The homepage traffic entrance is reopened, and the price war on Taobao Mobile begins

Introduction: This article gives readers a glimpse into the fierce competition behind the booming online shopping platforms by citing the latest price measures of major e-commerce platforms. The article focuses on the "new measures" of online price adjustments by the two "e-commerce giants" Taobao and Tmall, opening up the latest industry development perspectives for readers.

“The highest levels of competition often take the most direct approach.”

Taobao Tmall started to fight back?

JD.com has offered a high-profile 10 billion yuan subsidy to compare prices across the entire network, and Douyin has provided subsidies to high-value users of top merchants. The e-commerce price war in 2023 has already begun. Taobao and Tmall have chosen a special way - bringing merchants to "join the war" together.

A merchant revealed to Yibang Power that Taobao Mobile will soon officially open the important "shopping guide traffic entrance" on its homepage. Merchants operating normally on the platform can obtain recommendations from the above traffic entrance for free as long as they are willing to provide "lower product discount prices."

"You don't need to pay any fees, you can sign up as long as you set a certain range of discounts for the products." An apparel merchant who has already signed up said that the traffic entrance opened this time mainly refers to modules such as "Good Stores of the Day" and "Good Goods", and does not yet involve "Guess You Like".

"Earlier, Tmall mentioned a saying at an industry conference - 'trading price for traffic', saying that the platform will have many products and mechanism adjustments this year that encourage price experience." A consumer electronics industry merchant said.

"At present, the traffic data of these places cannot be seen in the background, but the free traffic on the homepage is still very attractive." A merchant in the furniture category just learned of the above changes and entered the relevant merchant group to inquire about the compatibility of the category. The group he was in was already "outside the top 10 groups."

01 Merchants “give profit” to divert traffic to the platform

According to the information provided by the merchants, the above activity is called "Big Dreamer Plan". It mainly targets the four shopping guide areas of Taobao Mobile: Good Goods, Daily Good Stores, Great Attitude, and Seriously. What merchants need to do is to provide a discount of 10% to 50% (10% to 50% off) on the products. After successfully registering for the activity, they can obtain the display rights of the corresponding products in the above entrances.

Related entrances to different versions of Taobao Mobile homepage

Yibang checked multiple versions of Taobao Mobile App and found that in some versions (as shown above), "Good Goods" and "Daily Good Stores" have become the key entrances in the first screen of Taobao Mobile's homepage, occupying the four major modules together with Juhuasuan and Taobao Live. "Taibang" and "Sh ...

Related pages of Taibang and Zhenshi Taobao mini programs

Relevant information shows that after the successfully registered products enter the above four entrances, the prices of the products will be "old friend price" and "Wednesday price" (marketing day every Wednesday). The two pricing sources are very clear, calculated from the discounts initially registered by the merchants, "old friend price" is 50% of the highest discount, and "Wednesday price" is the highest discount. When consumers place orders, these preferential prices can also be combined with other discounts.

For example

Daily commodity A:

The fixed price is 200 yuan, the single product price is 100 yuan, and the store offers a 50-5 yuan coupon. The product has registered a maximum discount of 10%.

Old friend price = 100-100*10%*50%-5=90 yuan;

Wednesday price = 100-100*10%-5 = 85 yuan

Promotional product B:

The fixed price is 300 yuan, the promotional price is 200 yuan, the store coupon is 100-10, and the cross-store discount is 200-30. The product has registered a maximum discount of 10%, and users also receive a 10 yuan red envelope.

Old friend price = 200-200*10%*50%-10-30-10=140 yuan;

Wednesday price = 200-200*10%-10-30-10 = 130 yuan

The rules clearly state that the above-mentioned preferential prices will not be included in the minimum price, that is, they will not be used as a pricing reference for merchants when they sign up for the platform promotion. However, some participating merchants found that the "Wednesday price" was still included in the minimum price. When asked, the official reply was, "The current event still uses the rules of the test period. After the new version of the rules goes online in April, it will no longer be included."

"We belong to the category of large home appliances. Since the channel of Taibang has category restrictions, our products will not be displayed on Taibang, but they will be displayed on the other three channels that serve all categories." A consumer electronics industry merchant added that currently Taibang can only display products in the categories specified in its own investment rules, such as clothing, beauty, snacks, jewelry, furniture, 3C digital products, pets, toys, etc.

