The "618" test is here: the melee is escalating, low prices are in circulation, and merchants are under pressure

What are the characteristics of this year's 618? What can we learn from it? Starting from this year's 618 shopping, this article details the characteristics of this year's 618, the current situation of low prices in the e-commerce industry, and the reasons behind it. It is recommended for students who want to understand brand operations and market consumption.

The mid-year exam for the e-commerce industry has arrived as scheduled.

On May 18, Kuaishou took the lead in launching the 618 pre-sale. Five days later, on May 23, JD.com launched the pre-sale. In the following three days, Xiaohongshu, Douyin, and Taobao also started the 618 pre-sale.

The month-long e-commerce promotion has officially kicked off.

As the first big promotion after the recovery of consumption, the gunpowder smell of this battle seems to be stronger than before. In order to capture consumers, the platforms have tried their best. Taobao Tmall called out "the biggest consumer benefit in history on 618"; JD.com called out "the biggest investment in the industry on 618".

Such a tense atmosphere also proves that this is destined to be a tough battle.

The 618 promotion has been going on for 10 years. In addition to the upgrade of the gameplay every year, the focus of the topic every year is on low prices. Whoever controls the lowest price will capture the consumers.

The obvious change is that in the past, low prices were exclusive to big promotions, but now, as industry traffic has reached its ceiling, low prices are no longer exclusive to big promotions, but are becoming more and more normalized.

Especially since this year, low prices have become the theme of the e-commerce industry and have been repeatedly mentioned by industry players.

After Pinduoduo opened up the market with low prices and Douyin and Kuaishou live broadcasts have maintained low prices all year round, price power has become one of Taobao's five major strategies for 2023. JD.com has also positioned low prices as its strategic focus this year and stated that it will launch a normalized 10 billion yuan subsidy.

From the perspective of the entire market, the low-price strategy is the result of fierce market competition. However, the e-commerce market is no longer what it used to be. If you want to start a price war, it is far from enough to just rely on low prices. More importantly, the pressure of the platform to offer low prices is passed on to the merchants.

Essentially, after the platform sets up the stage, what is tested is the ability of merchants to perform on the stage. In the era of inventory in the e-commerce industry, merchants have also realized that maintaining profits is more important than chasing sales.

At the critical time of consumption recovery, this 618 Shopping Festival has received attention from many merchants. For all players, this year's 618 is a sprint battle that cannot be failed.

1. Upgraded melee, different ways of playing

This year's 618 has a different meaning for many platforms than in previous years.

This is the first big promotion of Taobao Tmall Group after Alibaba's "1+6+N" organizational structure adjustment, the first tough battle of Xiaohongshu after its accelerated commercialization, and the first time that JD.com CEO Xu Ran and Kuaishou CEO Cheng Yixiao have swung the baton for 618.

With so many firsts, everyone wants to come out on top in this big test, and the smell of gunpowder ensues.

Taking Taobao, Tmall and JD.com as examples, one claims to have “the largest investment and the strongest measures in history”, while the other claims to have “historic investment”. As slogans are released one after another, the gameplay of major platforms has also been upgraded.

Alibaba Taotian Group emphasizes content the most. On May 10, at the 2023 618 Merchant Conference held by Taotian Group, comprehensive content was repeatedly mentioned, and Taotian Group CEO Dai Shan proposed that "the future e-commerce platform is the best content platform."

When it comes to specific actions, Mu Shan, general manager of Taotian Group's marketing department, identified three key points: good products at good prices, Taobao Good Price Festival, and short videos and live broadcasts that are fun to watch.

According to Future Consumption, during the 618 shopping event this year, more than 50,000 new anchors will debut on Taobao and Tmall, and four special columns will be launched during the event, including new encyclopedias of life, new interest culture, new scenes of characteristics, and new lifestyles. At the same time, for high-quality expert content, the platform will also provide traffic support in the information flow, shopping, venues, and outside the site.

