The low-price siege of e-commerce on June 18: Those trapped in the city want to escape

Today's 618 promotion has become a wall for all participants, with major e-commerce platforms competing with each other at low prices, consumers comparing prices on various platforms, and merchants in trouble. How to balance the relationship between them is particularly important. Recommended for Internet friends to read.

After the 618 promotions in recent years, the current 618 has been surrounded by the default low-price competition. As the low-price competition continues to spread, some brands that once actively participated in it have changed their attitudes from positive to negative; various consumers who have been "fooled" are also trying to escape the routines set by e-commerce platforms. At the same time, e-commerce platforms that are unwilling to be kidnapped by big anchors have begun to fight to the extreme with the top anchors whose appetites are constantly increasing.

The once lively 618 has now turned into a siege for all kinds of participants. Those who want to get in keep looking inside, while those who want to get out are trying various ways to escape from the cage of 618.

1. Undercurrents behind the false prosperity

Under the bonus of live e-commerce, various platforms such as Douyin, Taobao, JD.com, and Vipshop are competing fiercely in the live broadcast room, and the rapidly soaring live broadcast data seems to also indicate the "prosperity" of live e-commerce. However, facing another year of e-commerce 618 shopping festival, the outside world is full of doubts and complaints.

A netizen revealed that his friend's women's clothing online store achieved a turnover of nearly 10 million yuan during the 618 period, but after deducting 3.5 million yuan in refunds and 3.8 million yuan in returns, and deducting various costs, the estimated loss was 500,000 to 600,000 yuan. A glimpse of the whole picture shows that under the "prosperous" appearance of live e-commerce, it seems that undercurrents have long been surging.

On the one hand, the sustainability of high sales brought about by low prices is questionable, and there is even the possibility of falling into the trap of "low-price competition". For a long time, low-price strategy has been an important means for e-commerce platforms to attract consumers. As the consumption environment cools down, consumers are increasingly sensitive to prices, and e-commerce platforms have also tried their best to promote sales. Taking Taobao as an example, in 2023, Taobao's cross-store discount was 30 off for purchases over 200, and in 2024, Taobao's cross-store discount was 50 off for purchases over 300. In the past, only on 618 was it 30 off for purchases over 200, and now daily activities have also become 30 off for purchases over 200. If you don't participate in the activities, there will basically be no traffic.

Similar activities are not only being held by Taobao, but also by mainstream e-commerce platforms such as Douyin, Kuaishou, and JD. For example, JD.com announced that during the 618 event, there will not only be 10 billion subsidies, cheap free shipping and other activities, but also a "2 yuan free shipping day", where a large number of low-priced products from industrial belts such as Baoding, Yiwu, Fujian, and Guangdong will be free shipping. Vipshop announced that during this year's 618, tens of thousands of products will be as low as 10% off, and big-name clothing will be reduced by up to 30% on the basis of the lowest price in 60 days. Douyin previously announced that the "Douyin Mall 618 Good Things Festival" will be launched at 0:00 on May 24, and the platform will launch a series of preferential activities such as official 15% discount and one-piece direct discount. Kuaishou announced that the Kuaishou Mall 618 Shopping Festival will cancel pre-sales, adopt the form of spot sales, and increase 1 billion red envelope subsidies.

Objectively speaking, low prices can indeed quickly boost sales and bring a larger GMV to the platform, but as the low-price competition among platforms intensifies, whether the subsequent effect can be sustained remains to be seen. When all platforms regard absolute low prices as their only pursuit, some merchants have to reduce production costs and circumvent rigid expenditures such as environmental protection and quality inspection in order to obtain more traffic and market share to achieve absolute low prices. Under this model, some informal production methods have rapidly emerged, and at the same time, illegal behaviors such as dealers selling goods in parallel and mixing genuine and fake products have spawned, which seriously damaged the interests of consumers.

On the other hand, as the traffic of live e-commerce platforms has peaked, all types of live broadcasts are facing the dilemma of "traffic decline", and the traffic cost has increased dramatically. As the traffic of short video platforms such as Douyin and Kuaishou has peaked, the traffic has declined from the top anchors to the live broadcast rooms of small and medium-sized anchors. Taking the top live broadcast rooms of Douyin, Dongfang Zhenxuan and Jiao Ge Pengyou, as examples, the maximum number of online users has dropped from millions of people online at the peak and tens of thousands of people online daily to today's peak of tens of thousands and thousands of people online daily. The downward trend is already very obvious. If this is the case for the top anchors, the situation will only be worse for some small and medium-sized anchors with only hundreds of thousands of fans.

