From the three key words of e-commerce development in 2023, we can see the trends and opportunities in 2024丨In-depth

The author of this article analyzes the development situation of domestic e-commerce in 2023, summarizes three annual keywords, and extends the outlook for the development trends and potential opportunities of e-commerce in 2024. It is suitable for friends who are engaged in e-commerce operations to read and study.

In 2023, if I were to use three words to summarize the development of the domestic e-commerce industry, I think they would be: rapid growth, low prices and content.

Keyword 1: Hurricane

Inspired by the continued high growth of Douyin's e-commerce, content platforms have increased their investment in e-commerce infrastructure and, combining their own strengths and advantages, actively explored the "second pole" of e-commerce growth.

Four months after launching the concept of "buyer e-commerce", Xiaohongshu announced its achievements in the past year of its return to the e-commerce market: the number of merchants with annual transaction volume exceeding 100 million yuan increased by 500%, and the number of merchants with annual transaction volume exceeding 10 million yuan increased by 380%. Buyers with single-game sales of over 100 million and over 10 million yuan were born on Xiaohongshu .

In order to attract more brands/merchants to join and improve the certainty of their e-commerce operations on Xiaohongshu, Xiaohongshu has changed its "Buddhist" attitude and has been working tirelessly to launch the Xiaohongshu e-commerce operation business guide and Xiaohongshu merchant management methodology, and has also flexed the platform's muscles through the release of the annual "Top 100 Anchors/Merchants".

Compared with Xiaohongshu, Video Account, which grew up in the WeChat ecosystem, appears to be much more low-key.

Although, since the second half of last year, Video Account has been intentionally cultivating and incubating top influencers, and has also launched guides for hot products and hot orders for merchants, perhaps due to the lack of benchmark merchants and influencers who can truly represent the platform's genes, or perhaps because Video Account focuses on the development logic of "strong products rather than strong operation-driven", the outside world's overall prediction of the value of Video Account e-commerce is relatively low.

But this does not reduce the courage of service providers in the WeChat ecosystem to take action. They have all moved to the video account e-commerce services, and some have already achieved positive results.

At the "2024 WeChat Open Class Pro", Video Account announced its achievements in the past year: compared with 2022, Video Account e-commerce GMV increased nearly 3 times, and the order volume increased by more than 244% year-on-year. Although the specific GMV data was not disclosed, Li Hao, founder of Kas Consulting, said that it was basically consistent with his estimate that Video Account e-commerce GMV in 2023 would exceed 400 billion.

In addition to the breakthroughs in e-commerce of Video Account and Xiaohongshu, the growth story of Douyin and Kuaishou e-commerce continues.

In 2023, Douyin e-commerce will still grow at a rate of more than 80%, and the annual GMV is estimated to be around 2.5 trillion. The source of high growth is, on the one hand, the "pan-shelf" that Douyin focuses on. With the improvement of mall infrastructure, the enhancement of mall operation capabilities, and the continuous iteration of search recommendation technology, the pan-shelf market has become the source of growth for most merchants, especially for Pinduoduo-type merchants, who regard the shelf market as the central stage for the layout of Douyin e-commerce. While further broadening the platform supply, it also helps the platform break through the incremental ceiling. According to LatePost, in 2023, the GMV share of Douyin e-commerce shelf e-commerce has increased from 29% at the beginning of the year to over 35%, slightly exceeding the established target; the other side of the high growth is due to the continuous expansion of the scale of transactions in brand live broadcast rooms. With the maturity of operating experience, in 2023, brands not only increased the length and frequency of live broadcasts on Douyin, but also increased the operation and investment budget on Douyin, and continued to migrate daily product sales positions to brand self-broadcasting.

Let’s look at Kuaishou. According to Kuaishou’s financial report for the first three quarters, from January to September 2023, the growth rate of Kuaishou’s e-commerce remained above 30%, and the cumulative GMV reached 780.5 billion. Kas estimates that in 2023, the GMV of Kuaishou’s e-commerce will stabilize in the range of 1.1-1.2 trillion.

