The various aspects of merchants on Double 11: Emptying their pockets to stock up, wanting both growth and profit

Merchants are gearing up for Double 11, with generally high expectations. Brands place high value on ROI and want to increase profits, and new players are looking forward to winning the jackpot.

At the end of September, Ai Guoyong, the founder of running brand Macondo, adjusted his schedule to "big promotion mode".

This year’s Tmall Double 11 opened on October 14, 10 days earlier than last year; JD’s Double 11 also started a week earlier than last year.

With the introduction of a number of measures to stimulate consumption and the market gradually recovering, this year's Double 11 is particularly worth looking forward to.

At the platform level, the efforts are unprecedented - Tmall took the lead and claimed that "this year there will be more and bigger coupons."

On the basis of the official 15% instant discount, or 50 yuan off for every 300 yuan spent across stores, Tmall will invest an additional 30 billion in consumer coupons and red envelopes; Taobao's 10 billion yuan subsidy will continue to increase, with more than 10,000 big-name products at a minimum 20% discount, and an additional 750 yuan large red envelope; the top 100 live broadcast rooms will give out 1 billion red envelopes, with a single red envelope amount of up to 888 yuan, and each person can receive up to 1,500 yuan per day.

At the merchant level, Ai Guoyong has high expectations.

In preparation for Double 11, Macondo has pulled the bowstring to its full potential. "All the items that can be put on the market have been put on the market, and the family's assets have been emptied out." In an interview with Financial Stories, Ai Guoyong said with a smile that his prediction is, "Driven by the big promotion, sales in October and November will be at least two to three times that of August and September."

Not only Macondo, but also after communicating with many merchants, Financial Stories found that:

Firstly, the industry situation this year is complicated, and merchants and brands are pinning their hopes for full-year growth on the most certain Double 11.

Secondly, the stock market has been improving recently, and public consumer confidence has rebounded;

Third, the platform has ensured that merchants reduce costs and increase efficiency through large-scale burden-reduction measures and subsidies, which has also boosted the confidence of merchants;

Fourthly, the government’s 20% trade-in subsidy can be superimposed on the Double 11 discount of up to 15% for the first time. The prices of more than 30,000 home appliances on Double 11 are as low as 40% off. Therefore, home appliances are expected to become one of the main growth drivers of Double 11.

With the above-mentioned multiple favorable factors, merchants and brands have different small goals but the same high expectations for this year's Double 11.

1. Emptying the family's pockets to prepare for Double 11, sales are expected to double month-on-month

Ai Guoyong's small goal may seem radical, but he actually has sufficient confidence.

Macondo has grown rapidly in the past few years, with revenue soaring from 4.04 million yuan in 2019 to 244 million yuan in 2023. Online sales are its absolute home, with monthly sales of over 50,000 units on its Tmall flagship store. This year's Double Eleven, e-commerce platforms continue to extend the cycle, which also means that Macondo can share the benefits of the big promotion more calmly.

It's not just Macondo that has high expectations.

The CMO of a sports brand likened Double 11 to the "Spring Festival Gala". Its main venue was originally in stores, but this year the company set a new goal to increase the online share to about 40%.

The decision was based on the fact that Taobao's GMV grew by double digits and high single digits in the first and second quarters of this year, far exceeding the overall market. According to Analysys International, during the 618 shopping festival this year, Taobao and Tmall platforms accounted for 62% of the overall e-commerce market.

"Wherever the growth is, that's our home ground. Double 11 is the online Spring Festival Gala of our retail industry, and we will definitely invest our all into it." According to the CMO of the above-mentioned sports brand, the brand plans to launch more than 30 new products during Double 11; the discounts for the popular products participating in Double 11 are as high as 50% to 70% overall, "with absolute sincerity."

In addition to GMV growth, the CMO is more concerned with reducing costs and increasing efficiency.

During last year’s Double 11, the e-commerce industry hit the lowest price. “If it was the lowest price, our brand would actually be in a very difficult situation. GMV has increased, but what about the profit? There is no growth in profit, and there is no quality.”

But the trend has changed this year. Compared with the bottomless price, Tmall pays more attention to the balance between quality and price. Since the platform generally regards increasing GMV as the first goal, this goal depends on the merchants at the forefront. Therefore, the platform is more friendly to merchants, and has shifted from emphasizing low prices to win-win for merchants, expanding traffic and reducing costs.