In fact, this follows the five major strategies that Alibaba set for Taobao at the beginning of the year - price power, live broadcasting, private domain, content, and local retail. Although these are not new words for Alibaba, after being promoted to a strategic level, Taobao Group will undoubtedly increase its efforts, especially during major promotional events such as 618 and Double 11.

On the other hand, at the JD.com 618 conference, JD.com Retail CEO Xin Lijun spent a lot of time talking about low prices, thus setting the main theme of this JD.com 618.

JD.com called its investment in 618 the "largest in the industry." For example, on top of the direct price cuts across the entire store, each user can receive up to three "20 off 200" coupons per day.

In addition, similar to Taotian’s idea, as platforms such as Douyin, Kuaishou, and Xiaohongshu use content-based methods such as live streaming and videos to improve the conversion rate of content and share the e-commerce platform’s cake, content-based development has become a consensus among traditional e-commerce platforms.

At the JD.com 618 Conference, JD.com announced that a mysterious organization will enter JD.com on the evening of May 31 and bring a heavyweight guest. This guest is Luo Yonghao, the former Douyin sales leader. As early as May 20, Luo Yonghao's company Jiao Ge Pengyou had completed its first live broadcast on JD.com.

At the same time, Pinduoduo officially reached a product-level cooperation with Kuaishou during the 618 period this year. Through short videos on Kuaishou's product recommendations, it focused on matching cost-effective products with new consumer groups in the sinking market.

If the focus of traditional e-commerce platforms is the traffic brought by content, then the focus of the content platforms newly added to 618 is on e-commerce conversion rate.

When it comes to e-commerce conversion rates, the most pressing one is Xiaohongshu. After raising live broadcasting to the first level, setting up live broadcast rooms for top anchors such as Dong Jie, and vigorously developing the live broadcasting sales business, Xiaohongshu e-commerce fully opened the "note sales" function on the eve of 618, aiming to use the cooperation notes between bloggers and merchants to open up the e-commerce closed loop within Xiaohongshu.

The intensive e-commerce layout actions indicate that this year's 618 is a rare training ground for Xiaohongshu, which is no longer wavering in its commercialization strategy.

On the other hand, Douyin and Kuaishou, which participated in the 618 promotion for the third year, and even Video Account, while stabilizing their own content platforms, are becoming more and more like e-commerce platforms such as Taobao and JD.com.

From the overall gameplay perspective, the cross-store discounts, deposit pre-sales, instant discounts on final payments, and big-brand subsidies that were once familiar to Taobao and JD.com can now be seen on Douyin and Kuaishou.

Specifically, Douyin mainly launched the "Goods Live Room", "Selected Alliance Category Day" and "Douyin 10,000 Orders Plan"; Kuaishou named this promotion "618 Shopping Festival" for the first time, and launched two core gameplays: live broadcast room big brand replenishment and product pre-sale, as well as category day, anchor rankings, interest-free installments, and national tasks.

On WeChat, the 6.18 Good Products Festival on WeChat Video Account has become the entrance for WeChat to participate in the 618 promotion. Specifically, the anchors of the video account can publish short videos with products and add the topic "618 Good Products are on the video account", which will have the opportunity to obtain short video traffic boost, increase content exposure, and help bring goods.

With the arrival of the 618 promotion node, the e-commerce industry is also moving towards the second half of the competition. E-commerce platforms are adding content gameplay, and content platforms are integrating e-commerce gameplay. The two major models are integrated with each other. How to make the content and e-commerce produce the greatest chemical reaction and attract consumers is a test for the long-term strategic adjustments of the platforms.

2. Price war must be fought, but it is more difficult

Regardless of the model, low prices are always one of the labels during the big promotion period. During this year’s 618, the low-price thinking of major platforms at the beginning of the year will naturally continue.

JD.com made a bold statement that "double compensation for overpriced products" will be offered during the 618 shopping festival. Taobao said that the 618 shopping festival will see a "breakthrough price" campaign with 10 billion yuan in subsidies, and that the main products will be offered a "compensation for overpriced products" application channel. Pinduoduo has announced the slogan "Every day is 618", and this year it will start with super subsidies for home appliances, betting heavily on 3C digital products. New player Xiaohongshu has also announced that "prices are the lowest on the entire network during the event"...

