Watch Taobao on June 18th: Returning to users is not just a slogan

How did Taobao and Tmall achieve great sales during the 618 shopping festival by optimizing user experience? This article deeply analyzes Taobao’s “user-first” strategy and explores how e-commerce platforms meet consumer needs. It is recommended for e-commerce industry practitioners and marketers to read.

The three core industries of Taobao, namely beauty, 3C and home appliances, have the fastest growth rates.

It has been a whole year since Jack Ma proposed "returning to Taobao, returning to users, and returning to the Internet" at an internal meeting of Alibaba in May last year. Taobao and Tmall's "user-first" strategy started last year. Since this year, they have significantly increased their investment in consumer experience and made the just-concluded Tmall 618 a window to showcase these changes.

How should we evaluate the effectiveness of Taobao Tmall's "Scroll" user experience over the past year? The market feedback is clearly positive.

Alibaba's financial report as of the end of March this year showed that Taobao Group achieved double-digit year-on-year growth in GMV this quarter. A recent report from Analysys also showed that in the first cycle of "618" in 2024, among the five major domestic e-commerce platforms, Taobao and Tmall accounted for almost half of the market share, and maintained a rapid growth of 14.6% under a large base. From the start of Tmall 618 to 9 pm on May 31, 185 brands had sales exceeding 100 million yuan, and more than 37,000 brands doubled their sales.

As of May 28, Taobao's 10 billion yuan subsidy, which launched the "whole family bucket" gameplay, has seen a 445% year-on-year increase in GMV compared to last year's 618 promotion. According to Qingyan Intelligence data, throughout May, Taobao's beauty and skincare sales increased by 69.2% year-on-year; Magic Mirror Insight data showed that home appliances increased by 74.2% year-on-year, and 3C digital products increased by 90.1% year-on-year, leading among mainstream e-commerce platforms. This year's Tmall 618, Taobao Live's full hosting attracted hundreds of celebrities and CEOs to join Taobao to broadcast, and their first show performance far exceeded that of ordinary newcomers.

Live streaming full hosting is also an innovative model launched by Taobao this year. Taobao Live provides one-stop "nanny"-level services to help new Taobao experts to provide good user services. However, the effectiveness of "users first" should be evaluated by every Taobao user, and most users do not care about abstract data such as GMV and growth rate, as well as business gossip such as who has a higher market value than whom.

What consumers want is actually very simple, as an Alibaba employee wrote on the internal website: "Return to the essence of e-commerce services, simple purchase and simple return, less routine and more benefits." The public's demand for consumer experience has no upper limit, and the role of the platform is like walking a tightrope. If you are not careful, merchants may become the "scapegoat" for all problems, causing instability on the supply side. In terms of maintaining this delicate balance, Taobao Tmall cannot be said to be perfect, but the Tmall 618, which canceled pre-sales and served the user experience, has at least taken an important step.

1. Online shopping should be simple

A big change in this year's 618 is that some people finally started praising Taobao for becoming simpler.

A lot of pre-sales, deposits, and balance payments are gone. Taobao has finally reduced sales together with Tmall. Taobao's 10 billion yuan subsidy is indeed the "lowest in the entire network". Even details such as "the green label of freight insurance is conspicuous" have received praise. Until a few years ago, the e-commerce festival movement that lasted for more than ten years has almost become a synonym for complexity.

Although prices during big sales - especially for popular brand products - are still lower than usual, the huge customer flow can often expose huge problems, including the inability to open the app, delayed delivery of pre-sale products, and difficulty finding where to pay the balance... Big sales always cause big company diseases to break out. When the team is too large and a big sale has to bear the performance of many project teams, it is easy for the discounts to be divided according to interest points rather than designed for the sake of "making it easy for users to understand."

In the past few years, there were more than ten kinds of discounts for buying a product on Tmall. Although it was a great benefit for consumers, the rules were so complicated that it was difficult for ordinary people to understand. Some marketing accounts even confidently launched a "one-stop guide for Double Eleven" and asked many consumers to set alarms and collectively grab various red envelopes and coupons. The promotion was so complicated that it was hard to say that there was any user experience.

Taobao and Tmall have reached the point where they have to listen to advice.

This year, Tmall 618 cancelled pre-sales, and issues related to deposits, final payments, etc. completely disappeared. For products such as women's clothing that are prone to long pre-sales, the pre-sale period is also limited to 15 days.

Before the 618 sales started, Taobao continued the "user first" tone of the first half of this year and continued to improve the promotion experience item by item.

The first thing that needs to be solved is the APP freeze problem. As more and more "giant" applications are added to mobile phones, Taobao APP has optimized its fluency and the opening speed is much faster than before. A programmer user found that this national-level application with "many, many, many functions" is now only 50MB in size.

While slimming down the APP, Taobao also adjusted the UI design of the homepage. The original dazzling interface has been greatly simplified. The homepage supports "personal customization" and only displays the most commonly used channels. Infrequently used mini-games and separate short videos and other functional modules are folded up. Some people also found that their page is different from that of their bestie. Taobao has taken a step closer to "one thousand faces for one thousand people". Another problem that has been completely solved is "doing math problems", which has been complained about the most in previous years.