"Double 11 must make consumers happy with their purchases, but merchants must not suffer losses, and merchants must also make money from big sales," the CMO is happy to see.

Not only the aforementioned leading brands have high expectations, but Weiwei, an individual merchant with an annual GMV of less than one million, also plans to make a big move.

Last month, Weiwei's Taobao maternal and child store participated in the 99 billion subsidy event. Without any paid promotion, sales in September doubled compared to August. "The traffic from the big promotion can also benefit our tail merchants, so I am looking forward to Double 11."

In preparation for Double 11, Weiwei did three things.

First, new products were added. More than 20 maternal and infant products were carefully selected from 1688 and put in the store. In order to make the products more attractive, Weiwei's whole family joined in. Her husband served as a photographer and her son served as a model. They took more attractive detailed pictures of all the products.

The second is to prepare stocks - before the National Day, the stock volume was more than doubled;

The third is to increase manpower. In order to cope with the surge in orders, Weiwei hired two new people to be responsible for packing and shipping during the big promotion.

Existing merchants and brands are looking forward to scoring big on Double 11; new brands are looking forward to having a good start on Double 11.

According to Tmall's official disclosure, the number of newly settled brands in the third quarter of 2024 increased by 70% month-on-month. Among them, the largest number of brands settled in September, a 239% increase from August. In the first three quarters, a total of more than 1,700 overseas merchants opened their first store in China on Tmall International; the largest number of merchants settled in categories such as trendy clothing, pure beauty, exquisite home furnishings, jewelry and health care.

Among these new brands, there are many well-known international beauty, skincare and fragrance brands.

On August 5, the "luxury" skincare brand Chantecaille officially entered Tmall; on the same day, the British Museum, one of the four largest museums in the world, also opened a fragrance flagship store on Tmall.

The British Museum Fragrance Flagship Store is betting big on Double 11 - it is actively stocking up, with prices of many popular items reduced to 70%-80% of the daily price.

On September 5, Yohji Yamamoto, known as one of the "three giants" of Japanese fashion design, entered Tmall International and opened his first online flagship store in China.

As the outdoor craze rises, sports brands are also rushing to participate in Tmall's "Double 11". In July and August alone, the well-known Korean sportswear brand xexymix, professional fitness equipment brand triggerpoint, and new cycling brand PMT have all entered Tmall.

Both new and old players are ready. On October 14, Tmall’s Double 11 promotion officially kicked off, and they entered the busiest harvest period of the year.

2. Taking advantage of platform dividends to ensure growth, this generation of merchants has figured it out

"This year on Double 11, merchants must be good at taking advantage of the platforms," ​​Zhang Fang, head of e-commerce for a tea brand, told Financial Story Collection, "use the platform's strengths to your advantage and make good use of the platform's subsidies and discounts."

This tea beverage brand originally had its main store presence, and its main customer groups were business people who "came to the store to rent a private room to discuss cooperation and projects", and companies that purchased mid- to high-end tea as gifts for partners, etc., but the above demands have now shrunk significantly.

Therefore, Zhang Fang is looking forward to making big gains on Double 11 this year to hedge against the decline in store performance. "We are relatively conservative and will not spend money to buy traffic, so we must fully reap the benefits of the platform."

While he was struggling, Zhang Fang waited for a big gift package from the platform - Taobao spent a lot of money on Double 11 this year.

Within the ecosystem, Tmall’s Double 11 plan is to invest an additional 30 billion yuan in consumer vouchers and red envelopes to facilitate transactions for merchants, an amount that is the highest in history.

At the same time, Tmall Double 11 plans to invest tens of billions to purchase traffic from outside and cooperate with more than 200 Internet platforms to attract customers and help merchants reach consumers across the entire network.

How to leverage this vast amount of traffic? Zhang Fang's strategy is to exchange good services for traffic.

In 2023, Alibaba Group CEO Wu Yongming once emphasized internally that "every penny spent on user experience will have a higher ROI than attracting new customers."

This year, Taobao has introduced a new rating system, where store experience points become hard currency within Taobao and are linked to traffic allocation. The above tea brands, which originally started offline, are strong in service.

