This year's Double 11, it's time for e-commerce to return to common sense

This article introduces the misunderstandings of e-commerce platforms in the pursuit of low-price competition, analyzes the true meaning of user experience, and explores how to meet consumer needs by improving product quality and services to achieve long-term development of merchants and platforms.

Zhang Cheng needs an ice bar to store more and more drinks and wine. This is probably inevitable in an affluent society. Because of the expansion of certain needs, people will have another kind of demand, the demand for upgrading.

But in the past two years, there have been some changes in the consumer sector, and continuously lowering prices has become a trend in the industry. Perhaps influenced to some extent, he finally chose the cheapest ice bar, which was half the price of the industry average. According to an e-commerce platform, this ice bar has the best sales.

But after receiving the goods, Zhang Cheng felt very disappointed. The black refrigerator was crudely made and its cooling capacity did not satisfy him.

Do users really just want cheap goods?

If this question was asked to any e-commerce platform in the past, the answer would definitely be no, because this is common sense. In fact, for a long time in the past, each platform has been building a rich product supply and structure, trying to meet the needs of different levels.

However, in the past one or two years, some changes seem to have taken place. Under the disorderly price war, more and more people will focus on the price displayed on the front desk, and the platform will also try to use a smaller number to facilitate instant transactions. The fact that is ignored is that shopping is a complete experience from pre-sales to sales and after-sales. If repeat purchases are taken into account, it is a person's life experience. Any detail in it will determine the platform's NPS, and then affect its DAU, GMV and ARPU.

Double 11 is a typical example. 15 years ago, Alibaba created this shopping carnival, but the keyword of this day is not just discounts, but more of a collective carnival in the Chinese consumer sector. Countless high-quality and inexpensive Chinese products have entered a broader world through this stage, jointly creating a unique global online consumption boom.

However, the e-commerce industry seems to have been led astray in recent years. This is certainly due to the influence of the macro environment, but it is also closely related to the extreme involution. Participants are driven by competition and begin to follow each other, compete in a homogeneous manner, and stop thinking.

Some questions are actually common sense, such as whether users are pursuing absolutely low prices, and even if consumer interests are paramount, should merchants give up their rights?

Only by clarifying the relationship between users, merchants and platforms can everyone get out of the internal competition together. On the 16th Double 11, the industry should return to common sense and return to the normal development track.

01 Absolute low price is not absolute user experience

After pressing the return button, Zhang Cheng's unhappiness reached its peak. The return address automatically sent by the system showed that the manufacturer of the ice bar was not the identified brand.

He suddenly realized that the manufacturer, platform and consumers had reached a consensus on this OEM ice bar. The platform believed that as long as the price was low, it was good for users. The manufacturer no longer focused on quality and brand, but instead used the lowest production cost and brand fee (authorization) to meet the low price. Even consumers would have the illusion that low price was their only demand.

But apparently not.

From the perspective of consumer psychology, the reason why people consume, in addition to satisfying their life needs, more importantly, is to "regain a sense of control." Especially when goods are no longer scarce, people tend to use shopping to self-regulate, release stress, relieve negative emotions, and achieve self-healing.

Therefore, a seemingly abnormal phenomenon is that no matter what the macro environment is like, consumer goods, entertainment and leisure will continue to develop rapidly. What will win is innovation and better satisfying consumers' psychological needs of "regaining a sense of control."

To put it in today's terms, it means: user experience.

As we all know, user experience includes three elements: price, quality and service. Undoubtedly, price is the most important factor in user experience, and all platforms also use price power as an important indicator of the product evaluation system.

The question is how to understand the term "price power". Frankly speaking, this is a new term that is very characteristic of the times, and has a rather vague premise. For example, if we want to compare the price power of a 3-liang Yangcheng Lake hairy crab, should we compare it among all hairy crabs, among 3-liang crabs, or among all production areas?

Obviously, if any premise is ignored, the price power index produced in the end is hard to say that it is completely fair, and it may even lead to bad money driving out good money. But there was indeed a period of time when the absolute low price had absolute say in the algorithms of various platforms. At the communication meeting on the 12th, Chu Duan, vice president of Alibaba Group and president of Taobao Platform Division, admitted that the Taobao team had done a lot of thinking in the past year, and the final conclusion included that the pursuit of absolute low prices is one of the industry's chronic diseases.

After reaching the above conclusion, Taotian’s price power index was revised. The new index is “competitiveness of price band”, that is, in the same price band of the same category, Taotian’s products are of better quality and lower price than those on other platforms.

