The four key words of 618: AI, low prices, refunds only and high return rates

This article mainly discusses the four key words of the 2024 618 Shopping Festival: AI, low prices, refunds only and high return rates, and their impact on merchants, consumers and e-commerce platforms.

Since the concept of pre-ordering came into being, the annual Double 11 and 618 shopping festivals have become battlefields for merchants, couriers and consumers. Consumers repeatedly think about how to combine coupons to save money; merchants rack their brains to quickly eliminate inventory pressure with preferential prices, and couriers often offer 400 yuan a day to recruit temporary couriers. As a result, every shopping festival has become a busy battlefield for everyone.

However, unlike previous years, when each had its own promotional focus, this year everyone seems to have returned overnight to the most fundamental origin of all e-commerce promotion festivals - low prices, endless low prices . Looking further, this year's 618 may have many firsts: the first big promotion after all e-commerce platforms emphasized the return to low prices; the first mid-year promotion after the explosive growth of AI; the first big promotion after all e-commerce platforms opened a refund-only service; and the first big promotion with a super high return rate for all categories.

1. Keyword 1: Low price - there is no carnival in the low-price siege

The most important point of this year's 618 may be the crazy pursuit of low prices. Although the emphasis on low prices began last year, this year is the first big promotion after all e-commerce platforms emphasized the return to low prices. Of course, we can simply attribute this series of problems to: as the competition between platforms becomes more and more fierce, price wars are almost inevitable. This is the case with Luckin Coffee, Kudi, Starbucks, Taobao, JD.com, and Pinduoduo.

But in such a situation, we must think about one thing: Is such a crazy price war really a good thing for platforms, merchants and consumers?

From the perspective of merchants, giant brand merchants may not be afraid of this, but for small and medium-sized merchants, it may not be a good thing. During the 618 period, almost all platforms launched activities such as "official instant discounts" and "cross-store discounts", and at the same time required merchants to support "seller version of freight insurance" and "pay later" and set strict delivery time.

For sellers, the already high return rate during the promotion period will further increase their costs. In addition, as mentioned at the beginning, the cancellation of the pre-sale system this year has indeed improved the consumer experience, but if this series of new requirements are added, it will inevitably put extremely high demands on the management capabilities of sellers and further squeeze their profits. As a result, we have seen many small and medium-sized sellers directly announce that they will withdraw from this 618 event.

It is not just small and medium-sized sellers that are crushed by low prices. The platform itself is also trapped in a siege. As traditional shelf e-commerce companies, the competition among JD.com, Taobao and Pinduoduo has already put enough pressure on traditional shelf e-commerce companies. But at this moment, Douyin e-commerce, which was born from live streaming e-commerce, has officially pressed the accelerator and tested the e-commerce price change system on a small scale in May. According to the description, for merchants who have activated this function, their products will be automatically adjusted by the Douyin platform based on the price change range determined by the system's intelligent analysis.

After Douyin launched this feature, Pinduoduo quickly launched the automatic price tracking feature. At the same time, it is rumored that Taobao is also trying to test the corresponding feature and will launch it soon.

In addition to some merchants announcing their withdrawal from the 618 shopping festival, it is worth noting that the top anchors who have always focused on low prices are also trying to withdraw. During the entire promotion period, Simba, Luo Yonghao, Jiaqi, Dong Yuhui, Xiao Yangge and other top anchors have all shown a trend of shrinking. Behind this is that a large number of platforms are increasing their support for store broadcasts. After all, for the platforms, merchants themselves are also a core resource that needs to be competed for. Only by incubating more different types of anchors can they attract as many consumers as possible.

Obviously, most platforms have more or less realized that low prices cannot be the core of competition forever, and may even become the beginning of a vicious cycle. Therefore, this year, emphasizing different products and services on the basis of price competition, as well as the support of AI e-commerce, has become a killer weapon for various platforms to cope with the pressure of growth.

2. Keyword 2: AI - Intelligently pissing off every consumer

The essence of using AI to attract consumers is to provide consumers with a better shopping experience. The biggest change in experience is not from AI, but from the cancellation of the pre-sale system that was introduced in 2012. The cancellation of the pre-sale system allows merchants to directly promote sales and greatly reduces consumers' boredom and disgust.

