Why is Double Eleven becoming less and less interesting?

As the Double 11 Shopping Festival continues to lengthen and promotional activities become increasingly complex, consumers' enthusiasm for this once-biggest annual shopping carnival seems to be gradually cooling down. This article explores in depth why it is increasingly difficult to stimulate consumers' shopping enthusiasm during Double 11, and analyzes the promotion strategies of e-commerce platforms, merchants' participation attitudes, and changes in consumer shopping behavior.

It has been two weeks since Douyin took the lead in opening the curtain of Double Eleven 2024, but the atmosphere of Double Eleven is still vague, and people don’t feel it too strongly.

After 16 years of Double Eleven, the time span has been extended from 1 day to 11 days and then to more than 20 days. This year, the time spans of Tmall, JD.com and Xiaohongshu are 28 days, 33 days and 30 days respectively. This year's 11 has also become the Double Eleven with the "longest battle line".

Many netizens complained, "The following Double Elevens will simply be brought forward to the National Day holiday, coming earlier every year and being the longest in history every year."

Source: Based on public information

In terms of gameplay, Double Eleven has expanded from the initial 50% discount and direct price reduction to deposit pre-sale, final payment later, cross-store discount stacking, and complex and difficult to calculate Double Eleven function problems, which have been criticized by consumers.

The longer the time span and the more complicated the gameplay, the less consumers pay attention to Double Eleven, and the more deserted Double Eleven seems.

Based on this, Double Eleven in 2023 was directly transformed into a simple and crude price war.

Image source: Shangguan News

"There are subtle differences in the ways each e-commerce platform plays this year. For example, Tmall has restarted the pre-sale method, and JD.com has opened subsidy coupons of 20 yuan off for purchases over 200 yuan to all merchants, hoping to create large-scale user coverage + a large number of commodity pools + strong joint sales effects. In addition, JD.com tasted the sweetness of last year's Double Eleven live broadcast, and this year's Double Eleven added a "live broadcast limited time price" method. But overall, the core of the e-commerce platform is still focused on the traditional 'three big things' of cross-store discounts, one-piece discounts, and platform consumption coupons." Zhang Shuai (pseudonym), who has been working in the e-commerce industry for many years, told us.

Zhang Shuai went on to say that with the current e-commerce platform traffic reaching its peak, major e-commerce platforms have been integrating shelf e-commerce + grass-planting e-commerce + live streaming e-commerce, and consumers' attention to Double Eleven continues to decline, the platforms are obviously limited if they want to find newer and more stimulating ways to stimulate consumers to place orders.

In addition, in order to motivate merchants to participate in the Double Eleven promotion, major platforms have increased their support and subsidies. For example, Douyin has launched commission reduction and commission exemption policies for daily necessities and fresh fruits and vegetables, Taobao provides merchants with multi-type store management plans, and Xiaohongshu has invested tens of billions of traffic support and hundreds of millions of subsidies to help buyers and merchants develop through traffic incentives, product upgrades and efficiency improvements, and new matchmaking tools.

But even so, most people still feel nothing about this year's Double Eleven.

01 This year’s Double Eleven, a lot of money was spent on Hong Kong

In fact, this year's Double Eleven is somewhat different from previous years.

This year's Double 11, Taobao and JD.com focused on the Hong Kong market. After JD.com established its first supply chain industrial base in Hong Kong during the 618 shopping festival, it continued to invest 1.5 billion yuan in September with no upper limit. The core is to continuously improve the online shopping experience of Hong Kong consumers through product subsidies + logistics subsidies + service optimization.

Unlike JD.com, Taobao entered the Hong Kong market earlier. This year, Taobao's focus on Double Eleven was on delivery and returns and exchanges. Currently, Alibaba has set Hong Kong as a free shipping area. Consumers can find products with the "HK¥99 free shipping" logo in the Taobao app, place an order of 99 yuan or more, and choose official direct shipping or official consolidated shipping to enjoy the free shipping benefits for cross-border sections.

However, Hong Kong and the mainland are two completely different "e-commerce worlds". Public data shows that nearly 90% of Hong Kong people are used to using cash, 97% use Octopus, credit cards account for 53%, and mobile payments account for only 20%. Due to restrictions on mobile payments, although Hong Kong's retail sales reached HK$34.2 billion in July, online sales accounted for only 7.8%. Local e-commerce platforms represented by HKTV mall, ParknShop supermarket, and Youhe have a CR5 of 21.5%, which means that how much growth the Hong Kong market can bring to JD.com and Taobao remains to be discussed.

