The lowest price on the entire network has disappeared, will Double 11 get better?

This year's Double 11, Taotian Group abandoned the traditional "lowest price on the entire network" label and tried to break through to create a more positive business environment. Taotian Group's new strategy includes reducing the burden on merchants, improving consumer experience, and providing merchants with a more stable operating environment while ensuring the supply of low-priced goods.

“Trying to solve industry problems”

Fast Reading:

• The label of the lowest price on the entire network seems to have disappeared in this Double 11, and Taotian Group is trying to break the deadlock.
• Create a positive and stable business environment instead of allowing businesses to lose all their profits, which will eventually lead to the decline of the entire industry.
• This year’s Tmall Double 11 is an important node to test the interim results of Taobao’s new changes.

The label of “the lowest price on the entire network” seems to have disappeared in this Double 11.

Over the past year, refunds and the lowest prices on the Internet have plunged major e-commerce platforms into an unprecedented internal competition, hurting merchants and affecting consumers' shopping experience. In this process, Taotian Group has gradually transformed from a entrant to a disruptor.

"Taotian discovered the problem during the process and made adjustments quickly. It cannot sacrifice one end (merchants) in order to cater to the other end." A Taobao insider told Snow Leopard Finance.

At the media communication meeting on the 12th, Taotian Group officially announced the new gameplay of Tmall Double 11 this year: the big sale will start at 8 pm on October 14th. Based on the official 15% discount and cross-store discount of 50 yuan for every 300 yuan spent, Tmall will invest an additional 30 billion in consumer coupons and red envelopes.

Taotian Group stated that the subsidy intensity for this Double 11 will be unprecedented, and it will provide merchants with a more certain business environment while ensuring sufficient supply of low-priced goods and consumer experience.

1. Taotian did three things

"Mr. Wu (Alibaba Group CEO Wu Yongming) is a technology and product person and is very pragmatic. He will not look for a reason to do or change something. If he wants to do something, he will do it. If he wants to change something, he will change it. If consumers and merchants like it, we will continue to do it." Chu Duan, vice president of Alibaba Group and president of Taobao Platform Division, said in a media interview after the press conference.

In his opinion, this is also the overall working style of the new leadership team of Taotian Group.

Since the new executives officially took over the business, what has Taotian Group done and what has it changed?

"When I first returned to Taotian, two phenomena appeared in the industry that made me feel uneasy." Chu Duan said that the industry as a whole began to focus on short-term interests, and the interests of consumers and merchants were unbalanced.

Chu Duan has worked at Alibaba for 17 years, from joining Taobao to founding Xianyu, and then worked at Alipay and Ele.me for two years each, before returning to Taobao. He has been responsible for multiple business lines and is a practical person. These are the two phenomena he is most reluctant to see.

"Business is an ecosystem, and this ecosystem is very averse to ignoring objective laws or being too ambitious, which will put the platform and business development in trouble."

An insider of Taotian told Xuebao Finance that after realizing this problem, the group spent a lot of time and energy discussing it, and finally concluded that it was necessary to make a trade-off, abandon certain short-term interests, return to long-termism, and all measures should be aimed at creating a positive, healthy and sustainable business environment.

In response to the unhealthy phenomena emerging in the industry, Chuduan summarized the "three major chronic diseases" that Taotian has tried to solve in the past year.

The first is the "refund only" policy that has been complained by merchants. Refund only is an inevitable product of e-commerce development to a certain stage, because in some online shopping scenarios, the cost of return and exchange is higher than the cost of the goods themselves, and some fresh fruits are not suitable for return.

But over the past year, Taotian gradually realized that refunds alone began to cause panic and burden to merchants. After hearing the merchants' voices, Taotian conducted a detailed investigation and designed a large number of rules to ensure that the interests of merchants would not be harmed while ensuring that the consumer experience was not affected.

For example, if a consumer often uses refund only, the platform will not approve his application immediately, but will conduct a more detailed evaluation through customer service. For clothing categories, the platform will support return and refund by helping consumers bear the shipping costs, rather than just refunding.

At the end of July this year, Taobao officially relaxed its restrictions on refunds. According to data provided by Taobao, the complaint rate of merchants began to decline significantly from that month, and has dropped by more than 30% so far.

The second industry problem is the high cost of return shipping, which is what merchants often call the freight insurance problem.