Unfortunately, the world is often a process of gain and loss. The pain that consumers suffer after the cancellation of the pre-sale system will always be made up in other places, such as AI technology, which is also expected to improve consumer experience.

Strictly speaking, this 618 is the first mid-year e-commerce promotion after the outbreak of AI technology. E-commerce platforms have been promoting AI technology before the event. JD.com, Taobao, Baidu e-commerce, and Douyin e-commerce all have their own AI products. For major platforms, AI is indeed a good opportunity to show their technical strength. After all, everyone knows that the traffic during 618 is huge. If they can successfully pass the test of 618, it is almost a golden sign for their AI products.

Moreover, since last year, the competition among e-commerce platforms has been fierce. To attract consumers, there are only a few traditional ways, such as advertising, low prices and services. But for attracting merchants, AI is an excellent choice to reduce costs and increase efficiency.

At present, there are three main applications of AI in the e-commerce field: AI anchor, AI customer service and AI telemarketing .

Therefore, on the afternoon of April 16, the AI ​​digital human "Purchasing and Sales Dong Ge" created by JD Cloud Yanxi started its live broadcast debut. At the same time, during the 618 period, JD opened the AI ​​digital human's live broadcast technology directly to merchants for free to help merchants start broadcasting at low cost.

On May 16, Taobao also launched the official website of the Taobao Merchant Tool Quick product, and opened it to Taobao Tmall merchants for free. It also stated that the product is a tool specially customized for e-commerce sellers to help merchants in multiple scenarios such as selling point extraction, copywriting, product image generation and data analysis.

However, the performance of the AI ​​digital people during the live broadcast was not very good. In many cases, their answers were relatively mechanical. Although in the stories of the AI ​​anchors, they were the ultimate aggregation of people who were good at selling goods, creating a super-hot atmosphere, controlling the scene, and selecting products, but in terms of actual performance, they were still the "stupid geese" that conformed to the consumer stereotype. There might be a 20-second delay in replying to consumers, and their answers to inquiries were often somewhat stiff and stereotyped, and there would even be errors in the audio and picture being out of sync.

Fortunately, although the AI ​​digital person seems to be ineffective now, the good news is that if consumers are not interested, they can just swipe away. However, when it comes to AI customer service and telemarketing, judging from the feedback from current consumers, their most applicable field is probably selling "blood pressure drugs". Consumers with high blood pressure who are angry are likely to hope to buy a bottle of blood pressure drugs as soon as possible.

Unlike the small impact of AI anchors on consumers, AI calls are almost rampant. Many brands will use AI to proactively make calls before various major promotions in order to reach consumers. However, as Morketing previously interviewed the CGO of a well-known brand company, the other party once said: " No consumer wakes up every morning looking forward to interacting with the brand. They expect a good experience ." A large number of users on social media platforms also complain about this telephone marketing model.

Obviously, at this stage, the only application of AI in the e-commerce field that can bring positive changes to consumers may be AI customer service. To some extent, AI customer service does have many advantages over human customer service. It is more patient, provides more detailed responses, and is available 24 hours a day.

However, if we really turn to the consumer side, we will find that in addition to the various AI assistants for merchants that have been launched last year, the more novel one is the "Tmall AI Bargaining Assistant" launched by Taobao, which officially claims that it can help users buy more affordable goods during the 618 period.

However, the AI ​​bargaining assistant quickly became popular after it was launched, not because it really helped consumers spend less money, but because AI made me feel embarrassed for myself. Many netizens summarized AI bargaining as: "Bargaining like a boss, then waving his sleeves and leaving, leaving me socially awkward in front of the store owner."

Of course, AI bargaining robots can only be considered embarrassing, but if consumers really encounter after-sales problems and the merchant happens to use AI customer service, the scene is likely to be a disaster. On the one hand, consumers are in urgent need of communicating with merchants to negotiate returns and refunds due to after-sales problems, and on the other hand, the merchant's AI customer service always repeats back and forth asking consumers to choose text categories.

