Taobao's strategy for this year's Double Eleven has completely changed

Unlike previous years when Taobao emphasized the lowest price on the entire network, this year Taobao has turned to pursue rational low prices and strived to balance the ecological relationship between consumers and merchants. This article explains in detail Taobao's new strategy during the Double Eleven period, including its support policies for merchants, optimization of consumer experience, and cooperation initiatives with other e-commerce platforms.

There is still nearly a month until November 11, but the Double Eleven promotions on major platforms have already begun in full swing.

On October 14, Alibaba, Pinduoduo, and JD.com launched Double Eleven on the same day; Xiaohongshu started its "once-a-year shopping spree" on the 12th; Douyin launched Double Eleven after the National Day holiday, and with the return period, Douyin's promotional activities are expected to last until November 30.

In addition to extending the event period, major platforms have also increased their discounts.

For example, Kuaishou E-commerce provided 20 billion traffic subsidies, 2 billion user red envelopes and 1 billion product subsidies during the Double Eleven period; JD.com launched a cross-store discount campaign, with a 50 yuan discount for every 300 yuan purchase, with a maximum discount of 40,000 yuan. Users can receive an additional 60 yuan subsidy every day, etc.

Taobao, which was the first in the industry to create the "Double Eleven Carnival", has changed its strategy this year.

At this time point when "low price" is the prominent feature, Taotian no longer emphasizes the lowest price on the entire network, but strives to pursue rational low prices and balance the ecological relationship between consumers and merchants.

On the one hand, Taotian, like other platforms, is also issuing various large-value coupons and launching various subsidy policies to provide consumers with high-quality and low-priced goods and services; on the other hand, Taotian has increased its support for merchants in this Double Eleven, reducing the burden on merchants through methods such as free commissions for big promotions and free commissions for store broadcasts.

In fact, Taobao’s Double Eleven layout echoes the many changes that have taken place this year.

Since the beginning of this year, Taobao has relaxed its previous low-price strategy to a certain extent. After the end of 618, it modified the "Five-Star Price Power" store evaluation system, reduced the importance of the order volume indicator, and refocused its goal on increasing GMV.

Regarding the "refund only" policy that has caused merchants to complain, Taotian also made optimization adjustments before Double Eleven, striving to reduce the unreasonable refund only phenomenon and protect the rights and interests of merchants.

In addition, Taotian also facilitated two barrier-breaking collaborations before Double Eleven. First, it connected to the WeChat payment channel, and then established a connection with JD.com to provide Taotian merchants with JD Logistics, a new logistics option. All of these are preparations to attract users and promote growth.

Taotian has been stuck in growth for a long time, and it must win the battle of Double Eleven this year.

1. Taobao has changed again and again this year, and Double Eleven is about to usher in a big training

In recent years, Taotian has encountered the impact of competitors and has begun to actively join the low-price war.

Throughout last year, Taobao has been promoting a product evaluation system called "Five-Star Price Power". It also once proposed a strategy of not looking at GMV but mainly looking at DAU, intending to use low prices and sign-in red envelope activities to drive user activity and product sales, and achieve growth through quantity.

But the facts have proved that activities like signing in every day to receive red envelopes will not bring truly high-quality DAU. The blind pursuit of low prices not only compresses the profit margins of merchants, but also does not retain consumers "snatched away" by competitors.

Therefore, this year’s Taobao, I don’t want to just keep bargain hunting at low prices.

According to 36Kr, Taotian’s low-price strategy has gradually weakened.

Judging from the series of measures implemented by Taotian this year, its thinking has indeed begun to change from "attracting users with low prices" to "impressing users with details."

For example, it has launched a series of initiatives such as free shipping services in Xinjiang and pay later, and has also invested a lot of costs to support free shipping services for 88VIP members.

Taobao also redesigned the interface of Taobao Mobile, embedded the "10 Billion Subsidies" entrance on the APP homepage, and designed the homepage to be simple and clean.

According to 36Kr, Taobao also eliminated many unnecessary startup items in the second quarter and made cache optimizations, making it several seconds faster for users to open the Taobao APP than before.

In addition to adjusting its low-price strategy and providing convenience for consumers, Taotian has also begun to upgrade merchants' business tools, mechanisms, strategies, etc.

After the end of 618, Taobao further weakened the "five-star price power" and allocated search traffic according to GMV (transaction amount). The internal assessment indicators also changed. It no longer emphasized DAC (order volume) but refocused on the two major indicators of GMV and AAC (average consumption amount).

In June this year, Taotian began to fully implement a new merchant rating system, including "store experience points" and "product experience points".

According to the announcement released by Taotian, the new scoring system will upgrade the store experience scoring period from the previous 180 days after an order is placed in the store to an evaluation based on 30-day objective store indicators.

The scoring index system has been upgraded from the original subjective index scoring based on three dimensions: description match, logistics service, and service attitude, to a more objective and comprehensive evaluation index system based on the product system, logistics system, and evaluation system, which is more convenient for merchants to operate.

