and off Taobao in real time. If it is found that the pre-sale price of the product is not competitive enough, the platform will activate the single product subsidy discount marketing tool to ensure that the product price is competitive.

For brands with distribution channels, automatic price tracking is undoubtedly a more stringent test of their price control capabilities. In addition, since merchants cannot withdraw after signing the agreement, if they suffer losses due to price tracking during Double 11, they will not be able to take timely measures to stop the losses.

Now it seems that the pre-sale mechanism has neither optimized consumers’ shopping experience nor had a positive impact on merchants.

03 Will pre-sales accelerate the demise of Double 11?

As a large-scale promotional event, the core of Double 11 is to attract consumers' attention through low prices. Nowadays, low prices have become a daily game for major e-commerce platforms. There is a small promotion every three days and a big promotion every five days. The normalization has led to consumer desensitization, and live e-commerce has also eliminated consumers' shopping needs. Just as Pinduoduo uses "Every day is Double 11" as its slogan, frequent promotional activities have diluted consumers' enthusiasm for Double 11.

In addition, merchants no longer have much room to make concessions on prices. Some merchants said on social platforms that Taobao reminded them that their stores had marketing qualification risks, and as a result, they were reminded that the discounts were too large when they offered a 300-50 discount on official cross-store sales during Double 11. In response to this situation, one obvious perception of consumers is that the discounts on many products are not as strong as in previous years. According to iResearch data, among the reasons why Chinese consumers are less enthusiastic about participating in the 618 Shopping Festival, 60% of consumers believe that the discounts this year are not as attractive as in previous years.

The combination of various factors has made the appeal of big promotions such as 618 and Double 11 less prominent. If you want to do something fancy, you need to extend the time or launch more gameplay and multiple waves of activities - full discount, 88VIP full discount coupons, beauty coupons, "energy value" red envelopes, etc., so that consumers can use their energy and time to exchange for discounts. For consumers, too many and too complicated gameplays make them physically and mentally exhausted. In addition, the promotion time is getting longer and longer, so consumers choose not to participate.

According to Star Chart monitoring data, during the 618 period in 2024 (Tmall 20:00 on May 20-23:59 on June 18; JD.com 20:00 on May 31-23:59 on June 18; other platforms are from the start time of 618 announced by each platform to 23:59 on June 18), the cumulative sales of comprehensive e-commerce platforms and live streaming platforms reached 742.8 billion yuan. Among them, the total sales of comprehensive e-commerce platforms reached 571.7 billion yuan, a year-on-year decrease of 6.9%.

It is obvious that the popularity of Double 11 is also fading.

The uselessness of the pre-sale model, which has been popular in the e-commerce industry for 16 years, has been fully demonstrated in this year's big promotion. In an era of abundant supply, it is difficult to win users by deliberately creating a sense of scarcity through pre-sale. Especially this year, when there is no pre-sale on major e-commerce platforms, Tmall's pre-sale mechanism undoubtedly pushes consumers to competitors.

At the same time, the pre-sale model and its additional rules have also caused considerable harm to consumers and businesses. In the "Analysis of Complaints Received by National Consumer Associations" released by the China Consumers Association this year, the first of the "Top Ten Consumer Complaint Hotspots" is "The pre-sale model of e-commerce platforms urgently needs to be regulated." The China Consumers Association pointed out that the pre-sale model of e-commerce platforms has the following problems: first, the price increase of the "final payment" is dishonest; second, the pre-sale goods are not guaranteed; third, the promised gifts are not fulfilled; fourth, the goods are not delivered on the promised time; and fifth, the "lowest price" propaganda is not true.

It is worth noting that Jiang Xia told "Shi Xiang" that the Double 11 pre-sale warm-up event originally scheduled to start on October 20 was urgently advanced to October 18. This adjustment may imply the failure of the pre-sale strategy, and the platform also seems to have felt the pressure.

The decline of Double 11 is obvious, and the noise in form cannot cover up the emptiness of content. Restarting a pre-sale link that damages the user experience and lacks much practical significance at this time will undoubtedly push the Double 11, which is on the verge of death, forward.

(All characters in this article are pseudonyms)