The good news is that most businesses still set the transfer to manual service as the first-level window. Except for a few consumers, most consumers can find manual customer service and complete the operation in the first time. However , at this stage, the application of AI in the e-commerce field is still more of a simple question-and-answer robot. Perhaps we also need more time for customer service to complete the process of switching from manual to AI. After all, for consumers, experience is the first priority.

3. Keyword 3: Refund only - Kill those white-label merchants

However, judging from the results alone, AI has not become the hope of the whole village, but has become a new means to anger every consumer. So behind the low price, the service seems to be changing. For e-commerce platforms, as long as it comes to service, Pinduoduo's refund-only policy can almost be regarded as a benchmark idea for service, at least for ordinary consumers.

In 2019, after experiencing the consumer boom brought about by the "price cuts", the most anxious thing for Pinduoduo at that time was probably not where to find consumers, but where to find the supply chain. After all, Pinduoduo, which had just opened up new markets with "price cuts" and 10 billion subsidies, wanted to compete with Taobao and JD.com, which have been in the industry for many years, in terms of supply chain. This is just a pipe dream.

Therefore, those white-label merchants who have products and production capacity but no brand became Pinduoduo's target. Then the famous C2M (Customer to Manufacturer) model was born, and this model allowed Pinduoduo to overtake others with "low prices".

For the white-label merchants at that time, although they had production capacity and goods, they also lacked mature e-commerce operation experience in addition to lack of brand, which ultimately led to the goods provided by the merchants not meeting the actual expectations of consumers. For example, the process of producing the product was relatively rough, but it was not marked in the text, or the packaging was not firm enough during the subsequent express delivery process, resulting in appearance damage during transportation.

At this time, Pinduoduo's refund-only model can quickly resolve consumers' anger. In fact, many consumers expressed a certain degree of surprise when talking about this policy. At least on the surface, "refund only" is equivalent to weaving a safety net, and consumers can boldly try the products provided by small and medium-sized merchants.

So after the "10 billion subsidy war" and "low-price e-commerce C2M strategy" failed, major platforms almost unanimously learned Pinduoduo's ultimate weapon - refund only.

In September 2023, Douyin launched a refund-only service. On December 26, 2023, Taobao announced the full launch of a refund-only service. The next day, JD.com quickly followed suit and announced the launch of the service. In January 2024, Kuaishou also joined the ranks of those who support refund-only services. Even second-hand e-commerce platforms such as Xianyu support refund-only services. As of now, almost all mainstream e-commerce platforms have supported refund-only services. This 618 is also the first mid-year promotion where all platforms support refund-only services.

So, can consumers really try the products provided by small and medium-sized sellers and let them make a profit? The answer is obviously no. If you search for "refund" on Heimao Complaints, you will get 152,529 complaints, and most of them are complaints from merchants against e-commerce platforms.

If we search on various social media, we will find that many buyers have directly reported that they were still communicating with the merchants about the return of goods, and the platform directly intervened and proactively provided buyers with only refund compensation. There are even a large number of so-called "wool parties" who specialize in teaching how to make profits through the refund-only business of major platforms.

What is even more strange is that if refunds are only a superficial gimmick, in essence, the platform wants to have both high quality and low prices, but does not want to make additional investments, and can only push the after-sales responsibility and bear the losses to the seller, making the merchant a scapegoat. Consumers do not seem to be much better. In addition to complaints from merchants about refunds, Black Cat Complaints is also full of consumer complaints saying: "After the goods are returned, the merchant uses all means to not refund the money."

It seems that after all e-commerce platforms support refunds only, they have become a dark forest of human nature. Consumers who just want a refund or return are cheated by unscrupulous merchants, and sellers who want to sell goods are being fleeced by "wool-grabbing parties".

4. Keyword 4: High return rate - 80% ultra-high return rate

If refunds alone bring unknown risks, then to some extent, refunds alone have further exacerbated merchants' anxiety about return rates, especially at a time when return rates are getting higher and higher. Not long ago, "a certain e-commerce women's clothing merchant complained about a return rate of 80%." A large number of merchants commented on various social media that returns are not scary, but what is scarier is that among the 80% of returns, half of them only ask for refunds. Some sellers even bluntly stated that the essence of the women's clothing pre-sale system is: "10,000 people make reservations, but only 3,000 items are ordered, and then the returned goods are mailed to the next batch of consumers in batches."

