Double 11 targets “young people who know how to spend money”

Double Eleven has been held for more than a decade, and not only merchants are tired of it, but users are almost immune to it. Under such circumstances, the growth of various platforms is focused on interconnection and young people.

Every Double 11, the argument that “the atmosphere this year is not as good as before” will sweep the country.

Especially at a time when homogeneous promotions are frequent and live streaming sales have become the norm, the phenomenon of low consumer participation is even more obvious.

In fact, there is no need to be too pessimistic. The overall calmness of Double 11 does not mean the end of an era. To some extent, it reflects the dynamic adjustment of my country's consumption structure and consumption patterns.

Just like this year, there were some good signs on Double 11.

An obvious change in the wind direction is that platforms have gradually walked out of the trap of one-sided pursuit of bottom-price competition and increased their investment in live streaming, private domain traffic, and supply chain improvement, turning Double 11 into a comprehensive strength contest in terms of price, quality, after-sales, logistics and more.

At the same time, the signals of boosting consumer confidence are more obvious this year. For example, government subsidies have "entered the market" for the first time, and can be superimposed on the platform's Double 11 discounts, with a subsidy of up to 20%; the three major platforms of Alibaba, Tencent and JD have broken down the barriers of payment and logistics, "reducing costs and increasing efficiency" for merchants. Everything seems to be moving in a good direction.

However, in the extremely inward-looking e-commerce industry, if major platforms want to win this tough battle, they must "compete more comprehensively" and "compete more sincerely."

1. Double 11 “Technique Exhaustion”

There are some changes in this year's Double 11 Carnival, but really not much.

What remains unchanged is that all major platforms have maintained the basic principle of "low prices" this year, and still use the promotion method of "full discount + red envelope subsidy + member consumption coupons". For example, Taobao and Tmall, on top of the cross-store full discount activity of 50 yuan off for every 300 yuan spent, will also invest an additional 30 billion yuan in consumption coupons and 2 billion yuan in live broadcast room red envelopes.

JD.com also offers a cross-store discount of 50 yuan for every 300 yuan spent, plus a 20 yuan subsidy coupon for every 200 yuan spent on the platform, and an additional 60 yuan subsidy per day; Pinduoduo upgraded its previous "compensation for overpriced purchases" service to a "double compensation for overpriced purchases" service; Douyin, Kuaishou, Xiaohongshu and other platforms have also actively joined the market.

The changes are reflected in two aspects:

First, the duration has been extended. This year, the "battle period" of the Double 11 promotion has been basically advanced by one week to ten days, extending the entire cycle to one month, which means that this Double 11 will be the longest large-scale promotion in history.

At the same time, Taobao and Tmall's pre-sale mechanism has returned, but it is worth noting that JD.com does not have pre-sale. The intuitive feeling is that if you place an order on JD.com and Taobao at the same time, JD.com has already received the goods, but Taobao is still pre-selling; limited by the promotion mechanism, Taobao's price is much more expensive than JD.com (the 300-50 discount cannot be added before the final payment). From this perspective, Taobao and Tmall are a little passive.

Second: Alibaba, Tencent and JD.com turned enemies into friends. Just like the saying goes, there are no permanent enemies or permanent friends in the business world. This saying is perfect to describe the relationship between Alibaba, Tencent and JD.com.

In terms of payment, Taobao has opened up WeChat payment. The "WeChat into Taobao" has directly reduced the operational difficulties in the payment process. For middle-aged and elderly users who prefer to use WeChat payment, they may return to Taobao. In terms of logistics, Taobao Tmall has begun to connect with JD Logistics, and JD will also connect to Cainiao Station. For small and medium-sized businesses, the logistics and distribution costs are expected to further decrease in the future.

As a consumer, these changes are minimal, even a little "ineffective". After all, 300-50 discount activities can be seen almost every month, but the overall shopping experience is more "smooth".

Thanks to the extra-long pre-sale period of Taobao and Tmall, you can shop with ease no matter when you start Double 11. Even if you want to "copy homework", you don't have to worry about missing out on discounts. JD.com has pushed delivery efficiency to the extreme. You can buy today and have it delivered tomorrow, giving you a maximum experience.

Ultimately, the change in the Double 11 platform mechanism from "price coupon" to "comprehensive coupon" is due to changes in consumer psychology and consumption patterns.

2. In the era of quality-price ratio, young people who spend money want both

Young consumers have always shown a tendency to first purchase on different platforms when purchasing different categories of goods. For example, when buying 3C electronic products, most people will first choose JD.com; beauty and clothing and other categories have always been Taobao's main battlefield, while Pinduoduo mainly focuses on daily necessities with low customer unit prices.

During this year's Double 11, major e-commerce platforms showed a trend of invading each other's territories.

An interesting phenomenon is that this year on Double 11, there are many more beauty price comparison posts showing "Sam's Club/Tmall/JD.com" on Xiaohongshu: Taking the popular product Clarins Double Serum 75ml as an example, in Taobao Li Jiaqi's live broadcast room, if you buy 75ml, you will get a bottle of 30ML full-size + 3 elastic gifts for 1,290 yuan (not counting the price of 300-50 yuan for purchases over 300 yuan); Sam's Club sells a single bottle of 75ml for 699 yuan, without any gifts; if you buy 75ml essence on JD.com, you will get a bottle of 30ML full-size + 3 elastic gifts for a combined price of 1,066 yuan, and an AUX fascia gun will be given for purchases over 1,500 yuan.

