The bad news about 618: low prices “failed” and platforms “took detours”

During this year’s 618, all major platforms have tried their best, including refunding products online, canceling pre-sales, and promoting low prices. However, the current publicity has not allowed this heavy promotion system to “turn around lightly”, and the platforms participating in the promotion have begun to look for other ways out for it.

Starting with the collective cancellation of pre-sales, this year's 618 attempted to reform the gameplay from the very beginning to restore the popularity of the promotion which has been declining year by year.

In terms of time span, platforms have also made adjustments to change players’ perception of the promotion cycle. For example, in order to be more focused, JD.com announced this year that it would return 618 to June, starting from the evening of May 31 to June 20. The duration of 21 days is the shortest among the top e-commerce platforms.

Extending the promotion period may be a more common option. The promotion periods of Taobao, Pinduoduo and Kuaishou all exceed one month. Among them, Kuaishou’s promotion period lasts from May 20 to June 30, spanning 42 days.

Judging from the publicity of various platforms, this year's 618 and various major promotion nodes in recent years have emphasized simplification, with "low price" becoming the first priority indicator and platform traffic constantly tilting towards low prices. However, consumers' reactions seem a little cold.

According to Star Chart data, the total online sales for 618 this year was 742.8 billion yuan, down 7% year-on-year from 798.7 billion yuan last year. Among them, the total sales of comprehensive e-commerce platforms Tmall, JD.com and Pinduoduo was 571.7 billion yuan, down 6.9% year-on-year; the total sales of live e-commerce platforms Douyin, Kuaishou and Diantao was 206.8 billion yuan, with Douyin still ranking first.

Behind the seemingly absolute low prices, the trend of big promotions becoming more complicated does not seem to have changed. In terms of gameplay, the platform is still constantly designing all-inclusive links to promote conversion efficiency. After low prices become normalized, they will be pushed to the forefront during festivals, and the platform and merchants are increasing their efforts.

Today’s low-price promotions have not been able to make this heavy promotion system “turn around lightly”, but the platforms participating in the big promotion have begun to look for other ways out for it.

01 Lower than "drowning" in low prices

Although low-price competition has long been a part of daily platform operations, price is always the most powerful mental sign during big sales. Especially after the cancellation of pre-sales, consumers are more sensitive to prices.

During the 618 period, the bidding principle given by the platform to merchants was very straightforward: give the green light to low prices.

Starting with the low-price "gatekeeper" Pinduoduo, the adjusted 618 search and push traffic rules are that all price-reduced products will increase the weight of the entire site traffic, with the weight increased by up to 9 times. Merchants who actively reduce prices to participate in the promotion of goods can obtain search recommendation weighting, tens of billions of official subsidies, 618 promotion main venue display traffic exposure, 618 conversion rate improvement and other rights.

Since Pinduoduo also uses low prices as an indicator of traffic inclination during non-promotional periods, it specifically stipulates that the prices of promotional orders completed during the 618 period will not be included in the historical lowest prices, in order to encourage merchants to offer more competitive prices during promotional periods.

JD.com, a platform characterized by higher average customer spending, has adopted the slogan "cheap and good" this year, juxtaposing low prices with quality. In addition to conventional promotional strategies such as 10 billion yuan in subsidies and free shipping, the "Spring Dawn Plan" launched last year around the low-price strategy is still expanding its content, including the "price star" supply, which allows merchants to adjust prices based on JD.com's guide price, automatically improving the exposure and competitiveness of products. This is also the logic of the direct connection between low prices and traffic.

What is quite explosive is that during the big sale, JD.com specially opened a price comparison page with its competitors to highlight that the platform's low prices have already reached the forefront in terms of horizontal scale.

A common problem can be seen in the marketing strategies of the above two platforms, that is, the platforms need to launch a more extreme and conspicuous low price for the big promotion on top of the already normalized low-price strategy. The pressure is self-evident.

Pinduoduo is a typical example. Since low price is a universal strategy at all times, the low price mentality is not prominent during promotions, and consumers' psychological expectations are leveled.

In order to further stimulate price competition, during the 618 period, Pinduoduo also launched a new tool called "automatic price tracking", which allows merchants to freely set the "maximum price reduction amount for a single product in a single day" and "maximum price reduction range for a single product in a single day". Pinduoduo can automatically change prices within the price range set by merchants, and emphasized that once it is enabled, it cannot be turned off before the end of the promotion on June 21.

But in fact, iResearch pointed out in "Observation on the First Cycle of "618" in 2024" that due to the relatively balanced growth of Pinduoduo in different time periods throughout the year, the proportion of platform transaction volume in total transaction volume during the promotion period was reduced, and was significantly lower than quarterly or annual statistics.

"Automatic price matching" is not highly regarded by merchants because it encourages extreme price competition and frequent pop-ups. However, Pinduoduo's merchants are more or less accustomed to this kind of price competition, and the platform itself is more concerned with maintaining daily low prices than focusing on holiday promotions compared to its competitors.

In May this year, the news that 56 publishers boycotted JD.com’s 618 book promotion attracted attention. The publishers believed that the 618 promotion plan required all books to be discounted by 20% to 30% for a total of 8 days, which was too much pressure for publishers who were already losing money on book sales, and the platform also required all books to participate in the promotion.