In this case, the platforms and live streaming e-commerce companies can only drive the growth of live streaming and sales data by lowering prices, increasing traffic, etc., which will inevitably further increase their costs and lead to a cliff-like drop in their overall ROI.

2. Small and medium-sized businesses are suffering

As an important part of the live streaming e-commerce ecosystem, merchants, especially small and medium-sized merchants, are naturally more sensitive to changes in the industry. For merchants, following the e-commerce platform's promotions and obtaining free natural traffic is certainly important, but many merchants cannot afford to offer low-price subsidies just to cater to the platform's promotions.

First, the past routine of "raising prices first and then lowering prices" has gradually become ineffective for consumers, and merchants have gradually become the "scapegoats" for low prices. In the past 618 activities every year, many merchants would raise prices in advance and then lower them during the 618 activities. Although it seems that their prices have undergone major adjustments, the actual prices have basically remained unchanged compared to daily prices. However, in recent years, the frequency of price cuts by e-commerce has become higher and higher, and the activities have become larger and larger. This "painless" price cut has gradually been marginalized. And many manufacturers who are willing to cooperate with price cuts have gradually become the "scapegoats" for low prices. Moreover, compared with the past, many e-commerce platforms on 618 this year have also cancelled the pre-sale system that has been used for decades, and low prices have become purely indiscriminate low prices, which has changed some of the rules of the game for e-commerce in the past to a certain extent.

In order to facilitate price comparison for consumers, many e-commerce platforms have even launched price comparison systems to highlight their low price advantage. For example, Douyin announced a small-scale internal test of an e-commerce price adjustment system; in the Taobao App, when users search for "cheaper than JD.com", the system will directly jump to a price comparison page, emphasizing the low price advantage of its own platform. The emergence of these price comparison systems that cater to consumers' price comparisons has also further made merchants' price profits transparent, further compressing their profit margins.

Secondly, the platform's mandatory requirements on merchants have also affected many brand merchants, forcing them to withdraw. During this year's 618 event, a well-known purifier brand Smart Air announced that it would not participate in JD.com and Taobao's 618 events, and complained that as a small and medium-sized merchant, it was forced by the platform to offer low prices, which put it in an extremely disadvantaged and passive state. Similar cases were not uncommon during the 618 events in previous years, which shows that under such platform-led promotions, it is difficult for small and medium-sized brands not to be influenced by them.

It is not difficult to see that in today's increasingly inward-looking e-commerce market, e-commerce platforms have no hesitation in choosing the former over visible platform GMV and brand interests.

3. Top anchors are retiring one after another

Slightly different from the 618 promotions of previous years, some of the once-powerful e-commerce anchors seemed to have chosen to retire during this year's 618 event, whether consciously or unconsciously. During the promotion, top anchors including Xiao Yangge, Simba, Luo Yonghao, Li Jiaqi, and Dong Yuhui all showed signs of retreat.

In mid-April this year, Kuaishou's Simba was banned for a month by Kuaishou for his angry comments on the platform. But after Kuaishou lifted the ban, Simba returned to the live broadcast room and announced that his live broadcast career was entering the countdown. In addition to Simba, Luo Yonghao, who was once a super head anchor, no longer appeared frequently in the live broadcast room during this year's 618. At the same time, super head anchors such as Li Jiaqi, Dong Yuhui, and Xiao Yangge were also indifferent to 618. As the "lucky ones" in the live broadcast trend, their indifference is by no means accidental.

First, affected by the decline in platform traffic, the benefits of super-head anchors are generally not as good as before. According to Xinxuan statistics, in the first live broadcast of 618 this year, Simba's total sales volume exceeded 8.5 million pieces, with a total sales of 1.427 billion yuan, compared with last year's sales volume of more than 15 million pieces and total sales of more than 1.6 billion yuan, and sales volume has declined year-on-year. According to Qingyan Intelligence data, on the first day of Li Jiaqi's 618 pre-sale, the GMV (total merchandise transaction amount) of the beauty category in the live broadcast room exceeded 2.675 billion yuan, a decrease of 46% from the same period last year.