We don’t know where the blogger decided to buy the products. But this consumption reflects two signals: First, instant retailers such as Sam’s Club have joined the Double 11 poker table. For young consumers who “buy as much as they need” and “don’t stock up”, Sam’s Club’s 75ml Essence of Clarins with a lower customer price can reduce the “sense of consumer expenditure” from a sensory perspective, which is a good choice.

At the same time, the comments section pointed out that "the products sold by Sam's Club are old models, and the after-sales service is not as convenient as JD.com and Tmall." From these comments, it is not difficult to see that young consumers have gradually completed the transformation of consumption concepts from "cost-effectiveness" to "quality-price ratio". When shopping, they value not only low prices, but also quality, service and low prices.

Under the trend of rational consumption, we are gradually entering the era of quality-price ratio.

Under this trend of thought, young people who are willing to spend money believe in "it's okay to buy expensive things, but not too expensive." "Shopping around" on different e-commerce platforms has become a regular practice, and what they compare is not only the discounts on the same product on different platforms, but also the number of gifts, combination methods, and even the platform's own logistics, after-sales and other services.

This is consistent with the "consumer surplus" theory in economics. Surplus value refers to the total value that consumers obtain from products or services, the net profit after deducting payment costs, and is expressed by the formula "consumer surplus = product value - product price". The higher the surplus value, the better the consumer experience.

The obvious success of Sam's Club in the domestic market in the past two years is the best proof. In 2023, the sales of Sam's Club in China will reach 80 billion yuan, with 5 million members. Each member spends 16,000 yuan per year on average. At the same time, Sam's Club can earn more than 1 billion yuan a year just by collecting membership fees. In fact, it hits the demand of these young people who spend money for high-quality and cost-effective products.

Young people want to buy high-quality products within a limited budget without compromising on quality and without sacrificing wallet power.

The most typical example is the pre-sale in Li Jiaqi's live broadcast room. In terms of goods, it ensures a stable and rich product selection mechanism, covering categories such as beauty, mother and baby, clothing, daily necessities, and high-reputation brands. At the same time, it continuously outputs high-quality content with super-value prices, product explanations + displays to meet the diverse needs of "all girls".

According to internal information from MeiOne, the amount of pre-sale and purchases in Li Jiaqi's live broadcast room during Double 11 this year increased by more than 20% year-on-year, and many products such as Cosmetics, Cetaphil, and Valentino were sold out in seconds. Many girls said, "These are my 'must-haves'. I buy things to save money, and it's a good deal to buy two boxes."

It can be said that Li Jiaqi's live broadcast room is a microcosm of the entire industry. Under the general trend of pursuing quality-price ratio, consumers' shopping decisions have become more rational. Only by starting from the competition of consumers and long-term value and thoroughly improving user experience can we gain a foothold.

3. The downward spiral will eventually break, and this year may be a turning point

In the past two years, faced with a shrinking market and young people who "spend more", merchants and platforms can only rely on continuous low-price rolling up to attract consumers. However, this path is now obviously an overreaction, and platform performance is difficult to grow. Merchants are even more miserable and tend to flee.

Taking JD.com's mid-year 618 promotion as an example, according to the financial report, JD.com's revenue in the second quarter this year, including the 618 promotion, was 291.4 billion yuan, a year-on-year increase of only 1.2%. Among them, the revenue from its largest business, JD Retail, was 257.072 billion yuan, a year-on-year increase of only 1%.

In this model, small and medium-sized businesses usually lose money to gain publicity, and play the role of running along in the big promotion. As a result, bad money drives out good money, and a large number of businesses "escape" from major platforms.

Fortunately, this year the platform no longer blindly pursues performance from big promotions, but begins to try a healthier development, that is, taking sustainable profitability as the goal and making comprehensive efforts in product supply, number of members, service efficiency and other aspects.

In terms of supply, we can clearly see the platform's unbundling and support for merchants. This year, Taobao launched tools such as full-site promotion to lower the threshold for merchants to operate. In response to the high after-sales costs of Taobao merchants, it launched the return service, providing a 0-fee, extremely fast payment service.

JD.com has completely cancelled the registration process for merchants, making it easier for merchants to obtain promotion and search traffic support. It has upgraded merchant tools, simplified operational processes, and launched eight core service tools, including the official intelligent customer service robot, to help merchants improve user experience and sales conversion rates in all aspects. Pinduoduo has launched a 10 billion yuan reduction plan for merchants; Douyin e-commerce has opened up the traffic pool of the content field and the shelf field, and launched a universal business model to directly promote the growth of merchants' business.

Of course, quality-price ratio consumption will remain the trend for a long time to come, but the platform's loosening of restrictions on merchants and improvement of operations will inevitably optimize efficiency and reduce burdens.

From the perspective of the overall environment, today's overall consumption recovery trend is obvious. Macro data show that China's total retail sales growth rate is slowly recovering. According to the latest data from the National Bureau of Statistics, from January to August, the online retail sales of physical goods increased by 8.1%, 4.7 percentage points faster than the total retail sales of consumer goods.

Double 11 also brought good news. According to statistics from Tmall and JD.com, after the Double 11 pre-sale started at 8 pm on October 14, sales of home appliances, beauty products and clothing categories soared, and most of the sales exceeded 100 million yuan for the leading brands.

In the foreseeable future, Double 11 may continue to be "calm", but a certain balance will be reached between platforms and between platforms and merchants, and the consumer experience will be more "smooth".

Author: Jia Hehui | Editor: Achan This article is written by the author of Operation Pie [New Retail Business Review], WeChat public account: [New Consumption 101], original/authorized to be published on Operation Pie, and any reproduction without permission is prohibited.

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