In addition, although it is difficult to say that B's e-commerce has made breakthrough progress, it is similar to Xiaohongshu in that it has produced benchmark UPs such as Bao Jiansao, Yingwuli and Xu Jingyu through the way of traffic inclination. At the B station 2024 AD TALK conference, B station also announced that the GMV of B station's sales in 2023 increased by 2.6 times year-on-year.

In my opinion, the reason why content platforms will be able to achieve ideal growth with the help of e-commerce in 2023 is not only because the platforms are naturally endowed with traffic, but also because the differentiated community and content atmosphere have accumulated sticky users with differentiated attributes, and there are a large number of excellent creators active on the platforms who can attract users with content and convert users through content.

Not only that, 2023 is also the year when content platforms move from idealism to pragmatic growth. Content platforms are finally no longer entangled in whether to make an open loop or a closed loop, and no longer enter the e-commerce market with the mentality of "try whatever you can". Instead, from the strategic to the tactical level, they are working hard to achieve a bigger result. All of these have increased their certainty in the rapid growth of live streaming e-commerce and contributed to the situation of "thousands of pear trees in bloom".

Keyword 2: Content

2023 is the second year that traditional e-commerce platforms will fully explore content. Content has been pushed to new heights as a strategy.

Although in terms of implementation path, e-commerce platforms are still poaching off-site talents through cash and traffic subsidies, compared with the content exploration in the previous two years, 2023 is also a year of some achievements.

Taking Taobao as an example, in 2023, Taobao made subtle adjustments in attracting talents: first, it not only introduced talents who can bring goods, but also invited a large number of content IPs, stars, and celebrities to enter Taobao for non-carrying live broadcasts . While enriching the content of Taobao live broadcasts, it also created many topics for the platform, such as the disco live broadcast of Coco Tree Coconut Juice and the live broadcast of Messi's fan meeting; second, it is no longer just to support talents with cash, traffic, etc. The role played by the platform after the introduction of talents has become more important, and the support for new accounts has also been strengthened . For example, during the preparation of the live broadcast, in order to let Coco Tree understand the secrets of Taobao's live broadcast, it will lead the Coco Tree team to visit high-quality institutions in the ecosystem. During the live broadcast, it will also provide one-on-one technical guidance and gameplay innovation guidance. Recently, Taobao has announced the establishment of a live broadcast e-commerce company to provide "nanny-style" full-hosting operation services for celebrities, KOLs, and MCN institutions that intend to enter Taobao to broadcast.

In addition, more live broadcasts with products have also appeared in Taobao live broadcast rooms, such as TVB's Hong Kong drama-style live broadcasts, beauty pageant live broadcasts, "This! Is Street Dance"'s "street dance battle-style product live broadcasts", and topic host Zhang Dada's "gossip live broadcasts". According to Taobao's official data, Taobao Live has accumulated tens of thousands of content-oriented anchors who "do not take product sales as their responsibility", which has further prospered Taobao's content ecology and enriched users' "shopping" experience.

In addition to Taobao, JD.com sounded the clarion call for live streaming e-commerce during the 618 period by inviting Luo Yonghao to join JD.com's live broadcast. Then, during the Double Eleven period, it launched the "Purchasing and Sales Team" to promote products, making JD.com's purchasing and sales concept of understanding products and offering lower prices deeply rooted in people's hearts.

Although both companies have made breakthroughs in their work on "content" in 2023, everyone knows that it is impossible to rely on traffic supply and strong operational means to produce top anchors like Li Jiaqi and Wei Ya. The IP creation that combines "time, place and people" can no longer be replicated under the current media competition landscape.

But there is no doubt that content has become a scarce resource for all platforms to break through the growth bottleneck. On traditional e-commerce platforms, content is the strongest weapon to increase user retention and promote sales conversion, and on content platforms, content has also become the strongest lever to attract users and promote sales conversion.