Moreover, in order to help the industry get rid of the absolute low-price involution, Taobao has further increased the impact of service experience on merchants. At the end of July, Taobao's new rating system was launched, replacing the previous DSR with "store experience score" and "product experience index". According to Taobao, the higher the experience score, the more traffic the merchant will get, and the merchant will be able to gain more business growth without having to offer unlimited low prices.

Based on the experience points, Taobao has also launched a store label system. Stores that provide good services will be labeled with dimensions such as "average delivery time", "damage compensation", and "customer service response time" to facilitate consumer selection.

In fact, good service was also first created by Taobao. The word "close" established the service standard in the e-commerce era. This service standard greatly satisfies consumers' "Esteem needs" in Maslow's hierarchy of needs, allowing consumers to gain a "sense of control" from the beginning and be more willing to consume, thus driving the rise of China's e-commerce industry and even the service industry.

Taobao is trying to "white-box" its service standards. Its purpose is to make merchants understand that if they have competitive prices in each category and provide good services, there will be traffic, consumers will repurchase, and this positive cycle will be used as a mechanism for store operations.

Quality and service are actually part of the "commodity", and the price paid by consumers also pays for this part. Better quality and better service, that is, stronger price power, also give consumers a stronger sense of "control".

02 Should the platform have a bird’s eye view?

The logic behind e-commerce is the efficient matching of people, goods and places. However, at one point, traffic became the absolute matching factor, and the platform had a God's perspective, ignoring what users actually need. Under the logic of centralized push traffic, the platform will push what users think they need. At the same time, when users no longer "go shopping", the platform does not need to build shelves. In addition, the platform will dig trenches and build walls based on competition, ignoring that users actually need to be inside and outside the walls.

The most typical period of this kind of God's perspective is when the entire industry is engaged in content e-commerce, an e-commerce ecosystem based entirely on traffic. In this ecosystem, the platform can push product links based on the user's portrait, interests, or advertising needs, seemingly giving users more matching choices, but in fact all of this is "what I think you should like" derived by the algorithm. If a platform has too few samples and too short a data history, it is difficult to understand the real needs of users. In addition, the recent frequent quality problems of live broadcast e-commerce have also exposed the deep problems of content e-commerce. It is easy for the platform to make anchors popular, but it is ultimately more difficult to build comprehensive supply chain capabilities.

It is undeniable that in the past few years, content e-commerce has achieved extremely high growth rates, but this year, this e-commerce ecosystem has clearly reached a real turning point. On the surface, this is because the public has become aesthetically fatigued after the proliferation of live broadcasts, but the deeper reason behind this is that everyone needs to "regain a sense of control." Searching for sweet potato flour on Taobao will yield thousands of SKUs, which can be selected based on origin, organic or not, etc. Why bother buying products with unknown ingredients in a live broadcast room?

Shopping is a highly deterministic part of life. In a wider range of scenarios, users need a rich supply of goods to find what they want. In response to this certain but sufficiently personalized demand, shelf e-commerce is the real infrastructure.

It is understood that not only Taobao and Tmall, which have always insisted on shelf e-commerce, but also content e-commerce such as Kuaishou and Douyin have gradually built a shelf e-commerce system. Shelf e-commerce based on massive commodities can greatly meet the personalized needs of users. With sufficient samples and historical data, the platform can make more accurate recommendations for users to choose from, and the core control is back in the hands of users.

Essentially, this is a re-equalization of the e-commerce ecosystem, because in the process of building shelf e-commerce, merchants will also have more control over their own business. Chu Duan believes that in shelf e-commerce, merchants operate their businesses with stores and flagship stores as the core. If other methods are "more like pushing a cart on the street", this store-centered model is similar to renting a storefront offline, which can continue to operate and serve users.

Recently, Taobao has also started internal testing of a new version of the store system, providing merchants with various types of store management solutions, including but not limited to optimizing platform rules, redesigning business mechanisms, operating tools and store products, etc. Taobao has currently invited three types of merchants: "emerging brand stores", "Taobao farm stores" and "Taobao collection points" to participate in the internal testing, and provide support and assistance in different dimensions based on the characteristics of the stores.