In addition to focusing on the Hong Kong market, interconnection has become an important change in this year's Double Eleven. On the payment side, Taobao users can not only use WeChat Pay, but also use WeChat's buy now pay later service similar to Pinduoduo. According to relevant media reports, JD.com will also connect to Alipay in the future.

Image source: Taobao

On the logistics side, Taobao and Tmall plan to connect to JD.com’s logistics system to add new logistics options for merchants, which is expected to be launched in mid-October. JD.com will connect to Alibaba’s Cainiao Express and Cainiao Post Station Network to achieve seamless integration of services such as package collection, shared delivery entrances, and package storage.

Unlike the capital market, which measures traditional enterprises by key indicators such as revenue, profit, and debt, the Internet industry is essentially engaged in traffic and user scale business. User scale, growth rate, market share, future market space, and strategies for coping with market changes have become key indicators for the capital market to measure Internet companies.

Based on this, in the era of single e-commerce platform competition, it is of utmost importance for e-commerce platforms to form competitive advantages and block competitors in the key links of the e-commerce industry chain in order to increase the number of users and market share. For example, in the "Cat and Dog War" and "Mobile War" of the year, JD invested heavily in building its own logistics, forming a "logistics wall" with Alibaba logistics; and the payment split caused by "WeChat" e-commerce and "Alibaba" e-commerce.

But whether it is the 4% revenue growth rate of Taotian Group in Q1 2024, which is almost at the bottom among Alibaba's many businesses; or JD.com's revenue growth rate of 3.87% in the first half of 2024, which hit the lowest growth rate in 2020; and the data disclosed by Wei Wenwen, President of Douyin E-commerce, showing that Douyin e-commerce GMV increased by 46% year-on-year in the past year, and the GMV growth rates in 2023 and 2022 were 320% and 80% respectively. This year, major e-commerce platforms are facing the fact that the growth rate has slowed down significantly.

Only by shifting to larger-scale ecosystem competition and building a comprehensive ecosystem covering more users, merchants, and services can e-commerce platforms continue to lock in users, expand market share, and maximize capital efficiency through synergy effects.

Image source: Alibaba financial report

At the same time, although the sinking market is vast, it also has extremely deep barriers - the relatively closed social relations, the different educational backgrounds of the middle-aged and elderly people, and the fear of unfamiliar technologies make them naturally have a large "digital divide" with new technologies. Based on this, they trust their acquaintances, relatives and friends to recommend and teach them how to use new tools, and the risks in the use process are transferred to the "opinion leaders" in the circle of acquaintances. When key figures in the trust chain use WeChat Pay, the elderly will feel that this payment method is trustworthy.

Data from the 2021 China Mobile Internet Development Report released by Quest Mobile shows that WeChat's penetration rate in the lower-tier cities is much higher than that of Alipay, especially among people over 40 years old, where the penetration rate of WeChat has reached over 80%. In other words, Taobao's access to WeChat Pay can not only help it expand the middle-aged and elderly consumer population in the lower-tier cities, but also expand the revenue growth of WeChat Pay.

Similarly, logistics drives business flow, and business flow feeds back to logistics. The integration of Alibaba and JD.com's logistics systems can not only improve the experience of Taobao and Tmall users, but also drive the growth of JD.com's logistics performance. More importantly, by integrating the payment and logistics systems, both parties can not only share some user resources, but also amplify the network effect, form a stronger agglomeration effect, reduce the problem of increasing marginal costs caused by the independent operation of the platforms, and thus maximize capital efficiency and synergy effects.

In addition, e-commerce companies have also been intensively entering the e-commerce of subdivided industries recently. For example, Tianyancha App shows that Tmall has recently established 20 new companies, including Guangzhou Jiaxiang E-commerce and other companies, which are involved in daily necessities, new energy vehicle sales, home furnishings, etc.

02 Price war, high investment flow, high return rate, merchants are becoming less and less interested in Double Eleven

The idea of ​​the platform may be beautiful, but the reality it faces is harsh.

“On Double Eleven, it would be good if we don’t lose money”

"Double Eleven now is basically the same as usual, and there are even fewer orders than usual."

"I've become numb to the Double Eleven platform activities..."

These are a few sentences that merchants frequently mentioned during our communications with them.