"We recently upgraded our service. When customers buy one kind of tea from us, we will also give them samples of five or six other kinds of tea. One is to surprise customers and increase their experience scores. The other is to encourage customers to buy new products." - After the above service was launched, the product experience index increased from 60 points to more than 80 points, and the corresponding product traffic increased by 30%+, which surprised Zhang Fang.

In addition, Zhang Fang is also looking forward to the launch of WeChat Payment on Taobao. "Middle-aged and elderly people account for one-third of the people who buy our tea. In the past, they couldn't handle the complicated payments. Now with WeChat Payment, they can buy without any obstacles, and our growth is more secure."

Unlike this tea brand, the aforementioned sports brands have budget investments on Double 11 every year, and this year is no exception.

"But we can't spend money indiscriminately. The hard requirement within the company is that the ROI of Double 11 must be better than that of 618. Our strategy is to make the most of small efforts, do a good job of payment and free shipping, and achieve the integration of product and effect."

As it wished, on this year's Double 11, Alimama plans to distribute nearly 3 billion in "red envelope subsidies". "The news I got from Alimama is that after we participate in the site-wide promotion of hot products recruitment plan, we can get up to 40% additional natural traffic." Not only that, Alimama recently launched the search traffic acceleration plan, and merchants can get up to 30% additional natural search traffic.

This CMO also has high expectations for the structural dividends that free shipping from Hong Kong will bring.

In August this year, Taobao launched a pilot program of free shipping for clothing in Hong Kong. The above-mentioned sports brands were the first batch of early adopters. The two-month trial has achieved good results - the average order value of Hong Kong customers is about 15% higher than the overall market.

On the eve of Double 11, Taobao invested another 1 billion yuan to expand the free shipping category to the entire industry. At present, 92% of the products on Taobao support official direct delivery to Hong Kong, with the delivery time shortened to 3-4 days. The free shipping threshold is as low as 99 yuan, and returns can be made at home - the shopping experience in Hong Kong is gradually catching up with that in the mainland.

"For our products, summer clothes are mostly priced between 100 and 200 yuan, and autumn and winter clothes are mostly priced between 200 and 500 yuan. Any item you buy can be shipped for free, so Hong Kong users have no pressure at all when making purchases," the CMO of the sports brand told Caixin Story.

On the eve of the Double 11 promotion, Taobao’s various new policies to boost growth and promote transactions are coming one after another. The top brands have dedicated people to study and connect with them. For the tail merchants like Weiwei, how can they digest the policies and not miss out on the bonuses?

Her trick is to use the "AI employees" as a "think tank" to reduce costs and increase efficiency. Weiwei's store is currently run by her full-time, with two relatives helping her, and her husband working part-time. "We are always short of manpower."

But with the help of Taobao's AI product Business Manager, she saved a lot of effort. Business Manager, which was launched in June this year, is open to all Taobao Tmall merchants and can provide a variety of capabilities such as material generation, data analysis, and business agency.

Weiwei is now getting more and more comfortable with this AI butler. It can help with everything from product selection to store decoration, to product listing, as well as event participation and data analysis."

If all these tasks were done by full-time employees, "the cost would be at least 20,000 to 30,000 yuan a month."

During the big promotion period, business managers who are familiar with platform rules and market data can show their skills better. Weiwei, who has no time to study the big promotion rules, can directly seek help from AI, such as "Double 11 rules and gameplay interpretation" and "batch completion of big promotion materials".

After communicating with several merchants, "Financial Stories" found that they all had the same common demands for growth, and tended to consider all aspects of growth strategy. On the one hand, they invested fully under optimistic expectations; on the other hand, they leveraged their strengths to fully tap into platform dividends and subsidies. Only with internal and external coordination can growth have a higher degree of certainty.

3. Release power and reduce costs, businesses need both growth and profit

"In terms of scale, we are not the largest, but when it comes to calculations, I am an expert," Weiwei said with a smile during a conversation with "Financial Story Collection", "We run a small business and cannot afford to lose money."

Previously, e-commerce platforms have made refunds the only option as a standard. Weiwei was also fooled. The maternal and infant products she sold had a "net profit of less than 10%. If they only refunded one order maliciously, all the work for 10 or 20 orders would be in vain."

Weiwei is not the only one upset about this. A merchant was so angry that he traveled 900 kilometers to collect the money after he refunded 12 pairs of socks but did not return them.

