This 618, Taobao and JD.com lean towards consumers

The author of this article talks about how Taobao and JD.com cancelled their pre-sale model. Interested readers can take a look.

After 12 years of pre-sales, Taobao and JD.com seem to be giving up.

A Taobao investment document disclosed by multiple media shows that this year's Taobao 618 will directly start selling in late May and the pre-sale stage will be cancelled.

The JD.com merchant ecosystem partner document mentioned that JD.com’s 618 event will kick off at 8 p.m. on May 31, with a direct “good start” for spot sales, followed by the special session period, climax period and return period.

Although an insider told Yilan Business that the rules for Taobao 618 have not been finalized, Yilan Business believes that there will not be major changes. In fact, in this year's 38 promotion, Tmall has cancelled pre-sales for several consecutive years. As an old tradition of e-commerce promotions for more than a decade, is pre-sales finally going to be abandoned by the platform?

Initially, the more mature industry that applied the pre-sale business model was real estate: home buyers paid first, real estate developers used the money to build the building, and home buyers moved in after it was completed.

In 2012, Tmall launched the pre-sale method for the first time in the e-commerce industry, and the entire industry quickly followed suit. Yilan Business learned that there are currently two forms of pre-sales: one is the spot price pre-sale, and the other is the advance purchase pre-sale of futures. The former is to use complex pricing rules to lock in a part of consumers' wallets in advance, and the latter is a pre-sale by merchants who do not have goods in order to prepare for the goods.

Why do we need to do pre-sale? Because pre-sale has its own advantages for both the platform and the merchants.

For merchants, pre-sales can help them know orders in advance, so they can produce accurately, reduce the risk of inventory backlogs, and facilitate capital turnover. For platforms, pre-sales can release prices in advance and lock in consumers' wallets, gain market share, and concentrate sales on a certain day, thus improving overall efficiency.

To a certain extent, warehouse shipments are concentrated on certain days, and merchants' costs and efficiency are optimized. The traffic is concentrated on one day, and the platform's resources are also more concentrated.

Why would Taobao and JD.com give up such a win-win model for merchants and platforms?

First, from the perspective of merchants, pre-sales hide their "wishful thinking". For example, for categories with high return rates such as clothing, some stores pre-sell 200 pieces but only produce 150 pieces. Through long pre-sales and delayed delivery, the returns of the previous batch of customers are sent to the next batch; some merchants found that the pre-sale data was not good, so they made up reasons to unilaterally cancel the order; under the pre-sale mechanism, some merchants who like to take advantage of loopholes will undermine the fairness of the transaction rules. The risks of operation are also transferred to consumers.

Secondly, it is precisely because of the slow delivery and similar operations mentioned above that the user experience has deteriorated, and consumers have become increasingly negative about the pre-sale system. The 7-day, 15-day, 30-day or even longer pre-sale period has made many consumers lose patience. Previously, a survey conducted by the Social Survey Center of China Youth Daily and Questionnaire.com on 1,507 respondents showed that 78.0% of the respondents felt that the pre-sale time of goods is now tending to be longer, and 79.6% of the respondents said that super-long pre-sales would reduce their shopping experience.

At the same time, returning to the user-centric approach has become the main theme of Taobao and JD.com this year. In a recent interview, Alibaba Chairman and Co-founder Joseph Tsai mentioned that Alibaba's biggest mistake in the past few years was forgetting who the real users were. To correct this mistake, Alibaba will put user experience at the top of the list. Liu Qiangdong also left a message on JD.com's internal network, saying that the starting point for any work JD.com does should be "don't forget about the user when making decisions."

In this context, it is reasonable that the pre-sale mechanism, which makes most consumers less satisfied, is eliminated due to its low efficiency and cumbersome procedures.

Finally, the long pre-sale period is also a long tug-of-war for the platform. For example, if a user places an order for a pre-sale product on Taobao or JD.com at a relatively low price after calculating through complex rules, Pinduoduo will directly provide spot goods that can be purchased at the same price without pre-sale. At this time, the platform's orders are very likely to be intercepted by competitors.

The elimination of pre-sales will have the greatest impact on small and medium-sized businesses with weaker supply chains.

Compared with Tmall's brand merchants, Taobao merchants, which are mainly individuals and small businesses, are more likely to adopt the pre-sale system, which is more evident in the clothing category. These small-scale merchants with weak cash flow capabilities are unable to bear the inventory pressure and lack bargaining power in the supply chain. Most of them do not have the ability to "quickly return small orders."

Under this premise, stores will be extremely cautious about setting delivery deadlines on the platform, because if something unexpected happens, they will face widespread complaints. On the contrary, for clothing merchants with mature supply chains, canceling pre-sales will not have much impact on them, and may even encourage them to increase the proportion of original fabrics.

Overall, by transferring the risks that originally belonged to the merchants back to the merchants, Taobao and JD.com, like Pinduoduo, will completely stand on the side of consumers.

After all, these days, pleasing consumers is the most important thing.

Author: Li Yan WeChat public account: Yilan Business