One source of the "math problem" is the various complex full-discount rules and coupons, and the second source is the long-standing difficult-to-explain discount barrier of "Tmall 50 off for purchases over 300, Taobao 30 off for purchases over 200". This year's 618, the barrier was finally broken, and Tmall and Taobao unified "50 off for purchases over 300", and the full-discount rules were greatly simplified. In addition, due to the existence of full-discount, many merchants in previous years liked to write the "final price" after the full-discount on the cover picture, using three or four different price tags on one picture to attract traffic. Before the 618 promotion, Taobao and Tmall standardized these routines and did not allow random price tags on pictures.

Accordingly, Taobao has created a "discount details" function for each product homepage, so that buyers can see all the discounts at a glance. No more math problems when buying things. For Taobao's 35 million loyal 88VIP members, the recent benefits upgrade is also clear and tangible. Since last year, 88VIP has undergone several rounds of upgrades, adding Mango TV membership, daily red envelopes and other benefits. Shopping card users can receive a 2 yuan red envelope every day.

Starting from April 22, 88VIP launched an unlimited return service with shipping included, with a maximum subsidy of 25 yuan each time, and all costs borne by the platform. This service quickly attracted a large number of people who frequently shop online, especially those who love to buy clothes. With the help of these rights, some "hidden ways" of Taobao and Tmall have been developed. For example, the "super value exchange" function of Tmall Supermarket reduces the price of various brand products from 100 yuan to 10 yuan. Many hot-selling snacks are only a few yuan, and with the 2 yuan red envelope of 88VIP, it is equivalent to "zero yuan purchase".

Real benefits have brought real user growth. In May this year, the 88VIP card opening rate was more than three times that of last year, and the number of card openings by those born after 2000 increased by 533%. After the cancellation of pre-sales, member benefits effectively boosted the pace of the big promotion.

During this year's Tmall 618, 88VIP issued large coupons in advance. Each member can receive two coupons: "400 for purchases over 5,000" and "100 for purchases over 1,200". On the first day of sales on May 20, the number of orders placed by 88VIP members increased by more than 50% year-on-year on 618 last year, and the average purchase amount per person increased by more than 30% year-on-year. Some users commented that the sincerity that Taobao could achieve back then can still be achieved now.

2. Return to the essence of e-commerce services

Marketing expert Philip Kotler once said that the cost of winning a new customer is five times that of retaining an old customer, and retaining 5% of customers may bring 100% profit to the company. According to a report by the China Internet Network Information Center (CNNIC), by December 2023, the number of Internet users in my country will reach 1.092 billion. Huachuang Securities released a research report saying that by March 2024, the MAU (monthly active users) of Taobao APP will reach 910 million.

When more than 80% of Chinese netizens use Taobao at least once a month, it is easy to imagine how difficult it is to continue to attract new users. The core strategy of Taobao and Tmall must be to prevent any merchants and consumers from leaving.

So, how to retain users? The intuitive answer seems to be low price.

"More, Faster, Better, and Cheaper", of course, saving is important. In this era when the trend of "letting go" has become popular, almost all e-commerce platforms are emphasizing low prices, shortening the supply chain, competing for merchants in the industrial belt, and giving more traffic to low-priced goods. Taobao is of course no exception. Last year, it launched the "Five-Star Price Power" strategy, with 10 billion yuan in subsidies taking center stage on the APP homepage.

The "banana green" hydroponic bananas that became popular during the 618 shopping event also introduced young people to the Taobao Factory channel, which mainly promoted 3 pieces for 3 yuan. Someone even wrote an enthusiastic "poem" for Taobao Factory, praising it for effectively curing his crazy shopping desire. Once the shopping desire came, he spent 9 yuan to order 9 pieces, simply enjoying the fun of unpacking.

Taobao, the omnipotent company, has a strong and abundant supply, and has come from behind to offer low prices. During Tmall's 618 event, Taobao's low-price gameplay was replicated pixel by pixel across the entire network. Taobao's "family bucket" gameplay, launched with a 10 billion yuan subsidy, introduced first-tier brands such as Apple and Dyson, with the platform providing subsidies to 20% off the network's bottom price. Not only were these products sold out within seconds of being put on the shelves, other e-commerce platforms followed suit and launched similar activities. However, facing 900 million users from all walks of life across cities and rural areas, low prices are by no means the only way out. Many commentators have pointed out that the end of price competition is price convergence.

There are only two ways for merchants to deal with low prices on platforms: shorten the supply chain by using white-label products from industry belts, and win over agents and distributors by using brands. When these two "tricks" are used to the extreme, the supply chain can no longer be shrunk, and prices can no longer be reduced. What can bring differentiation to consumers' perception is something else. Before June 18 this year, a survey of more than 3,000 consumers conducted by the "Rational Numbers" channel of the Beijing News also showed that among the dimensions that consumers value, in addition to the price strength that ranks first, the second to fifth are all related to experience and service: authentic guarantee, comprehensive shopping experience, simple promotion methods, and real price guarantee services.

