Why 1688 is so clear about "anti-involution"

The 1688 e-commerce platform has recently taken a series of eye-catching measures to publicly declare its "anti-involution" stance. These measures are aimed at providing more support to source factories and merchants, reducing their operating difficulties and costs, while improving efficiency and profitability. This action by 1688 is not only a response to the current involutionary competition in the e-commerce industry, but also an active protection of the interests of merchants.

1688 has put forward an attractive slogan - anti-involution.

On August 12, 1688 launched a series of "anti-involution" measures for the source manufacturers of the industrial belt, including providing merchants with a series of "efficiency improvement and revenue increase" measures, and providing free "AI business assistant" etc.

This is the first e-commerce platform in the industry to put the "anti-involution" slogan on the table, and it is very clear.

Why is 1688’s attitude so firm?

The reason is actually not difficult to understand. Among the current mainstream e-commerce platforms in China, based on its own B2B attributes, 1688 is closest to the source factory.

This also means that once the competition of "involution" and "low prices" is rolled towards the source factory, the entire industrial chain will not only face the problem of squeezing the intermediate profits, but may also face product quality problems such as cutting corners.

At the same time, the merchants are almost unable to continue.

Long-term low-price competition has forced many merchants to sell goods at a loss under the pressure of price-breaking. Business is becoming increasingly difficult, and they are even suffocated by the three major problems of "difficult operation, high costs, and low profits". The voices of doubt about "only refunds" and "low-price internal competition" from merchants in the market are getting louder and louder, and complaints are endless.

As these front-line feedbacks become more and more frequent, 1688, as a platform that is still essentially 2B-based, must consider the interests of merchants more and stand more on the side of merchants. Data shows that the number of source manufacturers on the 1688 platform currently exceeds 1 million.

Because of this, it is imperative for 1688 to raise the banner of "anti-involution" and send a good signal to merchants. 1688 even said, "I wish to turn into a stone bridge so that people can cross it."

However, 1688's "anti-involution" measures this time are more focused on providing AI tools to merchants to help them improve efficiency and increase revenue. In fact, this is also what the current mainstream e-commerce platforms are doing.

As for the "refund only" policy, which is the most controversial in the market and the one that merchants are currently most concerned about, 1688 did not make any core adjustments this time.

As to whether it can drive the industry to break through, it ultimately depends on its implementation.

1. Return to “Simplicity”

"Make it easy to do business anywhere in the world." This is not only Alibaba's mission, but also one of the keys to 1688's "anti-involution" initiative.

According to the person in charge of 1688 merchants, in terms of efficiency improvement, 1688 has comprehensively simplified the business model of merchants on the platform, making the business of merchants as simple as self-operation and supply model, thereby improving the business efficiency and business results of merchants. To put it bluntly, it is "self-operation uses AI, and supply model uses hosting".

Making business simple and operating simple is the main focus of 1688 at present.

The fact is that with the continuous changes in the consumer market, even 1688, which is mainly B2B, has seen its online business become more and more complicated, with huge changes in rules and gameplay. Many merchants have given feedback to 1688 that they need to operate 1688 carefully to make big money. In particular, many factories cannot operate 1688 stores without looking for agents to operate them.

Especially in the past two years, based on the trend of substitute products, many small B merchants and C consumers have flocked to 1688 to "dig for treasure" at the source of factory goods, looking for big-name OEM factories and brand substitute products. Many merchants who are used to large-scale business are not able to adapt to the needs of these buyers for a while, and are a little overwhelmed by the high-frequency small-amount purchases, and even have a resistance to small wholesale and lightly customized orders.

Whether the source factories can concentrate on production and do what they are good at without having to rack their brains to generate traffic, and whether they can easily handle interactions with buyers, are the issues on 1688's desk.

In the past, this was a huge problem. But now, AI has provided a solution, and 1688 provides AI business assistants to merchants for free.