With weak traffic and sales that are lower than expected, the top anchors who are constantly "haunted by hot searches" have begun to turn to find new ways out. For example, Dong Yuhui made it clear that "he doesn't like selling goods". During this year's 618 event, he rarely appeared in the Douyin live broadcast room and even missed the 618 beauty live broadcast event. Xiao Yangge turned to short film and television dramas and collaborated with the well-known director Stephen Chow to shoot short dramas; in addition to attending some important live broadcast events, Luo Yonghao spent a lot of time on his own VR business. Their fading out also seems to indicate that the once lively track is gradually returning to calm.

Secondly, e-commerce platforms have stepped in personally, and with stricter regulatory policies, platforms are increasingly inclined to support small and medium-sized anchors or store broadcasters, which has also led many big anchors to choose to retire on their own. From the regulatory side, with the improvement of various regulations and policies, the live broadcast e-commerce industry has become more standardized, and the "super low price" advantage previously obtained by super anchors through platform subsidies is no longer available, resulting in a decline in the price competitiveness of super anchors.

From the platform side, no matter whether it is Douyin, Kuaishou, Taobao or JD.com, no platform wants the super anchor to dominate the market and eventually hijack the platform. The repeated tug-of-war between Kuaishou and Simba is very telling. For the platform, optimizing the ecology of live e-commerce and increasing the proportion of small and medium-sized anchors will be conducive to the healthy development of the platform ecology. Unlike Douyin and Kuaishou, JD.com quickly broke out of the circle through its subsidiary JD.com Procurement and Sales, and personally started live e-commerce, which has also become a new path for platform live broadcasts.

In short, as the industry situation evolves rapidly, top anchors are working hard to find their own positioning, and platforms are also moving further and further in pursuit of a more diversified live e-commerce ecosystem.

4. The siege of 618: Where should e-commerce platforms go?

As mentioned earlier, low-price competition is a siege that small and medium-sized businesses participating in the 618 shopping festival have to fight, and the same is true for e-commerce platforms.

On the one hand, as competition between e-commerce platforms becomes increasingly fierce, the marginal effect of simple and crude price competition decreases, and e-commerce platforms obviously need to rebalance the interests of merchants, users and platforms. This year's 618, e-commerce platforms actively transformed and enhanced their ability to accumulate and retain users by "simplifying processes and optimizing experiences." From the first cancellation of pre-sales on the Tmall platform, spot sales began. From the previous user price comparison to the AI ​​self-service price comparison of major e-commerce platforms today, this change also shows that low-price competition has become the core grip of competition between platforms at present and for some time to come.

For e-commerce platforms, not participating in price comparison will lead to loss of users in the short term and market share in the long term; if they participate in price comparison competition, once the marginal effect of platform GMV brought by price comparison decreases, merchants will complain and platform efficiency will decline, which will become the new "three mountains" that will make it difficult for e-commerce platforms to breathe.

In fact, even with the premise that e-commerce platforms cut prices and emphasized service experience this year, the performance of 618 was not satisfactory. In May, many merchants reported that the performance of their stores on Taobao and JD.com platforms generally fell by 40% to 50%, and even the pre-heating advertising fees were not recovered. From this perspective, whether it is to take into account the interests of e-commerce platforms, brand merchants, or consumers, pure low-price competition is not a wise move.

On the other hand, under the value competition of high cost performance, AI-driven may become a new direction for 618 e-commerce platforms. Since April this year, Liu Qiangdong has started his first live broadcast as the AI ​​digital person "Purchasing Dong Ge". According to insiders of JD.com, the live broadcast attracted more than 20 million viewers in less than an hour and achieved sales of more than 50 million. In addition to JD.com, Alibaba launched the official website of the merchant AI tool Quick product on Taobao on the eve of 618, and opened it to Taobao Tmall merchants for free. Douyin has set up a special AI department - Flow, and launched a series of AI products...

From all these, it is not difficult to see that in the extremely competitive environment, relying on AI e-commerce to seek breakthroughs is becoming a key killer for e-commerce platforms to build new advantages.

Author: Liu Kuang

Source: WeChat public account: "Liu Kuang (ID: liukuang110)"