Xiao Mu, general manager of Taobao Group's merchant tools and open platform, said at the Tmall Double 11 press conference that Taobao and Tmall continued to welcome a wave of store openings this year, with a total of more than 6 million new stores opened this year, and the number of new brands entering Tmall in the third quarter increased by 70% month-on-month. Tmall also played an important role in the process of overseas brands increasing their investment in the Chinese market. According to data, more than 1,700 overseas merchants opened their first stores on Tmall in the first three quarters.

In addition, in the past, the Internet was full of high walls, and each platform designed its own domineering rules of the game, "I don't care what you think, I care what I think." For example, users who are accustomed to paying with WeChat find it difficult to use Taobao, and it is also very troublesome for users to share Taobao links on WeChat. They need to copy and paste a piece of "alien text." Based on the logic of one inventory, merchants who want to use JD Express cannot do so on Taobao.

With the significant progress made in the Internet's "interconnection and interoperability", this year will be the most open Double 11. Currently, Taobao supports WeChat payment, and WeChat also supports directly opening Taobao links to complete transactions.

Users and merchants have been given greater choices and control, and they are the real "Gods".

03 How important are merchants’ interests?

China is the region with the most developed supply chain in the world. Various supplies are extremely sufficient, which objectively leads to intensified competition on the supply side. Also due to competition, major e-commerce platforms have completely shifted their focus to the user side. In this context, Taotian has determined its core strategy to be user-first.

It should be noted that putting users first does not mean that merchants are not important. Chu Duan emphasized to "Zui Hua" that Taobao has never intended to change its mission - to make it easy to do business in the world. This earliest e-commerce platform in China has gone through several cycles with the industry and realized very early that merchants are the first to provide goods and services to users.

Therefore, he believes that the interests of consumers and businesses must be balanced. Only when businesses have confidence and can operate in the long term can they stably meet consumer demand. He admitted that the relationship between the two was unbalanced at some point, and he felt uneasy because of it.

Before Double 11 this year, Taobao decided to take the lead in correcting its mistakes and began to rebuild merchants' confidence.

The first to be relaxed was the "refund only" policy, which was a widely discussed consumer protection policy that sparked controversy among many merchants. At one point, the refund only policy of e-commerce platforms was quite loose, which gave rise to a lot of "wool party" behavior. Taobao took the lead in rectifying the chaos in the industry. In the past two months, Taobao has intercepted more than 400,000 unreasonable "refund only" transactions per day through new strategies such as upgrading the "refund only" abnormal behavior recognition model and canceling or reducing the active intervention of high-quality service merchants in refund only scenarios. The "refund only" chaos has been basically resolved.

In contrast to this data, there is a set of data provided by the end. In the first week after the relaxation of the refund-only policy, Taobao's transactions with refunds after goods were received decreased by 20%, and the complaint rate of merchants began to decline in July and now exceeds 30%.

It can be seen that in fact, the number of transactions that apply for refund only on the platform every day may exceed one million, which is a very large number, just on Taobao, where the phenomenon of "refund only" is the least. It is the responsibility of the platform to meet the reasonable demands of consumers. Similarly, it is also the responsibility of the platform to curb "wool party" . Maintaining a good order and letting merchants sell with confidence can make it easier for users to buy.

The high return rate is also a major challenge for merchants in their operations, especially for categories such as clothing. Some merchants complained to the service provider, "It takes three attempts to sell a piece of clothing." This involves three shipments and two returns, which means that for one piece of clothing, the merchant needs to bear five logistics costs.

In order to solve the problem of "high return shipping costs", Taotian has now launched the Huihuobao service for all merchants. Compared with the previous freight insurance, Huihuobao can further reduce the return costs of merchants. According to Chu Duan, within less than a month of Huihuobao's launch, 1 million merchants have already subscribed to Huihuobao, and the average return cost of merchants has dropped by 23%, and some merchants' return costs have even dropped by 50%.

"We need to allow merchants to settle down and operate steadily for a long time." Today, Taotian has begun to put this proposition in the most important position again, because only when merchants have long-term thinking can users' needs be stably met.

"In the process of development, there will indeed be waves. What we need to do is to pull back if we find that we have gone a little bit off the track, and to walk a little bit slower and then try to run again," Chu Duan said.

There is no doubt that today, China's largest and earliest e-commerce platform has taken the lead in correcting its mistakes, and after taking a detour, the industry has begun to return to common sense.

(At the request of the other party, Zhang Chengcheng is a pseudonym)

Text: Wei Xia, Editor: Wang Fangjie This article is written by the author of Operation Party [FunTalk], WeChat public account: [FunTalk], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

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