Based on 1688's 24 years of knowledge accumulation in the B-type e-commerce field, AI business assistant can help merchants build a digital employee team with professional operation experience. The main members of the team include AI store managers, AI material operations, AI marketing promotion and AI customer management.

According to the person in charge of 1688 merchants, during the grayscale test of the AI ​​business assistant, the business difficulty of merchants using the product was equivalent to 60% of the original, and the business opportunities increased by an average of 50%. Through the free AI operation capabilities provided by the platform, merchants can now complete the work that previously required a professional operator with only 0.2 manpower.

At the same time, "AI business assistants further simplify the interaction process between merchants and buyers, reduce unnecessary communication, and further increase the proportion of silent orders. Looking forward to the future, almost 99% of Class C orders will be placed silently, so merchants don't have to worry about not being able to properly serve this type of buyers."

Using technology to make business simple again is the "anti-involution" strategy given by 1688, and it is also one of the implementations of Alibaba's current main AI e-commerce strategy.

2. Competition for the Source Factory

Since the end of last year, 1688 has been given a higher profile within Alibaba and has become one of the first batch of strategically innovative businesses, the “Four Little Dragons”, along with Xianyu, DingTalk, and Quark.

In comparison, the attributes of the latter three tend to be innovation, while 1688 tends to be strategic. As Alibaba’s oldest and original business, its weight was upgraded this time mainly for the purpose of fighting and winning.

In the past few years, under the impact of Pinduoduo, Douyin and others on Alibaba, Taobao Tmall has not shown a defensive advantage, and its growth has been weak, and its market share has been squeezed and diverted.

Under this heavy pressure, the burden of fighting fell on 1688.

The key to victory lies in the competition for high-quality industrial belts and high-quality source factories. In particular, the strong rise of Pinduoduo, Douyin, etc. is based on the white-label merchants in high-quality industrial belts, which provide sufficient low-price supply.

This time, 1688 has raised the high-profile banner of "anti-involution", and its purpose is naturally to show goodwill to the merchants in the industrial belt to release to them the certainty of business growth and considerable profit margins.

In terms of revenue growth, 1688 announced that it would provide "double guarantees" for the business results of new merchants, helping them to obtain at least 50 Class B orders or buyers each month. At the same time, two types of member merchants, namely, powerful merchants and super factories, can directly access the core traffic scenarios without setting transaction thresholds. The platform also launched a "10 billion scale traffic subsidy", which will increase the exposure of promoted products by more than 40% compared with the past, reduce the average click cost by 38%, and save 38% of promotion costs for every 1,000 clicks.

These are policy levels.

At the same time, in terms of platform positioning, 1688 no longer wavered, but chose to do what it does best.

In the past two years, due to the influx of a large amount of C-type traffic, 1688 has also tended to favor C-end users in some rule adjustments and introduced upgraded services such as "free shipping for one piece" and "free shipping for returns".

This also confuses merchants as to whether 1688's B2B positioning will shift.

Also at this "anti-involution" meeting, the head of 1688 merchants clearly stated that currently more than 90% of the transaction volume of the entire 1688 platform still comes from enterprises. Although the flow of consumer traffic continues to rise, 1688 will not transform into an e-commerce platform that focuses on both enterprises and consumers, but wants to become a digital supply chain platform.

In other words, still stick to B.

1688 realized that its core competitiveness lies in supply, and it cannot compete with C-end platforms in terms of traffic and number of users. This self-awareness is very necessary, and it will bring 1688 back to its basic principle of providing high-quality supply, and focus on how to attract more high-quality industrial belts and source factories to join 1688.

Just as Jack Ma called on Taobao to return to Taobao, 1688 is also returning to 1688.

Author | Ye Er Editor | Wei Xiao This article is written by the operation author [Lan Media Hui], WeChat public account: [AI Lan Media Hui], original/authorized to be published in the operation party, and reproduction is prohibited without permission.

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