Pre-sale disappears, "Cat and Dog" compete for users, and "Doupin" adds fuel to the fire

The essence of canceling pre-sales on June 18 is to boost consumer desire and compete for users’ wallets in advance.

This year’s 618 is a little different.

Recently, Alibaba decided to cancel the "pre-sale" mechanism that has been implemented for 10 years, that is, to sell directly from 8 pm on May 20, with price guaranteed throughout the process.

Alibaba made this difficult decision to give up the dividends brought by pre-sales, which means that the platform operation and revenue model will change. Since the Internet giants shouted to return to users last year, the strategy has gradually shifted from merchants to users, and user experience and price wars have returned to the mainstream. The e-commerce industry is about to set off a new round of bloody storms.

In addition, JD.com and Kuaishou will also start selling spot goods on May 31 and May 20 respectively. Facing new forces such as Pinduoduo and Douyin, old players such as Alibaba and JD.com have made changes. Whether they can get satisfactory scores in the 618 test depends on how they implement it.

01 The two-sided nature of the pre-sale “buffer zone”

Looking back to 2008, JD.com launched its first online "618" mid-year promotion. At that time, the "618" promotion was simple. Liu Qiangdong would select a few products and put them on the 618 flash sale list. Even the start, end, and inventory of the flash sale were done manually, which was very crude.

After several developments, consumers are already very familiar with the process. They will fill their shopping carts several days in advance, repeatedly compare the amount of discounts, and prepare to place orders before 12 o'clock. Only after the rush to buy at 12 o'clock can they go to bed peacefully.

Behind the consumer shopping spree, there were also countless warehouses, logistics, servers, and funds that exploded. This was a major test for any e-commerce platform at the time.

Although many brands with "transactions exceeding 100 million yuan" will be born at midnight, many merchants will not be able to prepare goods in time due to the surge in orders, logistics companies will be overwhelmed by the large amount of goods, and buyers will complain because they cannot receive the goods.

According to relevant media reports, a Tmall insider said that the main reason for pre-sales was the explosion of consumer demand. Many big-name products were often in short supply, and pre-sales could lock in stocks in advance. For merchants, pre-sales can better guide stock preparation. Now, merchants must adapt to the platform rules again.

Therefore, 618 needs a pre-sale model to balance. The platform will collect various information when consumers put products into the shopping cart in April every year, and roughly classify consumer preferences, added products, quantities, delivery addresses, etc. Before 618, the platform will first send some goods to the warehouse. On the night of 618, only countless funds will explode.

The deposit payment strategy later launched by the platform also follows the same logic. Paying the deposit and the final payment again and again can make it easier for merchants to prepare goods, the platform to sort out information, and the logistics to maintain speed.

In short, pre-sales objectively play a role in advance preparation and relieving pressure from multiple parties. It allows the platform to withstand this major test related to the domestic online retail industry and "find out" consumer preferences in advance; it allows merchants to grasp the sales situation in advance and reduce inventory risks; and it allows consumers to lock in hot products and new products first through pre-sales.

Everything has its pros and cons. In the past 618 events, the pre-sales on e-commerce platforms allowed some merchants to "take advantage of loopholes".

An analysis of complaints received by national consumer associations in 2023 released by the China Consumers Association pointed out that the pre-sale model of e-commerce platforms urgently needs to be standardized.

This situation analysis lists issues such as dishonest price increases for the "final payment", no price guarantee for pre-sale goods, failure to deliver promised gifts, failure to ship on the promised time, and false promotions of the "lowest price".

Now, big promotions such as 618 and Double 11 are losing their appeal. On the one hand, platforms such as JD.com and Taobao are not differentiated enough and create too many festivals, which makes consumers gradually insensitive. At the same time, Pinduoduo's factory direct delivery and low-price route, as well as short video platforms' daily live broadcasts and daily promotions, have once again impacted traditional e-commerce promotions.

According to the "China Internet Audiovisual Development Research Report (2024)", 71.2% of the surveyed users shop online because of watching short videos and live broadcasts, and more than 40% of Internet users believe that short videos and live broadcasts are their main consumption channels. Content consumption is becoming a key track for major platforms to compete. This is enough to show the impact of short video e-commerce on traditional e-commerce.

At this time, Alibaba and JD.com chose to cancel pre-sales, which is a disguised publicity to increase the 618 highlights. For consumers, canceling pre-sales can reduce many unnecessary steps, and directly purchase products, which will be a much smoother experience. However, canceling pre-sales will inevitably have other impacts on platforms, merchants, and consumers.

02 Pre-sale cancellation = returning users?

The e-commerce pre-sale system has been in place for many years, but its effect on boosting GMV has been greatly reduced, and too many routines have reduced user experience. Cancelling it now is also what the people want. However, after the pre-sale cancellation incident, merchants in the big promotion must be on high alert.

A Yiwu merchant who runs a shoe and hat industry belt told Jingshang, "Pre-sale is reverse customization, and we will decide the production volume based on the orders. For small merchants like us, the impact is not that big, and basically the spot stock can meet consumer demand. But the top brand merchants have a large demand, and they have layouts on multiple e-commerce platforms. Canceling pre-sales may have an impact on the brand, and we can only rely on past experience to prepare stocks."

For users, after canceling the pre-sale, they may make impulse purchases when the product is put on the shelves.