Food merchant Hu Yang (pseudonym) told us that although major e-commerce platforms no longer promote the "lowest price on the entire network" as they did last year, increasing discounts on purchases over a certain amount has become another form of "price war." If merchants want to participate in the Double Eleven event, in addition to being forced to use a general coupon for a discount of 50 yuan for purchases over 300 yuan, some platforms directly offer a coupon for a discount of 70 yuan for purchases over 300 yuan. In addition to general coupons, there are also category coupons for a discount of 20 yuan for purchases over 200 yuan and a discount of 10 yuan for purchases over 99 yuan, and consumers can use category coupons and general coupons in combination.

However, due to the serious homogeneity of the food industry, the price war on e-commerce platforms that has shifted traffic to more low-priced goods, the diversion of offline snack discount stores, and the fact that the industry has categories but no brands, the gross profit margin of food industry manufacturers is about 40%, OEM is about 15%, and the comprehensive gross profit margin of snack discount stores represented by Snacks is about 19%.

Nowadays, the e-commerce platforms offer a 50 yuan discount on purchases of 300 yuan or more and a 10 yuan discount on purchases of 99 yuan or more on Double 11, which basically means that Double 11 is all about losing money to gain publicity. Based on this, many merchants hope that there will not be a surge in orders on Double 11, so that they can lose less.

When consumers complain about the Double Eleven routine of first raising prices and then lowering them, don’t merchants also have their own grievances?

In addition to requiring merchants to configure coupons for 50 yuan off for purchases over 300 yuan during the promotion period, forcibly binding freight insurance has also become another standard for merchants participating in e-commerce platform promotions. The original intention of freight insurance is for e-commerce platforms to improve user experience, but consumers take advantage of freight insurance loopholes, merchants do not deliver the same goods as described, and the quality is poor, which has caused the return rate to soar in 2024, and the freight insurance costs that merchants need to bear have also continued to rise.

Liu Na (pseudonym), an operator of a domestic e-commerce platform agency, told us that the return rate of medical device customers has soared from 2% to 5% a few years ago to more than 30% this year, and the return rate of furniture customers has soared to the 50% break-even line. Women's clothing is the hardest hit in almost all categories. A few years ago, the return rate of women's clothing on shelf e-commerce was about 30% to 40%, but this year it can only reach 50%, which is the ceiling. The return rate of live e-commerce industry is about 65% to 70%, or even higher.

Fang Jianhua, founder of women's clothing brand Inman, once calculated the cost of returns. Even if there is no profit, a return order in the clothing industry will cost about 15 yuan, which is equivalent to the merchant's advertising fees, packaging materials, and courier fees. If the sales volume is 10 million yuan, the customer order is 200 yuan, and conservatively 40% of the returns are calculated, the loss cost is as high as more than 300,000 yuan, and the associated costs are more than one million yuan per month.

In order to address the already high return costs, Taobao also launched a return policy during the Double Eleven period this year.

Liu Na pointed out that because the return policy gives consumers 90 days to return products, many women's clothing customers estimate that the premium for a single order may increase by more than 2 times on the basis of the original freight insurance.

Image source: Taobao

If we consider that women's clothing is a business with small inventory, fast turnover, and fast new product launches, but many customers have high inventory, subsequent discounts and promotions will be a cost expenditure. Now, it is a hellish start for e-commerce platforms to sell women's clothing.

While merchants cannot afford shipping insurance and discount coupons, the high cost of traffic investment makes it even more unaffordable. Douyin merchant Zhang Rui (pseudonym) told us that in the food category he used to operate, the customer ROI could reach more than 6, but this year it is only less than 3. During the Double Eleven period, Douyin's top influencers strongly diverted traffic. The recent incidents of Xiao Yangge and Dongbei Yujie have forced Douyin to find a balance between content, e-commerce and huge engines. It is estimated that the Double Eleven investment-to-production ratio may continue to decline.

As Zhang Rui said, taking the special live broadcast of Blue Moon and the Guangdong couple on June 30 as an example, although the sales on that day were between 75 million and 120 million yuan, the media estimated that the special live broadcast cost Blue Moon 40 million. In addition to the Guangdong couple, Blue Moon has also launched different cooperation with Douyin super anchors such as Mr. Zhu, Zhu Xiaohan, Shu Chang, and Shen Tao. The high investment and flow costs of the cooperation with the experts caused Blue Moon's sales and distribution expenses to soar by 108% in the first half of 2024, which seriously eroded its profits and Blue Moon delivered the worst performance in the past three years.

Image source: Baidu Blue Moon Financial Report

The essence of business is profit-seeking. It is difficult for brands and merchants to maximize their profits from Double Eleven. How can we continue to mobilize the enthusiasm of merchants in future Double Elevens and even more major promotional activities?

