Taobao returns to users, and users return to Taobao

This article will give you an in-depth understanding of the story behind Taobao’s “rebirth” and how it will continue to lead the future of China’s e-commerce industry in a purer and simpler way.

The 21-year-old Taobao is undergoing a "rebirth".

It has been exactly one year since Jack Ma proposed “returning to Taobao, returning to users, and returning to the Internet” in May last year. “Return” has become the main theme of Taobao’s 618 mid-year promotion this year.

From pre-sale to spot sales, from solving "advanced math problems" to direct discounts - some people say that the minimalist Taobao 618 has returned to the era of big promotions without routines and only discounts. After 7 years, Taobao upgraded its web version and restarted the "Taojianghu" forum section that had been offline for more than ten years. Some people say, "The familiar Taobao is back."

The top post on Taojianghu is an old article written by Jack Ma 20 years ago, which contains his vision for Taobao at that time: "The biggest beneficiaries of e-commerce should be users."

The enthusiasm of users has brought back the long-lost excitement of the promotion. In 2003, Taobao's annual GMV was 34 million yuan. In the first hour after the opening of 618 in 2024, the transaction volume of 28 brands exceeded 100 million yuan. As of midnight on May 21, 59 brands had sales of over 100 million yuan on Taobao, and 376 single products had transaction volumes of over 10 million yuan.

"Return" has also been the main theme of Taobao over the past year. In an era of fierce competition for existing products, it is more important than ever to regain the original intention and the trust of users.

1. The simplest 618 in history

Jack Ma once said, "The best model is often the simplest thing."

This judgment is not inconsistent when applied to e-commerce promotion activities.

This year's 618 is called "the simplest and most affordable 618 in history" by Taobao: the pre-sale model that has been used for many years has been cancelled, and the goods are sold directly; most of the goods are directly discounted, and there is no need to get coupons. The minimalist promotion frees users from the complicated arithmetic of cumulative discounts.

The platform also lifted the restrictions on the "300 yuan discount 50 yuan" super promotion for the first time, and Taobao merchants and Tmall merchants jointly participated in the discount. This year's 618 also supported consumers to use 88VIP coupons on Taobao products for the first time.

While reducing the number of routines, Taobao also invested tens of billions of subsidies with the largest force in history, subsidizing the "King Bomb Family Bucket" containing "hard goods" such as iPhone, Dyson, and Estee Lauder to the lowest price on the entire network. According to Taobao, the first batch of "King Bomb Family Bucket" was sold out within 1 minute, driving the GMV of the tens of billions of subsidies in the first hour of the 618 sales to increase by 596.5% year-on-year.

In addition to the real money subsidies, there are also comprehensive upgrades to user experience, services and rights.

In Alibaba's latest letter to shareholders, Chairman Joseph Tsai and Group CEO Wu Yongming said that the "user-first" strategy will ensure that user experience is the top priority in business strategy and product design.

The Taobao App homepage has been changed from three channels to two channels, and has been optimized overall. Many netizens said that they have recently found that the Taobao App has opened much faster.

To improve the user experience, the web version of Taobao was upgraded again after 7 years, and users can watch live broadcasts and place orders on Taobao.com, which increased the average daily user visits of the web version of Taobao Live by 5 times.

In addition, since last year, Taobao has carried out multiple rounds of upgrades to 88VIP membership benefits, including coupons, unlimited returns with free shipping, etc. According to Alibaba's Q4 financial report for fiscal year 2024, the number of 88VIP members has exceeded 35 million, a double-digit year-on-year increase.

Cai Chongxin and Wu Yongming believe that improving user experience will increase user retention and repurchase. On May 20, the number of visits to 88VIP members increased by 40% year-on-year on June 18, and the average purchase amount per person increased by more than 30% year-on-year.

After Taobao upgraded its cooperation with over 200 Internet platforms including Tencent Advertising, Zhihu, and Bilibili, the number of visits to the 618 venue increased 14 times year-on-year.

It is undoubtedly an incentive for merchants that users fall in love with Taobao again.

This year, the number of new Taobao merchants participating in the 618 promotion for the first time increased by 60% year-on-year, setting a new record. According to Taobao, 200 new merchants had a turnover of over one million yuan three days after the sale started, and the overall turnover of new merchants increased by 223% year-on-year. 370,000 small merchants had a turnover of over 100% year-on-year on the first day of sales.

The simplest 618 in Taobao’s history brought back the long-lost excitement.

2. Taobao returns to “21 years ago”

Taobao’s original intention in establishing Double 11 was to “let consumers have a good time once a year.”

The way to "play" is simple, that is, cheap. With simple and extreme low prices, the promotion is popular with consumers. In 2009, Taobao's first Double 11 GMV was only 50 million yuan, while the total transaction volume of the entire network on Double 11 in 2022 was 557.1 billion yuan, an increase of more than 10,000 times.

The minimalism of this year's 618 is a return to the style of the big promotion years.

Simplicity is not only the original idea of ​​the promotion, but also the original intention of Taobao. In addition to the promotion, Taobao is also learning from itself 21 years ago.