Looking at the platform again, in 2023, JD.com will no longer disclose the sales of the 618 promotion. In 2022, Tmall no longer disclosed the sales of Double 11. The big promotion data gradually disappeared, and there are traces to follow. After all, Wu Yongming and Liu Qiangdong have called for focusing on consumer experience. Canceling pre-sales means that Taobao will actively sacrifice some short-term income. Simplifying the sales process is a key step in Taobao and JD.com's self-revolution.

In addition to canceling pre-sales, the 618 promotion also focuses on low-prices and full-link services.

Since Liu Qiangdong personally launched the year-round "low-price" strategy last year, JD.com has not only promoted the slogan of "good products at low prices" during this year's 618, but has also clearly called for "a simpler JD.com 618".

Judging from the current information, JD.com continues to tilt traffic towards low-priced goods, and has added a new gameplay of "lowest price in half a year". If merchants successfully register for 618, and the price of the goods during 618 is lower than the price in the past 180 days, then the merchants can automatically participate in this gameplay. Of course, what consumers care most about is whether the platform can implement real benefits.

Taotian Group also emphasized "low prices" during the 2022 Double 11. The promotion is no longer based on GMV, but emphasizes price power and multi-level strategies. Last year's Double 12 was also changed to the "Year-end Good Price Festival". In order to attract more small and medium-sized businesses to return, Alibaba established the "Small and Medium Enterprise Development Center" and the "Taobao Good Price Festival" to serve small and medium-sized businesses last year.

After 2024, Taobao has launched "refund only", free shipping in Xinjiang, free shipping for 88VIP members, etc., hoping to increase its appeal to users. In addition, Alibaba has also set up a team to optimize and upgrade the Taobao PC terminal - restarting the Taobao web version for the more than 10 million users who shop on computers every day.

This year, Taobao still hopes to create a low-price mentality and grab as much user wallet share as possible. In addition to "trading price for volume" on super single products and main styles, 10 billion yuan in subsidies and Taobao live broadcasts are also key areas for low prices.

Tmall has set up an "official instant discount" with a discount starting at 15%, which is no less than last year's Double Eleven. Taobao also launched the "10 billion flash sale festival" from April 23 to 28, announcing that it will give an additional 30% discount on top of the lowest price on the entire network. This also shows that Taobao is building momentum for the low-price event on June 18.

It can be seen that in this year's 618, JD.com and Taobao have made every effort to emphasize the cost-effectiveness and quality of products, and launched measures such as free shipping, freight insurance, and price guarantee services in fulfillment and after-sales. However, the market is changing rapidly, and friendly companies such as Pinduoduo, Kuaishou, and Douyin are also doing their best.

03 "Doupin" continues to plunder at low prices

Pinduoduo once achieved continuous growth in performance by reducing prices and only offering refunds, and its market value once exceeded that of Alibaba. This year, Pinduoduo is also preparing for 618 in a low-key manner, and there is not much news at present.

According to LatePost, based on the estimated data obtained from analysts and related companies, the combined order GMV (gross merchandise volume) of Pinduoduo and Douyin e-commerce in 2022 has exceeded 50% of Alibaba's domestic e-commerce business. On the revenue side, in the first three months of 2023, Pinduoduo's revenue has reached 62% of Alibaba's domestic e-commerce business revenue.

Later, Taobao and JD.com decided to go all out and implement strategies such as refund only and low prices, which inevitably caused anxiety about Pinduoduo's "cutting". However, Pinduoduo's refund only policy was criticized by many sellers before, and even caused fierce conflicts between merchants and platforms.

In June this year, a person related to Taotian Group revealed that in the past year, about one million Pinduoduo merchants have opened online stores on Taobao, which is owned by Alibaba. This number accounts for nearly 20% of the more than 5 million new merchants added to Taobao this year.

These sellers who switched from Pinduoduo to Taobao did not expect that Taobao would also start to support "refund only". Some merchants had new concerns, while some merchants who switched to Taobao were optimistic. For Taobao, how to balance the disadvantages of refund only and retain these merchants is the most important thing.

In addition to Pinduoduo, Douyin 618 will officially start on May 24. The relevant person in charge of Douyin Mall said that during the Douyin Mall 618 Good Goods Festival, the platform will invest tens of billions of traffic and launch a variety of low-price marketing methods.

After Douyin coordinated live broadcast content and scenes with shopping malls, search, stores and other shelf scenes, the growth rate of Douyin e-commerce has become more and more amazing. According to the 2023 annual inventory released by Douyin e-commerce, the platform's GMV has increased by more than 80% in the past year; the GMV of Douyin Mall has increased by 277% year-on-year in the past year.

Douyin is also keeping up with the times in terms of low prices. This year, it has determined the "price power strategy", focusing on Douyin Factory and launching an independent Douyin Mall APP. Although the Douyin Mall APP has not yet made a splash in the industry, low prices are bound to become Douyin's weapon. This will bring a new round of impact to traditional shelf e-commerce companies such as Taobao and JD.com.

In short, low prices on e-commerce platforms have become a daily trend. Pinduoduo's 10 billion yuan subsidy, Taobao and JD's various flash sales and 9.9 free shipping, Douyin and Kuaishou's regular live broadcasts, and various small promotions mean that competition in the e-commerce industry is intensifying and consumers are increasingly sensitive to prices.

Various promotional activities are disguised as lowering prices, which is an industry development trend. As the e-commerce market enters the stock stage, whether it is Taobao, JD.com, Pinduoduo, or Douyin and Kuaishou, they all need to find new ways to expand the added value of goods and services from the perspective of users and merchants and win the favor of consumers.