In order to solve the problem that some experience scores do not match the quality of individual products in the store, Taobao has also updated the evaluation dimensions of product experience scores, and scores them based on three dimensions: logistics and delivery issues, product negative feedback issues, and user help issues.

The promotion of experience points can, on the one hand, better serve users and help them quickly find merchants and products that suit them. On the other hand, it can regulate and constrain merchants, making it easier for the platform to carry out quantifiable management of merchants.

More importantly, the experience score also laid the groundwork for Taotian’s series of rights protection strategies for merchants.

According to Taotian’s announcement, merchants with a store experience score of 4.8 or above can obtain three major rights and interests protections: “enhancing the store’s after-sales autonomy”, “increasing exclusive support for complaints” and “enhancing business continuity guarantees”.

The "refund only" policy, which had previously caused complaints from merchants, has also been relaxed with the cooperation of the experience point system.

According to a notice released by Taobao, Taobao will officially implement the optimization strategy for the "refund only" function on August 9. It will enhance merchants' after-sales autonomy based on the new experience points and reduce or cancel after-sales intervention for high-quality stores.

According to the latest rules, merchants with higher comprehensive store experience scores have greater disposal power when faced with a "refund only" application.

This also means that merchants have the right to reject consumers' applications, and the risk of consumers maliciously requesting "refunds only" is further reduced.

According to the latest data released by Taobao, two months after the new strategy was launched, Taobao intercepted more than 400,000 unreasonable "refund only" transactions every day. The unreasonable "refund only" phenomenon has almost been completely rectified on the Taobao platform.

The "refund only" problem has been effectively solved, and Taotian is also reducing the shipping costs incurred by merchants in the "return and refund" process.

On September 12, Taobao officially launched the Return Bao service for all Taobao and Tmall merchants. After merchants join, as long as consumers place an order to purchase goods with the "Return Bao" service logo, apply for a return or exchange after the merchant ships the order and the return or exchange is successful, consumers will be guaranteed free shipping for the first return or exchange.

It is reported that "Return Treasure" will reduce the return costs for merchants by at least 10%, and can achieve a direct cost reduction of up to 30%.

Chu Duan, vice president of Alibaba Group and president of Taobao Platform Division, revealed in a media communication meeting that since the launch of Return Bao on September 14, 1 million merchants have subscribed to the service in less than a month. As of now, the average return cost of merchants has dropped by 23%.

In addition, starting from September 1, 2024, Tmall will cancel the platform's annual software service fee.

In previous years, merchants in different categories on Tmall had to pay an annual fee of 30,000 to 60,000 yuan. However, after the implementation of the new exemption policy, new merchants who join Tmall after September 1 this year will no longer have to pay this fee. At the same time, Tmall will fully refund the annual fee for merchants whose operating turnover reaches the annual target from January to August 2024.

In place of the annual fee, Taotian will charge a basic software service fee of 0.6% of the successful transaction amount of each order. However, before this, many e-commerce giants including JD.com, Douyin, and Pinduoduo have set basic technical service fees, and the charging ratio is also mostly 0.6%.

Almost all the changes reflect an important signal, that is, Taotian not only pays attention to consumers, but also pays more attention to "reducing the burden" for merchants.

Whether this series of changes can really work depends on the results of this Double Eleven.

2. On Double Eleven, how can Taobao still offer low prices?

Since its inception, Double Eleven has been labeled as low prices. Major e-commerce platforms have used all their efforts to promote sales and attract consumers' attention during this shopping carnival.

Especially last year, every e-commerce platform seemed to be intent on winning in the internal competition. In the endless competition for low prices and services, some platforms ignored consumers' real needs for goods and shopping, and also harmed the interests of merchants.

After years of struggling in the low-price battlefield, Taotian began to realize that consumers like not only "low price" but "good quality" is more important.

Therefore, how to pursue a "new low price" during this Double Eleven is the answer that Taotian must give.

From Taotian’s Double Eleven media communication meeting, we can see that Taotian has a low-price strategy layout for both consumers and merchants. On the one hand, it attracts consumers by issuing a large number of preferential policies, and on the other hand, it stabilizes merchants through layout and adjustments in the past year, as well as business assistance strategies during the promotion period.

Taotian said that it has invested the largest discount this year in this Double Eleven, including issuing 30 billion consumption coupons and red envelopes, Taobao's 10 billion subsidies for 10,000 brand products as low as 80% off, and millions of brand products at low prices across the network.

The 10 billion subsidy business is also one of the key areas of preferential strategies implemented during this year's Double Eleven Taobao.

On the afternoon of October 14, Taobao's 10 billion yuan subsidy distributed additional red envelopes with a discount of 50 yuan for purchases over 300 yuan, 200 yuan for purchases over 800 yuan, and 500 yuan for purchases over 1,500 yuan.