Whenever there is a big promotion in the industry, price is a competition that players cannot avoid. In the eyes of consumers who are extremely sensitive to prices, lower prices are always the "killer move". In other words, promoting transaction volume through discounts and full discounts is the value of big promotions.

From the consumer side, this year's 618 promotion saw the same "cross-store discounts" as in previous big sales. Taobao offered 30 yuan off for purchases over 200 yuan and 50 yuan off for purchases over 300 yuan; Douyin offered 25 yuan off for purchases over 150 yuan; Xiaohongshu offered 50 yuan off for purchases over 300 yuan; JD.com issued "20 yuan off for purchases over 200 yuan" subsidy coupons to users every day on the basis of "straight price cuts across the store", which is equivalent to a 10% discount after the straight price cuts.

In addition to cross-store discounts, all stores have unanimously given priority to "10 billion subsidies."

At the JD.com 618 conference, JD.com revealed that the number of products participating in JD.com's 10 billion yuan subsidy has also increased 10 times compared to March. Before the 618 pre-sale, Taobao also preheated the market with a "10 billion yuan subsidy" section on May 22; Douyin also launched hundreds of millions of platform subsidies and launched policies such as "window management cashback" for merchants; Kuaishou provided platform subsidies of up to 15% for some big-name products.

In addition, each platform has done more work around price wars.

For example, Taobao launched the Juhuasuan direct discount event for the first time. The shortlisted products must be 80% off the lowest coupon price within 30 days; in addition, the "Taobao Good Price Festival" will also be launched, providing nearly one million 1 yuan products every day. This is the first time that Taobao Tmall has launched a 618 marketing channel exclusively for small and medium-sized merchants.

Xiaohongshu launched the "Ace Flash Sale" and "Single Product Direct Discount" activities. In terms of platform subsidies, Xiaohongshu also made great efforts. The platform will use the red envelope expansion method to attract users with purchase intentions in "planting grass" scenes such as search and notes to "pulling grass" scenes such as live broadcast and business cards, and penetrate various fields such as search and notes.

However, for most consumers, the trouble of the big promotion rules is like a math problem. One consumer told Lianjie Insight that "the discounts on June 18 every year are not small, but the overly complicated rules will discourage me."

In addition, the rules of many platforms implicitly require users to immerse themselves in a certain scene of the APP, which is equivalent to increasing the user's usage time. On JD.com, the flash sale day on June 1 can be combined with the self-operated full-category discount coupons, and there will be big brand day, magic coupon day, full discount day and red envelope rain afterwards; on Douyin, higher discounts are inseparable from the live broadcast room and red envelopes and mall red envelope rain.

From this point of view, for e-commerce platforms, what they are pursuing in this year's 618 promotion is no longer simply breakthroughs in data such as GMV scale. The key is to compete for users.

Whether it is price power, content, or improving content conversion, they are all means for e-commerce platforms to acquire users.

However, a major premise is that low prices are no longer exclusive to big promotions. As e-commerce traffic has peaked and users are approaching the ceiling, low prices and subsidies have become more and more normalized for the sake of transaction volume and user scale. A consumer told Lianjie Insight, "I am not as eager to shop on 618 and Double 11 as before. I used to stock up on these two big promotions, but now there are discounts on various platforms almost every month, or even every half a month."

The change in consumer attitudes means that the price war among e-commerce platforms is becoming increasingly difficult. In an environment where low prices have become the norm, consumers are no longer as excited about big sales as before. If platforms want to attract users by price, they need to spend more money.

In other words, consumers’ expectations for 618 are higher than ever before. In addition to low prices, consumers also expect simpler gameplay, higher cost-effectiveness, and better services.