The turning point came at the end of July this year, when Taotian was the first in the industry to raise the anti-scam banner and optimized the refund-only rule.

First, merchants will have more autonomy to handle refunds and returns. Normally operating merchants can negotiate with consumers and handle refunds and returns on their own. Currently, Taobao’s involvement in “refund only” has been reduced by 20%.

The second is to establish a bottom-line correction mechanism - Taotian invites a third party to intervene to make fair judgments and compensate merchants who have indeed been wronged.

The third is to upgrade the "abnormal behavior identification model" to reject "refund only" for "consumers with abnormal behavior" and prevent "wool-grabbing parties" from succeeding. According to Taobao data, the platform currently intercepts more than 400,000 unreasonable refund only orders per day.

After optimizing the refund policy alone, Weiwei felt much more relieved. "I am more motivated for this Double 11."

Zhang Fang, the person in charge of the aforementioned tea brand, is also committed to cost reduction. He spoke highly of the "Return Treasure" launched in early September, saying that it is "more cost-effective than the previous freight insurance."

Zhang Fang has done some calculations - the store's freight insurance used to cost an average of 1.4 yuan per order. After switching to Return Bao in September, the average cost per order was only 1.27 yuan. "This item alone can save 20,000 to 30,000 yuan a year."

According to Taobao's estimates, after the launch of "Return Treasure", it is expected to reduce merchants' costs by at least 2 billion yuan throughout the year, with the overall average reduction for merchants reaching 20%, and the maximum reduction being 30%.

On the eve of Double 11, in order to ease the pressure on merchants to return and exchange goods during the big promotion, Taobao further systematically reduced the return service fee, with the highest reduction for some merchants reaching 58%.

Moreover, this year Tmall Double 11 no longer forces merchants to purchase freight insurance. "We will choose whichever is more cost-effective. After unbinding, we have all migrated to Return Bao," Zhang Fang told "Financial Story Collection".

Not only that, this year on Double 11, all Taobao and Tmall merchants participating in the promotion can use the "pay later" service for free, and can also obtain exclusive resource exposure to drive transaction conversions; the ultra-fast remittance limit exceeds 250 billion, alleviating the financial pressure on merchants.

Weiwei, who tasted the growth dividend of the 10 billion subsidy in September, plans to participate in the 10 billion subsidy activity throughout the Double 11 period. She was also pleasantly surprised to find that this year on Double 11, Tmall will 100% refund Tmall’s commission for the “10 billion subsidy” merchants for the products participating in the “10 billion subsidy” program. “I can use this part of the commission to reduce the price and leave it to consumers.”

The aforementioned leading sports brand has launched regular live broadcasts on Taobao, and currently has three store live broadcast accounts. This is also an opportunity for the brand to drive growth - the GMV growth rate of its live broadcast room in 2024 is 1.8 times the growth rate of its omni-channel. It can now enjoy a one-year free live broadcast technology service fee policy, which will last until the end of August next year.

According to the platform's estimates, a series of burden-reducing and cost-reducing measures, such as unbinding freight insurance, commission-free major sales, and commission-free store live streaming, are expected to save merchants tens of billions of real money.

In fact, it has become a habit for Taobao and Tmall platforms to give concessions and subsidies to merchants.

As early as March this year, Taobao announced that its "Business Advisor" would be completely free, and gradually exempted merchants from a number of operating service fees.

Behind a series of burden reduction and cost reduction measures, the platform has readjusted the profit distribution mechanism - balancing the interests of consumers and merchants to allow merchants to live better.

An obvious proof is that Taotian's GMV grew by double digits in the first quarter and by high single digits in the second quarter, but its customer management expenses in the second quarter only increased by 1% year-on-year, far lower than the GMV growth rate. The reason is very straightforward: the platform tilts benefits towards merchants and reduces their operating costs.

Merchants are the forefront of e-commerce services. Whether the Double 11 promotion will be successful and whether consumers have a pleasant shopping experience depends to a large extent on the enthusiasm of merchants to participate.

Judging from the interviews with "Financial Stories", businesses generally have high expectations, are loaded with guns and drawn their bows, and are fully prepared for a big war.

Written by Chen Jiying Edited by Wan Tiannan This article is written by the author of Operation School [Financial Story Collection], WeChat public account: [Financial Story Collection], original/authorized to be published on Operation School, and any reproduction without permission is prohibited.

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