Among them, 50% of consumers are concerned about low prices, 44% are concerned about genuine products, and 34% are concerned about the "comprehensive shopping experience of product strength + price strength + service strength". In the minds of consumers, a simple, practical and reliable experience is almost as important as price. Last year, Taotian Group CEO Wu Yongming proposed internally: Every penny spent on user experience has a higher ROI than attracting new customers. As a result, Taotian has launched a "return to consumer experience" reform from top to bottom.

3. Taobao wants to take a very new path

Does Taobao have a user experience gene?

As the first generation of e-commerce platform, Taobao's growth environment is very different from today's. Its initial "gene" was not to make products or content, but to attract investment. For many years, Alibaba's "customer first" has always been more biased towards merchants. However, in reality, merchants and consumers are in the same flywheel, and Taobao must grasp one end to make the whole cycle turn, but now the grip has changed to consumers.

Recently, there have been reports that Taobao is fully implementing a new rating system - "Store Experience Score" and Product Experience Index (PXI), replacing the previous DSR (that is, Taobao's previous seller service evaluation system).

This rating system covers all kinds of issues that users care about. The higher the average praise rate of a merchant, the faster the delivery speed, the faster the customer service response speed, the fewer complaints, and the more timely and appropriate the handling of refunds and other complaints, the more traffic will be given to Taobao Mobile search, Guess What You Like, advertising, event registration and other scenarios.

Some businesses have already received this "operating dividend" simply by improving the experience without increasing investment traffic.

A high-selling product in a flagship store of a leading grocery brand on Tmall improved its product experience index (PXI) from 61 to 93 points by improving the delivery and refund experience, and the corresponding product traffic increased by 20.5%. A leading factory store on Taobao launched a dishwashing cloth. By solving the problems of delayed delivery and out-of-stock, the product experience index (PXI) increased from 67 to 90 points, and the corresponding product traffic increased by 39.3%.

Traffic distribution that is service-oriented rather than just low-price and high GMV-oriented indicates that Taobao and Tmall are trying a new path of using operating dividends to drive traffic dividends.

More than 20 years ago, China's first e-commerce platform evaluation system, "Taobao DSR", was put into use. After continuous iterations, it finally became the industry standard, providing a basis for search recommendations on all platforms.

Today, Taobao is trying to update the entire system. Merchants can get more traffic by showing off their "price power", providing better services, or coming up with new products or super products that are worth selling.

Taobao is "all-powerful", and the needs of 900 million consumers are also very different. Compared with other e-commerce platforms, Taobao Tmall's unique advantage is precisely comprehensiveness. Relying on a large and diverse supply, through optimized mechanism design, different groups of people can find a satisfactory consumption experience, and even the smallest demand should not be ignored.

As Wu Yongming said in the earnings call on May 14 this year: "Taotian Group continues to adhere to the user-first strategy, creating a product mechanism that can be operated efficiently by brands, channel merchants, and industrial belt factories, and providing a shopping experience with good products, good prices, and good services to meet the multi-level needs of domestic consumers."

One of the marginal demands that has received attention recently is the upgrade of the Taobao web version. Today, there are only 10 million users who log in to Taobao from PC every day, which is not comparable to the mobile APP. However, on the eve of Taobao’s anniversary on May 10 this year, Taobao thoroughly upgraded the web version, solving the remaining problems such as inconvenient login, and further supported watching live broadcasts on the web before 618.

After the revision, the average daily user visits to the web version of Taobao Live increased fivefold.

Another marginal demand that was "fished out" was free shipping in Xinjiang. Until last year, Alibaba considered the construction of logistics for Xinjiang to be pure investment. This year's Tmall 618, as the first big promotion after free shipping in Xinjiang, witnessed the results of this project. On the first day of sales on May 20, Xinjiang consumers bought more than 60,000 T-shirts and shirts, more than 20,000 facial masks and nearly 10,000 sunscreens on the Taobao Tmall platform.

Xinjiang's population is only equivalent to that of Shanghai, but Xinjiang's free shipping can serve more than just Xinjiang people. In the relevant news comment area, a Henan netizen told his story: he is from Henan and his girlfriend is from Xinjiang. In this long-distance relationship spanning 3,000 kilometers, the things his girlfriend bought for him often arrived very quickly, but when he placed an order for his girlfriend, he always had to face many obstacles in logistics and shipping costs.

Now that Taobao has a special area for free shipping from Xinjiang, he can finally give her more care.

He said in his comment: "My sister loves me very much, and I also want to do my best to treat her well."

Dostoyevsky once said: Love concrete people, not abstract people. When Taobao and Tmall focus on user experience, many concrete people like this boy from Henan are voting with their feet and choosing to return to this shopping platform. According to Analysys Research, in the first phase of the 618 promotion this year, the number of daily active users (DAU) of Taobao APP increased by 22.9% year-on-year. When this Tmall 618 comes to an end, a more receptive Taobao has stood at a different starting point. In the face of increasingly fierce competition, how far this user experience road for multi-level consumers can go still depends on the determination and strength of Taobao and Tmall.

Author: Xiaoxi; Source public account: 36氪 Future Consumption (ID: 774470)