In 2023, observing the development of the entire Douyin e-commerce, my most profound feeling is that when live streaming e-commerce enters the mature stage, in order to achieve an ideal ROI, it is necessary to either use brand power as a lever or use content as a lever. There is no third solution.

Keyword three: low price

Low prices, like content, can be said to be the main theme of e-commerce in 2023.

At the beginning of 2023, Taotian Group set five major strategies, and "price power" was written into the five major strategies. It also launched the same-product price comparison, five-star price power, Taobao good price, etc. around price power. JD.com had earlier established the "low-price strategy" as the "No. 1 Project" of JD.com Retail, and publicly stated that in the distribution of search traffic, low prices are positively correlated with traffic recommendations, and the price weight accounts for no less than 50% of the traffic weight. At the same time, it also proposed an upper limit on the "high price rate" for each category, and implemented strong assessments on each BU around the "high price rate".

On last year's Double 11, Taobao Group changed its core assessment of GMV; JD.com directly cancelled pre-sales and started selling spot goods, while defining the theme as "really cheap". In order to prove that their "lowest prices" are not inflated, Tmall and JD.com also added services such as "compensation for overpriced products" and "double compensation for overpriced products".

The pendulum moves to 2024. Douyin, which has relatively weak pricing power in the industry, has also joined the low-price war. It has not only set "price power" as the highest priority task of the year, but also launched the "hot item bidding" function. If a product has a lower price than similar products, it can participate in the bidding and obtain a large amount of traffic exposure support.

The platform's return to the low-price strategy has a lot to do with Pinduoduo, the catfish that is stirring up the e-commerce world.

According to Pinduoduo's financial report, in the third quarter of 2023, Pinduoduo's revenue was 35.504 billion yuan, a year-on-year increase of 65.09%. In comparison, Taotian Group's revenue in the second quarter was 97.65 billion yuan, a year-on-year increase of 4%, and JD Group's revenue was 247.7 billion yuan, a year-on-year increase of 1.71%.

Although there is a gap in revenue, from the perspective of growth rate, Pinduoduo's performance can be said to be explosive. Pinduoduo's wild growth has reminded its peers that the essence of e-commerce competition is still "low price". Whoever can truly achieve the lowest price on the entire network can retain consumers.

But this is obviously not the underlying logic that drives the platform to start a low-price business war. The underlying logic is directly related to the changes in users' consumption power and consumption mentality in the post-epidemic era. After three years of the epidemic, we have to accept the fact that users' wallets are not as bulging as before, and consumer confidence has also been greatly reduced because the economy has entered a downward cycle.

When young people advocate reverse consumption and rational consumption, and when "pursuing cost-effectiveness" becomes the mainstream consumption trend, e-commerce platforms also try to show sincerity and activate users' enthusiasm for buying through the simplest efficiency logic, and use the mentality of price comparison among all people to accelerate users' trust in the platform's lowest price.

Here I would like to borrow a point made by Li Hao, the founder of Kas Consulting: competition among e-commerce platforms should also follow the first principles. When e-commerce develops to maturity, it is difficult to create a competitive gap with "more" and "better". Only "saving" and "fast" can create a competitive gap, especially "saving".

Summarize

Look at the trends and opportunities for businesses in 2024 through 3 keywords?

As the rapid development of content platforms in exploring e-commerce has not stopped, and as "low price" is still the core keyword driving mainstream user consumption, I believe that 2024 will first of all be a very favorable year for small and medium-sized businesses or supply chain businesses. It will also be a very critical year for small and medium-sized businesses to achieve all-round growth.

We all know that the early development of Taobao was closely related to the low threshold for attracting small and medium-sized merchants and white-label merchants to settle in. However, in the process of development, in order to attract brand merchants, Taobao has successively increased technical service fees and liquidated damages, etc., which has put a number of uncompetitive small and medium-sized merchants in a difficult situation. Especially in 2014, after Alibaba went public, Taobao accelerated the branding process. The large increase in platform advertising fees made small and medium-sized merchants form an "anti-Taobao alliance" and leave Taobao in anger.