After browsing the comments section of related events and interviewing some sellers, Morketing received feedback that returns in the industry this year are almost all-round. Regardless of the category, large brands may perform better, but the high return rate among small and medium-sized sellers and brands has almost become a common problem in the e-commerce industry. Refunds alone further exacerbate this risk. Many sellers directly stated that returns and refunds are considered small losses, and if they are directly refunded, it can be said that they will lose all their money.

At the same time, some merchants also believe that the extremely high return rate is also because the traffic of e-commerce platforms is not accurate. When the mobile phone is touched, it inexplicably jumps to various third-party e-commerce platforms. This has almost become a standard operation of content apps during promotions . From video media to graphic media, almost all openings, pop-ups, banners and some small advertising spaces in corners are occupied by e-commerce advertisements. "I ate XXX and lost XX pounds in a month." As long as you search for one, you will continue to receive various different advertisements on different apps.

This reflects the anxiety of both content platforms and e-commerce platforms. For e-commerce platforms, although the traffic on the site is becoming more and more expensive, it is becoming increasingly difficult to meet the needs of merchants. For content platforms, the top platforms almost eat up all the traffic, so the platforms can only recover blood crazily during the big promotion period. Those KOLs or KOCs who survive in the platform ecosystem are obviously not immune, and reckless commercialization is naturally inevitable.

But for merchants, on the one hand, the traffic costs on the site are rising, and on the other hand, the platform keeps asking for low prices and only refunds. The final result will naturally become that the platform traffic is getting more and more expensive, coupled with some problems such as inaccurate push or impulsive orders by consumers, which will further increase the return rate and become a vicious cycle.

On the contrary, most buyers clearly do not agree with this view.

In fact, if you browse the comments section about refund rates on various platforms, you will find that the most common comments are: Why do you return the goods? Isn’t it because of poor product quality? No matter how bad the environment is, you can still make money. Think about your own reasons. Why do buyers keep refunding?

In addition to quality issues, policies of various e-commerce platforms such as 50 yuan off for slow purchases of 300 yuan are also the root of the problem. In order to make the purchase in batches and get a discount, it is inevitable that some non-first priority products will be purchased. A few years ago, when everyone's willingness and ability to consume were strong, buyers would most likely be willing to keep the products unless there were obvious quality issues. But this year, with overall consumption more rational, refunds are more likely to occur as long as there is even a little dissatisfaction.

Perhaps the changes in the consumer market are very simple. In the past, there was traffic only when there were sellers, but now there is traffic only when there are buyers.

The extremely high return rate will inevitably change the sales status of merchants, just like the previous problem of pre-sales of women's clothing. Consumers hope to buy affordable and high-quality products, while the platform hopes to attract consumers with low prices, AI, and refund-only labels. Merchants have changed from the active party to the passive party, and can only find ways to defer the demands of the platform and buyers, such as the so-called pre-sale system, turning to basic models with lower refund rates, or even actively reducing quality in order to cater to low prices, or simply increasing prices to the point where they can still make a profit even if the return rate is extremely high.

V. Conclusion

Although facing various problems, at least from the perspective of pure data, the sales of various platforms are relatively good. According to the first round of battle reports of various platforms, on the first day of JD.com's 618 promotion, more than 10,000 brands increased by more than 5 times year-on-year; in the second wave of Tmall's 618 promotion, more than 37,000 brands doubled their transactions, and the transaction scale of 50 trending categories exceeded 1 billion; in the first week of Pinduoduo's 618 promotion, the total sales of mobile phones reached 3 million units, the sales of many home appliance brands exceeded 1 billion yuan, and the sales of beauty products increased by more than 80% year-on-year.

However, each platform still needs to better balance its own interests and the interests of merchants and consumers, so that the platform's technology can truly become a weapon to reduce merchant costs and improve efficiency, and ultimately allow consumers to truly get a good experience.

Author: Innocent Roland

Source: Morketing