Canceling pre-sales, is this the death knell for 618?

This article deeply analyzes the decision of Tmall and JD.com to cancel the 618 pre-sale mechanism, explores the possible impact of this change on e-commerce platforms, merchants and consumers, and guides readers to think about the future direction of e-commerce festivals. I hope it will help you understand the trends in the e-commerce industry.

In previous years, the pre-618 activities were launched early in May, and major platforms competed for consumers' time and money to the greatest extent, but this year is a little special. Recently, Tmall and JD.com, two major e-commerce giants, announced the cancellation of the 618 pre-sale mechanism and returned to "spot sales". This move has poured cold water on the hot "e-commerce festival" in recent years, and has aroused the attention and thinking of all walks of life on the future development of the e-commerce industry.

What does the cancellation of the pre-sale mechanism mean to platforms and merchants? Does it also indicate the withdrawal of 618 in the future? TOP will use this to explore the development path of e-commerce under the new pattern.

1. Evolution of pre-sale: from marketing strategy to "brain-burning" gameplay

It has been 12 years since Taobao first proposed the concept of "pre-sale".

Pre-sale was originally a marketing strategy designed by e-commerce platforms to help merchants prepare goods in advance and reduce logistics pressure. Orders are concentrated in a specific time period to facilitate merchants and logistics to arrange in advance and prepare sufficient manpower and material resources to cope with peak periods.

But as time goes by, pre-sales are gradually changing. From the early 10-day pre-sales to increasingly advanced pre-sales, the battle line is getting longer and longer, and sometimes consumers even have to wait for more than a month before delivery.

In addition, there are a variety of limited-time flash sales, discounts, red envelopes and other promotional activities that are dazzling. Consumers' complaints are endless, but it is difficult for the platform to make up its mind to give up the pre-sale mechanism. The reason is that the extension of the pre-sale cycle can bring better sales figures . Concentrating the marketing budget for a period of time or even within one day on June 18 can create a dazzling "hot-selling" effect and bring significant short-term growth.

Using pre-sale amount as a measurement indicator, the platform will subsequently allocate more traffic to merchants' spot promotions, thereby encouraging merchants to invest in pre-sale marketing as early as possible, resulting in the current situation where pre-sales are becoming more and more competitive.

It is understood that during the Double 11 period in 2022, the pre-sale transaction volume of the top anchors accounted for more than 50% of the total transaction volume. It can be said that pre-sales supported half of the live broadcast promotion.

2. Cancellation of pre-sale: a common demand of merchants, consumers and platforms

Since pre-sales are so "effective", what makes e-commerce giants decide to abandon the pre-sale mechanism?

The success of big promotions like 618 is essentially a "conspiracy" among merchants, consumers, and platforms. Merchants need sales, consumers need discounts, and platforms need good data. When one party is harmed, this mechanism will lose balance.

The marketing promotion of merchants during the pre-sale period is already a considerable expense. Coupled with the various discounts required by the platform, merchants often "break prices", causing dissatisfaction among other dealers. The merchants themselves are also in a state of "losing money to gain publicity".

Behind the GMV that is getting higher year by year, the "explosion" of sales during the peak period caused by pre-sales is just a way to take advantage of other periods of time. Consumers who keep an eye on discounts have no loyalty or stickiness, and excessive investment in pre-sales is not conducive to the stable development of merchants.

Image source: JD.com

Consumers are also gradually losing patience and trust in pre-sales. E-commerce shopping has become a part of daily life, and convenience is one of the basic requirements for e-commerce today. Pre-sales that often take dozens of days to ship obviously cannot meet consumers' shopping needs for "instant consumption."

The only thing that pre-sales attract consumers is discounts. However, in order to transfer losses, many merchants choose to raise prices before pre-sales and lower prices during pre-sales. In fact, the price after the "discount" is even more expensive than usual. This operation seriously damages consumers' trust in the pre-sale mechanism.

Promotions on major platforms have become the norm. Last year, Pinduoduo launched a new concept of "Every Day is 618", aiming to "allow consumers to enjoy discounts on weekdays without having to wait for shopping festivals" and to directly confront the 618 promotions of other platforms.

Consumers who had been "suffering from pre-sales for a long time" were quickly impressed. Last year, Pinduoduo's annual revenue and net profit both increased by 90% year-on-year, nearly doubling its growth.

In the context of intensified competition, canceling pre-sales can shorten users' wait-and-see time and prevent users from leaving for other platforms during the "shopping cooling-off period."

3. The 618 Shopping Festival has fallen out of favor and may be phased out in the future

In the long run, the disappearance of pre-sales may herald the end of the 618 Shopping Festival.

Previously, Taotian Group had a long discussion on whether to cancel pre-sales. Most people supported the cancellation, with the same reason based on user experience: consumers don’t have to wait, users can place orders throughout the process, and pre-sale products are no longer scarce for users…

The final decision to cancel the pre-sale shows that the platform has leaned towards the latter in the balance between short-term interests and user experience.

In the stock era, platforms can no longer increase user retention through opportunistic means, but must focus on user experience, and cutting out cumbersome links is the first step. Even after canceling pre-sales, the platform's 618 marketing cycle is still not short.

Taobao started to accumulate momentum for 618 in late April, and the second wave of 618 activities ended on June 20. Including multiple daily promotional activities, the full cycle of 618 can reach nearly two months.

JD.com’s 618 event will start at 8 pm on May 31. Although it will directly sell spot goods, it will then enter the special period, climax period and return period in sequence.

Image source network

Some netizens said on social media that simply canceling the pre-sale will not change anything. The current promotional rules such as receiving store coupons, product-exclusive coupons, discounts for purchases over a certain amount, daily red envelope stacking, and discounts for the first XX minutes are still very cumbersome.

In response to consumers' calls, the platforms that have already relaxed some of their rules may further cut down on the cumbersome rules in the future. When the artificially created e-commerce shopping festivals become ineffective, the platforms will need to find other ways to retain consumers.

This approach is not necessarily "innovative" or "radical", but it must make consumers feel comfortable.

This does not mean that the e-commerce industry is declining, but it is an inevitable stage in the development of the industry. In the new market environment, e-commerce platforms need to constantly adjust and innovate to adapt to changes in consumer demand and market development trends. Only by keeping up with the pace of the times can the e-commerce industry maintain its own development momentum and usher in a more promising future.

Author: TOP Jun; Source public account: TopMarketing (ID: 1082248)