It is foreseeable that for this mid-year promotion node, which is gradually becoming more recognized, each company will inevitably go through a period of competition, and the intensity of the price war can be described as the "most competitive year" in history.

After all, low prices are the most effective weapon for platforms to reach consumers. The price war on June 18 this year will not be absent and will continue. However, with price wars becoming the norm, users’ demands for June 18 are no longer as simple as low prices. If e-commerce platforms want to attract customers to place orders, the difficulty is only increasing.

3. How to attract users and increase profits? Pressure is transmitted to merchants

As the first 618 after the black swan event of the epidemic, it is also a test for merchants. Whether it is a big brand or a small and medium-sized merchant, their purpose of participating in 618 is to survive better in the second half of the year.

When all the major platforms have already set up the stage for 618, it is extremely important for merchants to find the best choice for their performance. This is a test for merchants to integrate human, material and other resources.

Specifically, given that each platform has its own unique gameplay, if a merchant wants to participate in the 618 shopping spree on multiple platforms, it must study the game rules of different platforms and formulate different pricing systems accordingly. More importantly, when merchants face consumers' "shopping around" for prices, the pressure will also increase invisibly.

A beer brand manager who is in charge of the 618 promotions on two e-commerce platforms has been working non-stop for nearly a month. He told Lianjie Insight, "From the perspective of us merchants, on some DTC platforms, we have the right to own the goods and set the prices ourselves, so the prices generally won't drop much more than usual; on some self-operated platforms, the goods are owned by the platforms themselves, so we merchants must lower the prices to attract more users."

If big brands have the energy and resources to participate in activities on all platforms such as Taobao, Douyin and Kuaishou, and even "lose money to gain publicity", then for small and medium-sized businesses, choosing the most suitable platform with limited resources is a better option.

The 618 and Double 11 shopping festivals seem to be a carnival for the entire e-commerce industry, but under the 28 effect, small and medium-sized businesses are often reduced to "runners-up". In particular, the attractiveness of big promotions to users has been declining year by year in recent years, and small and medium-sized businesses are unable to escape the problems of being trapped by rules and being kidnapped by low prices.

More importantly, the disappearance of user growth dividends and the ineffectiveness of the marketing model of burning money for growth are facts that the entire consumer industry must acknowledge in the past two years. For the e-commerce industry, this is also a stock market, and it is not easy to grab users, divide traffic, and increase order volume.

Under this trend, merchants began to change their scale thinking and GMV thinking and turn to profit thinking.

In the past, merchants hoped to establish a good reputation and gain traffic during big promotions such as 618, and would not hesitate to offer promotions and concessions in exchange for sales. But now, the era of burning money for growth is over, and the marketing formula of "new brand = 5,000 notes + 2,000 Q&A + live streaming" is no longer applicable. Merchants are more concerned about maintaining profits and allowing brands and companies to develop healthily.

The good news is that, in addition to the existing e-commerce market, the potential of the sinking market is valued by major platforms. As important suppliers who can provide low-priced goods, small and medium-sized businesses are also valued by major platforms. This year's 618, Taobao, JD.com, Kuaishou and other platforms specifically mentioned small and medium-sized businesses at the conference and issued a number of support policies.

Ultimately, for merchants, the traffic subsidies granted by the platform are short-term and unstable. If they want to continue to attract users and increase sales, merchants need to continue to polish their products, provide high-quality services, and establish deep connections with target users.

It is undeniable that after the 10th anniversary of the 618 promotion, merchants have gradually lost the myth of creating sales during the promotion period, and maintaining profits and making money have become the priority. Platforms have bid farewell to high-speed growth, and users, services, and supply chains have replaced GMV as keywords.

The rules of the game are constantly changing, and players on the field can only avoid being eliminated if they can understand the changes and respond quickly. The day for submitting the results of the 618 mid-term exam is getting closer and closer. Under the wave of consumption recovery, which platforms will take the lead and which merchants will stand out will soon have answers.

Author: Wang Huiying

Source: WeChat official account: "Lianxian Insight (ID: lxinsight)"