Pinduoduo, which was born at this stage, has become a new destination or even the only destination for small and medium-sized businesses.

However, with Pinduoduo's "overprotective" policies for users and "overly harsh" policies for small and medium-sized merchants, the contradiction between merchants and the platform has also intensified, which was mainly reflected in the "store bombing" campaign launched by small and medium-sized merchants against more than 10 brand merchants in early March 2023. However, for the vast majority of small and medium-sized merchants, they dare not speak out against the unreasonable policies of the platform. After all, Pinduoduo has traffic and business, and still contributes to the basic plate of daily transactions.

However, as Taobao and JD.com "repented and returned to the right path", they have "embraced" small and medium-sized businesses again, especially extending olive branches to businesses from industrial belts with low price advantages. Small and medium-sized businesses have once again become the "hot cakes" that are highly sought after by the platforms.

In January 2023, JD.com launched the "Spring Dawn Plan" for small and medium-sized merchants, and upgraded the plan in August, involving 10 billion traffic support, "0 yuan trial operation" indefinitely, and double traffic incentives for new merchants.

The first major move by Wu Yongming after taking over Taobao was to announce the farewell to Double 12 and instead launched the "Taobao Year-End Good Price Festival" marketing IP. It is reported that the Taobao Good Price Festival is the first marketing IP tailored for small and medium-sized businesses by Taobao. At present, the Taobao Good Price Festival is located in the C position on the homepage of the Taobao APP, on par with Taobao Live and Taobao Shopping. Among them, low-priced good products are undoubtedly the mainstream of exposure.

In addition to the rush of cats and dogs to low prices, the pan-shelf or central venues that Douyin and Kuaishou are promoting have also provided a new stage for small and medium-sized businesses that do not have content capabilities but have supply chain foundations and traditional e-commerce operation experience. In addition, Xiaohongshu's main buyer e-commerce has actually also given individual merchants and small and medium-sized merchants the opportunity to sell goods through short video trailers and live broadcasts.

But it needs to be made clear that the low prices pursued by various platforms do not mean low quality. If small and medium-sized businesses want to get back to the table, they must continue to cultivate their internal strength, improve supply chain efficiency and quick response production capabilities, and be able to guide production and sales through digitalization. While reducing inventory, they must continue to provide "good-price" products to the platform.

At the same time, when doing business on content platforms, small and medium-sized businesses must also consciously improve their content production capabilities, because high-quality content is always the strongest lever for obtaining traffic, and the more mature the content is, the more obvious its leverage effect will be.

Of course, brand merchants with the ability to earn cash are still the foundation for the survival of various content platforms.

In 2024, I think the core opportunities for brand merchants will still be two key words: one is hot products; the other is content. Among them, hot products mean traffic and sales, while content is the key to increasing the reach of hot products to the crowd and reducing the mowing cost ratio.

Looking back at 2023, those brands that have succeeded in breaking through the siege all relied on these two advantages to gain a head start.

But compared to emerging brands and white-label products, at the end of the article, I would like to mention a point: once traditional brands find the right operating methodology on new traffic platforms, it will be easier for them to expand their business scale through Douyin and have a greater chance of success.

A core reason is that the mobile Internet is entering the final stage of its development, and the traffic opportunities or dividends that emerging brands are good at catching up with have basically disappeared. At the same time, the shortcomings of traditional brands in new traffic channels, including content shortcomings, delivery shortcomings and operational shortcomings, are gradually being made up.

Under the condition of equal traffic acquisition capabilities, traditional brands that have established strong brand awareness will accelerate their advantages in customer acquisition and conversion, and can use their awareness advantages to continue to attract the post-90s and post-00s to try out new products and pay for them. This can be found in the fact that brands such as Hansu, Bosideng, and Camel have exploded on Douyin in 2023.

On the other hand, those "Douyin brands" that started on Douyin or whose core business channels are on Douyin will find their days becoming increasingly difficult in 2024!

Author: Call me Sister Na; WeChat public account: Kas Data