This is a typical merchant backlash, revealing the hidden danger that the underlying logic of the big promotion is being impacted. The involution of prices and the pressure on merchants are a dilemma that everyone can see. What is even more difficult is that in a large low-price cycle, it is difficult for merchants to differentiate themselves and consumers are not interested. The "lower prices to maintain volume and increase revenue" represented by the big promotion may fail.

02 Building a wall for transformation

Not only the more traditional shelf e-commerce, but also the content e-commerce that has been booming in recent years, has performed somewhat mediocre in this year's promotion.

Yicai Business School combined the Feigua data expenditure in the past 90 days and found that the overall sales, sales volume and views of Douyin e-commerce during the 618 period were almost the same as usual.

Taking the four most representative categories (apparel and underwear, beauty and cosmetics, jewelry and collectibles, and food and beverages) as an example, the sales, sales volume and page views of the apparel and underwear categories declined during the May Day holiday, and only returned to the usual level after the big sale began; after the big sale began, the traffic of beauty and cosmetics and food was higher than usual, but the growth was limited; jewelry and collectibles were the categories with the most obvious decline in overall sales.

Looking at the performance of super heads, the transaction volume of Douyin's "Guangdong Couple" in the first broadcast of 618 last year was 450 million, which fell by 86.4% to more than 60 million this year.

Both content and price can be a traffic-generating strategy. When low prices are difficult to trigger traffic in the short term, the platform has some other ideas on how to maximize the value of big promotion nodes. For example, find ways to make promotional traffic form a cycle within the site, lock user attention within the site, and create more "retention".

During the 618 period this year, Douyin and Kuaishou were trying to promote some business methodologies that were deeply integrated with the platform.

In early May, TikTok proposed the concept of "global voice, global explosion". Without mentioning the specific operations involving its various supporting marketing tools, let's take a look at the main points it focused on in the first phase (accumulating brand voice). In addition to basic crowd reach, content interaction and search share are all emphasized.

Content refers to the hot topics and skits on the platform, while search involves deterministic conversion and anchoring of user decision-making behavior. In fact, these are all hot topics in the current content e-commerce business. What the platform does is more like combining them, taking advantage of the popularity of the shopping festival, allowing merchants to practice this business system and reuse it in the future.

Similarly, in addition to regular traffic and red envelope subsidies, Kuaishou has always had a tradition of implementing phased management for big promotions, and emphasizes the sedimentation of the R1 (brand exposure population) to R5 (brand loyalty population).

What is different this year is that short dramas have become a highlight of Kuaishou's business. During the 618 event, Kuaishou launched 22 short dramas exclusively sponsored by Tmall. And after 618, Kuaishou's short dramas will also be launched in the "Ace Follow-up Season", using a long-term content matrix to undertake the traffic and conversion driven by the big promotion.

In general, the platform will still emphasize its low-price advantage, but it has also begun to consider looking for value from more directions, which suggests a shift in the focus of the promotion business. It may be difficult to make a breakthrough by focusing on short-term transaction volume, so it is better to take the opportunity to polish some long-term business plans. Although it is difficult to make a big splash, there are still traces to follow for a long-term success.

03 Conclusion

When e-commerce, merchants, and consumers are all troubled by "Schrödinger's low price", some platforms are trying to rewrite the repeated low-price narrative, starting from the concept, breaking the vicious circle. For example, in Taobao's recent publicity, the term "good price" frequently appears in the description of price. In terms of words, it avoids absolute statements and emphasizes the comprehensive presentation of price to service and product quality.

When the official announcement of the cancellation of the Double 12 Shopping Festival was made last year, the "Taobao Year-End Good Price Festival" was launched as a successor. This can be seen as a foreshadowing and a strategy to change users' minds.

In line with the Double 11, 618 also gradually gave up publishing sales, choosing to "play to their strengths and avoid their weaknesses". In the battle reports of various companies this year, we can still see some gratifying growth, especially those indicators related to the future business direction of each platform.

For example, the number of new members of Taobao 88 VIP increased by 65% ​​year-on-year, and the membership scale reached a record high; the sales of more than 150,000 small and medium-sized merchants on JD.com increased by more than 50%; the transaction volume of 3C digital brands relying on the "strategic large order" model increased by 3 times year-on-year; the transaction volume of more than 190,000 authors on Douyin increased by 300% year-on-year. More than 370,000 authors participated in the 618 Good Products Festival for the first time.

However, according to Wall Street Journal, Goldman Sachs expects the industry's total merchandise volume (GMV) for 618 this year to achieve low double-digit year-on-year growth; however, due to returns and order cancellations, net GMV (i.e. the final actual transaction amount) is expected to only grow in the mid-to-high single digits.

In the past, 618 was still synonymous with growth and was the breaking point for promoting the low-price mentality. However, in an era of oversupply and fierce competition, this scarcity no longer exists.

In other words, when low prices and big sales are "unbound" and become hot words on daily basis on various platforms, the "disappearance of the spirit" of big sales is a foregone conclusion.