Chu Duan believes that the development of e-commerce is inseparable from a sound service system, of which logistics and insurance are one of the links. However, the high cost of returns has brought a great operating burden to merchants, which is particularly evident in some categories, such as the clothing industry, which has a high return and exchange rate. "On average, Taobao clothing merchants have to sell a piece of clothing three times before they can sell it."

In response, Taotian, in conjunction with logistics companies and insurance companies, upgraded its freight insurance to Huihuobao in September this year. According to the company, since Huihuobao went online on September 14, 1 million merchants have subscribed to the service in less than a month, and the average return cost of merchants has dropped by 23% so far.

The third major problem is the industry’s low-price internal circulation phenomenon.

Chu Duan said that not being inward-looking does not mean that Taotian will give up low prices, but Taotian’s pricing power is different from other platforms, and Taotian must be competitive in all price ranges.

For example, in the 1 yuan price range of mineral water, the quality should be good and the price should be low. The same applies to the 5 yuan and 10 yuan price ranges, rather than the entire beverage industry having 0.5 cents and 0.1 cent.

Taotian is trying to send a signal: to create a positive and stable business environment, rather than allowing merchants to lose all their profits, which will eventually lead to the decline of the entire industry.

2. Return to a more rational low price

This year’s Tmall Double 11 is an important node to test the interim results of Taobao’s new changes.

At the Double 11 media communication meeting, Taotian’s five business general managers successively introduced the new ways of playing this big promotion, mainly focusing on 88VIP membership benefits, Taobao Live, Juhuasuan and 10 billion subsidies, as well as the optimization and upgrading of the business environment for merchants.

During this promotion, the 88VIP coupons that were previously exclusive to Tmall stores will be added to some Taobao stores for the first time, and 88VIP large-value coupons will be distributed in advance at 2 pm on October 14.

According to Xiuxun, general manager of Taobao Group's 88VIP business, Taobao 88VIP has maintained double-digit growth over the past year, with the number of post-00 users increasing by 67% year-on-year and the membership scale exceeding 42 million, making it the largest paid e-commerce membership in China.

The scale of 88VIP’s annual partner brands increased by more than 300% year-on-year, and more than half of the business of top brands was contributed by 88VIP.

In terms of live broadcasting, on October 14, 100 live broadcasting rooms will be opened at the same time, with a total of 1 billion yuan in red envelopes distributed. In a single live broadcasting room, each consumer can receive up to 30 red envelopes per day, with a single red envelope value of up to 888 yuan, and each person can receive up to 1,500 yuan per day.

Taobao believes that live streaming e-commerce has entered a new stage of quality live streaming from the entertainment celebrity model. Yuan Yuan, general manager of Taobao Live Store, said that the quality live streaming model with professional anchors, branded goods, and high-quality platform service guarantees has become the mainstream of the industry.

In the first half of this year, Taobao Live's GMV increased by 30% year-on-year, and the live broadcast GMV penetration rate reached double digits.

Although Taobao no longer frequently mentions the lowest price on the entire network, it still hopes to maintain the low price in the minds of Taobao users. During the promotion period, Taobao's 10 billion yuan subsidy will continue to increase and "super subsidy" will be launched.

During the 618 shopping festival this year, Taobao's 10 billion yuan subsidy transaction volume increased by 550% year-on-year, and industries such as 3C digital, home appliances, fast-moving consumer goods, fresh food, and home furnishings all maintained triple-digit growth. This also gave Taobao the motivation to continue the 10 billion yuan subsidy.

In addition, there is support for merchants. In addition to measures such as loosening the refund policy, launching store experience points, and launching return treasure since July this year, during the promotion period, Taobao Live's software service fees will be fully waived, freight insurance will not be mandatory, and service fees will be waived for pay-later services, as well as 100% of the 10 billion yuan subsidy to return Tmall's commissions.

The pre-sale system that was cancelled during the 618 shopping festival has returned during this Double 11 shopping festival.

Chuduan’s explanation for this change is that many merchants feel that pre-sales are very important to business. After careful research, Taotian has indeed found that it can bring incremental opportunities to merchants.

"We follow the principles of market demand and value creation. If people are unhappy or the problem has not been solved, we will use new methods to solve it."

Author: Hanxing Cover source: Alibaba This article is written by the operator [Snow Leopard Financial Society], WeChat public account: [Snow Leopard Financial Society], 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.