03 Big promotions become regular, and consumers return to offline shopping

"If you like eating sushi, but if you were asked to eat sushi every day, would you still be willing to eat it? Similarly, if you are surrounded by various promotional activities on e-commerce platforms every month, would you still be interested in Double Eleven?" Consumer Zhou Yangyang (pseudonym) asked back.

Image source: Qingshan Capital "Labor in the New Era of Consumption"

Zhou Yangyang said that she used to like shopping on e-commerce platforms and live broadcasts, mainly hoping to buy high-cost-effective products. However, with the poor quality of products on e-commerce platforms, the frequent sales of fakes by top anchors, and brands pursuing the same price online and offline, why should we buy from e-commerce platforms or even pay attention to the big promotions on e-commerce platforms? It is better to buy directly from offline physical stores. "I can really feel the quality."

As Zhou Yangyang said, the purpose of extending the promotion time of e-commerce platforms is to drive the growth of platform GMV. Frequent promotion information bombardment and complicated promotion rules make consumers feel tired in the process of participation, and gradually lose their enthusiasm and interest in promotion activities. This not only leads to a serious overdraft of consumption potential, but also makes consumers' shopping more rational. The "shopping addict", crazy shopping, and "Double Eleven" shopping spree are gradually becoming history. Instead, they are compared on multiple platforms, and even check information on multiple platforms. This makes it more difficult for e-commerce platforms to facilitate transactions and the competition is more intense.

Image source: Qingshan Capital "Labor in the New Era of Consumption"

Image source: Qingshan Capital "Labor in the New Era of Consumption"

Moreover, long-term promotions not only require e-commerce platforms to bear high marketing costs. For example, before the big promotion started in October, platforms including Pinduoduo, Douyin, Kuaishou, and Taobao frantically launched information flow advertisements. In addition, various emergencies during the big promotion also increased the overall activity operating costs of the platform.

JD.com released a "Double Eleven" advertisement on social media featuring Yang Li, but Yang Li became popular by insulting men, and the vast majority of JD.com users are men. This also triggered a wave of refunds for JD.com plus members, and JD.com had to apologize.

Image source: App Growing

Image source: JD.com official microblog

Moreover, long-term promotions or large discounts may send a signal to consumers that the brand's products are "overpriced", weakening the brand's high-end image. This depreciation of the brand image will cause serious long-term damage to high-end brands. In other words, there seems to be no winner on the merchant side, platform side, or consumer side during the big promotion period.

The more realistic question is, what exactly is being sold during the Double 11 promotion? Consumer Hu Wei (pseudonym) told us that I buy goods essentially to satisfy my needs, which can be material or spiritual. But nowadays, shopping on e-commerce platforms requires a lot of effort just to determine the needs.

If you are buying a common facial cleanser for men, you must first determine what type of skin you have and what effect you want, whether you want a powder, cream, or gel.

After that, it is a long process of searching for products, finding platforms, comparing prices, reading reviews, reading reviews, etc. If you encounter a bad product, there is also a lot of after-sales service involved. I don’t know when shopping on e-commerce platforms during big promotions is no longer a happy and joyful thing, but has become a waste of money and energy.

Nowadays, shopping on e-commerce platforms is not shopping, but rather "labor" - working in a company and getting paid accordingly; but what do you really get from investing so much "labor" on e-commerce platforms during the Double Eleven shopping festival? In other words, is it really worthwhile to invest so much "labor" to save a few dozen yuan?

Hu Wei's words may be exactly what e-commerce platforms need to think about, to meet the needs of consumers and generate transactions on both the supply and demand sides. The underlying logic of consumer society has not changed from ancient times to the present. And the simpler the transaction model, the more transactions can be facilitated. For example, the emergence of Jiaozi in the Song Dynasty in China solved the problem of the inconvenience of carrying and insufficient quantity of traditional currency forms represented by copper coins and gold, making large transactions simple and fast, thereby accelerating the transaction speed. This is also an important reason for the prosperity of business in the Song Dynasty in history. In modern times, the emergence of electronic payments such as WeChat and Alipay has simplified the transaction process, reduced friction in the transaction process, and improved the convenience and speed of transactions.

But today’s increasingly complicated Double Eleven is gradually deviating from the essential attributes of transactions; how much is worth looking forward to in the future Double Eleven?

Author | Guiqulai Editor | Ji Ran This article is written by the author of Operation Party [Value Planet], WeChat public account: [Value Planet], original/authorized to be published in Operation Party, and any reproduction without permission is prohibited.

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