As one of the earliest players in China's e-commerce, Taobao's goal from the beginning was to allow users to shop conveniently and cheaply. Jack Ma wrote in a post on Taobao 20 years ago, "The biggest beneficiaries of a true, great, and outstanding e-commerce website should be users, and the biggest builders should also be users."

Jack Ma wrote a post on Taobao 20 years ago stating the importance of users

User-centric thinking has enabled Taobao to gain a foothold in the rapidly booming e-commerce industry, and in the process has led to several industry development nodes.

For example, Taobao’s original 7-day unconditional return policy was designed to prevent users from placing wrong orders and improve the shopping experience by giving them a chance to “regret”. For example, the Double 11 promotion and e-commerce live streaming, which were launched to make it cheaper and more convenient for users to buy goods, also led the changes in the e-commerce industry.

At present, 7-day no-reason return and exchange has become an established rule in the e-commerce industry, and Double 11 and live streaming have also become standard features of major platforms.

20 years later, Jack Ma wrote on Alibaba’s intranet: “In the past year, the most core change in Alibaba was not to catch up with KPIs, but to recognize ourselves and get back on track of customer value.” The return of Taobao is not just a smoother client experience and improved user rights, but in essence a complete return to user thinking.

In 2004 and 2019, Alibaba released the corporate culture values ​​known as the old and new "Six Meridians Divine Sword", with "customer first" running through it. After the latest organizational changes, "user first" is still the top strategy.

The user-first strategy has also brought about real growth in GMV and orders.

The financial report shows that in the fourth quarter of last year ending in March, Taobao Tmall's GMV and order volume both achieved double-digit year-on-year growth. Alibaba CEO Wu Yongming said in the financial report that the strategy of price competitiveness and focusing on user experience is paying off.

At the same time, Taobao has not forgotten its business philosophy of "making it easy to do business anywhere", and has ensured the healthy growth of merchants while giving benefits to users. According to the store opening data released by Tmall in the first quarter of 2024, the number of new merchants increased by 60% year-on-year.

Since the beginning of this year, Taotian Group has released 10 AI business tools to help merchants reduce operating costs. UBS said in a report that in March this year, the conversion rate and return rate of merchants on Taobao and Tmall increased steadily, outperforming other traditional e-commerce platforms.

In an era when all platforms are competing for experience and users, how should Taobao fight this long-term battle for user experience?

3. Re-sharpening the sword of entrepreneurship for another ten years

"Ali's primary goal is to win in the e-commerce field." In March this year, Joseph Tsai set goals for Alibaba and Taobao in public.

It has been 26 years since the first recorded e-commerce transaction in China. The e-commerce industry has now entered a brutal stage of stock competition. User experience is a powerful tool to solve this problem.

It is Taobao's top priority this year, as described by Wu Yongming, and is also the core driving force for business development as described by Douyin e-commerce. Whoever can provide a better user experience will have the upper hand in this round of competition.

What do users really want?

Today's consumers are more inclined to "minimalism" when it comes to shopping: spend the least money, use the least time, buy the best products, and get the best user experience.

The seemingly simple demand requires the platform to spend huge costs and determination.

For e-commerce platforms, user experience can be broken down into operational experience, price, and fulfillment.

In terms of operating experience, Taobao App has undergone a major revision, reducing the number of operations by one second, thanks to the technical team's extensive optimization of the underlying architecture. Industry insiders believe that as a national app serving hundreds of millions of users, Taobao's ability to launch so many functional updates in a short period of time means that user experience has been elevated to an unprecedented level of importance.

In terms of price, Taobao invested an additional 15 billion in consumer red envelopes during the 618 shopping festival this year, and included high-value brands such as Apple and Dyson in the "King Bomb Family Bucket". 88VIP also has large discount coupons.

The low-price strategy is not just a flash in the pan during the big promotion period. In January this year, the "Tao Factory" business, which focuses on direct supply from source factories, was fully upgraded and two commission preferential policies were launched, with the highest discount up to 95% and the maximum discount for ordinary goods being 50%. Taobao also launched the 10 billion flash sale festival for the first time in April, offering a 30% discount on top of the lowest price on the entire network, and the event attracted more than 20 million items to participate.

On the fulfillment side, 88VIP members upgraded their rights to "unlimited returns with free shipping" on the eve of 618. In addition to members, Xinjiang users can also experience free shipping services starting from this 618. After the package arrives in Xinjiang, Taobao will also work with express delivery partners to provide services to the "last mile" and deliver goods to villages for consumers.

After anchoring the path of user experience, how will Taobao fight this long-term battle around user experience in the future?

In the latest financial report and letter to shareholders, Alibaba’s management gave the answers to this question now and 10 years later respectively.

At present, Taobao needs to increase strategic investment in price-competitive product supply, customer service, membership system rights and technology. In the next ten years, Alibaba will "once again regard itself as a start-up, adhere to the original mission of 'making it easy to do business anywhere', and continue to innovate with an entrepreneurial spirit."

Taobao, which was only 1 year old, grew from 0 to 34 million GMV, relying on user experience. Now, Taobao, which is 21 years old and has an annual GMV of 8 trillion, is returning to the starting point. In this "travel" with memories, user experience is still the most important trick.

Author: Ye Zengwen

Source: Snow Leopard Finance (ID: 1093197)