Of course, simply issuing large coupons cannot show the difference between the "new low price" and the "old low price". The key to the new low price is that Taotian pays more attention to the consumer experience during this year's Double Eleven.

For example, in previous big sales, the prices of some products on the homepage posters did not match the actual prices, and some merchants’ promotional methods were very difficult to understand, requiring consumers to perform calculations before purchasing to know the specific discounted prices.

In response to this situation, Taotian upgraded and adjusted the platform's product price release specifications before Double 11. The price after coupons and the discounted price will include users' personal assets such as Taobao coins and red envelopes in the discount calculation, and will be displayed on the product details page in a way that is automatically calculated and updated in real time by the system, ensuring that the price given by the system is the price consumers pay, thereby simplifying consumers' shopping steps.

In addition to providing consumers with a better shopping experience, Taotian has increased its support for merchants during this year's Double Eleven period to help merchants better serve consumers.

Tmall will refund 100% of all commissions to merchants participating in the "10 billion subsidies". During the promotion period, Taobao merchants will also enjoy rights such as no commission for promotions, no commission for store broadcasts, and unbinding of freight insurance, all of which will help merchants reduce operating costs.

What is more noteworthy is that the pre-sale system that Taotian cancelled on 618 has returned to this Double Eleven.

Regarding this move, Chu Duan said that many merchants feel that pre-sales are very important to business. After careful research, the platform has indeed found that pre-sales can bring incremental business opportunities.

For consumers, although pre-sale deposits increase the payment step, they also help consumers make rational consumption decisions before paying the balance.

However, judging from the feedback on current social platforms, the extension of the Double Eleven period has limited impact on user enthusiasm, and there are also many consumers who complain that the items in their shopping carts first increase in price and then decrease in price.

From this perspective, Taotian still needs to work harder on more dimensions besides price in order to truly attract consumers.

3. Looking for growth: Taobao Double 11 has heavy tasks and tight time

On the eve of Double Eleven, Taotian also cooperated with its former competitors in order to attract consumers.

Previously, Taotian was connected to WeChat Pay and supported multiple payment methods such as Alipay and WeChat Pay, breaking down the payment barriers for users.

An analyst from a leading investment bank revealed to 36Kr that according to estimates, after Taobao and Tencent cooperate to launch WeChat Pay this year, Taobao's daily new DAU is expected to be in the millions.

Recently, Taotian has also started cooperation with JD.com, and the two parties have communicated with each other in logistics and payment respectively.

In terms of logistics, according to LatePost, Taobao and Tmall will soon be officially connected to JD Logistics, which is expected to go online in mid-October. After that, Taobao merchants will have an additional option of JD Logistics when choosing the delivery method of goods in the system. At the same time, JD will also be connected to Cainiao Express and Cainiao Post.

For Taotian, this logistics cooperation will provide a new way to ship goods for its merchants. At the same time, JD Logistics' warehousing and distribution capabilities will also help Taotian merchants.

At the consumer level, compared with the Tongda Group, JD Logistics has the characteristics of fast delivery, door-to-door delivery, and integrated warehousing and distribution. After Taotian is connected to JD Logistics, it can also provide Taotian's consumers with a more convenient service experience.

Taotian's series of initiatives are undoubtedly aimed at improving the experience of consumers and merchants during Double Eleven and finding new growth in the largest e-commerce carnival in the second half of the year.

Taobao, which has gone through trial and error in the low-price war and is under pressure to grow, must seize this Double Eleven.

According to Alibaba’s second quarter 2024 financial report released, Taotian Group became the only one of Alibaba’s six core business segments to experience a decline in revenue.

The financial report shows that in the second quarter of 2024, Taotian Group's revenue was 113.373 billion yuan, a year-on-year decrease of 1%; Taotian Group's revenue from China's retail business declined to 107.421 billion yuan, a decrease of 2%; among them, direct sales and other business revenue decreased by 9%.

The financial report stated that the decline in direct sales and other revenues was mainly due to a decline in sales of consumer electronics and electrical appliances categories caused by Alibaba's plan to reduce several direct sales businesses, which was partially offset by an increase in grocery sales.

In addition, Taotian Group's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the second quarter of 2024 also declined to 48.81 billion yuan, a decrease of 1% from the same period last year.

The financial report explained that the decline in this data was mainly due to increased investment in user experience and technological infrastructure, which was partially offset by narrowing losses in several businesses.

As the largest business segment under Alibaba, Taotian Group's performance is crucial to Alibaba.

If you want to deliver a growth report in the next reporting period, you must solve the "application problem" of Double Eleven correctly.

In order to answer this question correctly, Taotian had "read a lot of books", "consulted some classmates", and "done a lot of calculation steps".

The final "score" of this question will also verify whether Taotian's exploration and changes over the past year have really gone in the right direction.

Text/Dou Wenxue Editor/Ziye