In the merchant group, we can see that in the face of this "trading price for traffic" gameplay, everyone is most concerned about whether it will affect the price setting of the promotion, including whether the platform will charge commissions, whether it will consume the merchant's search recommendation fees, and how to clearly see the actual effect of the profit sharing. The relevant person in charge said that this will be a long-term activity, the platform will not charge any fees, and the orders will be counted in the main search. Since the traffic of these entrances is part of the free traffic, merchants cannot split it for statistics yet. It is expected that relevant data tools will be launched in the merchant backend in April.

02 "Cheap" ammunition is everywhere

A merchant introduced that the Big Dreamer Plan is not a new gameplay, but an upgrade from the old version. "Previously, this gameplay focused on the trendy domestic products in the Taibang." This means that the upgrade of the new version of the plan is not just to increase the number of entrances. Instead, it encourages some domestic merchants to make concessions, and then guides all categories of merchants to make concessions. The scope of profit concessions has also expanded from local businesses to the entire Taobao mobile app.

In fact, in order to optimize the platform's pricing experience, Taobao and Tmall have already made relevant changes in their products.

Recently, some Taobao users discovered the "same model price comparison function" in the app, which allows users to directly find the lowest price of a certain product on the platform when searching on Taobao. For example, when searching for washing machines, a price comparison information bar appears below a washing machine priced at 3,899 yuan on the result page, indicating that there are 48 of the same model on sale, with the lowest price being 2,658 yuan. Click "Go to price comparison" to jump to a summary list of 48 products of the same model, with the lowest-priced product ranked first.

Screenshot of the front-end display of the same price comparison function

Behind the changes in front-end products, Taobao and Tmall have also turned "price power" into an important reference for the supply of product traffic, encouraging merchants to provide price-competitive products in exchange for the platform's "search traffic."

Two weeks ago, some merchants were invited to use the "Five-Star Price Power" system that Taobao and Tmall recently tested. The so-called "Five-Star Price Power" means that the platform will grade the price power of merchants' products from one to five stars, and the higher the grade, the greater the traffic rights and interests obtained. Among them, the highest grade "Five Stars" corresponds to "the lowest price in the entire network", that is, the price comparison results of the product in Taobao and outside Taobao are both low, and such products will not only be given priority in search recommendations and display the lowest price label in the entire network, but will also be directly displayed on the first screen of product search results.

Five-star price power system and corresponding product rights

"Taobao and Tmall attach great importance to commodity prices this year, and clearly tell us the importance of 'comparison of prices across the entire network' when setting prices." A Tmall furniture merchant told Yibang Power that the platform's traffic rules this year are: "The one with the best price for the same product gets traffic, the one with the best price in the same period gets traffic, and the one with the best price in the same track gets traffic."

Another merchant in the consumer electronics industry revealed that this year Tmall launched a new business methodology "Star Plan" for merchants in the consumer electronics industry, encouraging merchants to provide "good products at good prices" and promising to provide "definite support" for these products in the five major areas of the platform, including search, recommendation, 10 billion subsidies, live broadcast, and promotion venues.

"The 10 billion subsidy from Taobao will be very competitive in the future, because the platform will use bidding to compete for the slots. The platform is encouraging more merchants to join, and it is said that it will expand the product pool, reduce the cost of merchants participating, and then give the 10 billion subsidy more traffic." A health care product service provider said, "The waiter said that the platform will also participate in the subsidy. For example, if a product that successfully bids on the site receives the 10 billion subsidy, the platform will continue to subsidize it, so that the final preferential price of this product can compete with lower-priced products on the entire network."

A clothing merchant told Yibang Power that Taobao and Tmall will add a lot of expressions about low prices on the consumer side, such as putting obvious "same style, low price" labels on low-priced products in search and recommendation fields. "Taobao Live will launch a price reduction tool, and the live price after the price reduction will be directly displayed on the product search results, allowing consumers to see the preferential price of a certain product in the live broadcast at a glance." The above merchant added.

However, while encouraging merchants to provide products with price competitiveness, Taobao Tmall has always emphasized "quality". "The store manager said that merchants are not encouraged to blindly offer low prices." The above-mentioned clothing merchant added that in some categories, the platform will introduce third-party quality inspection agencies to label corresponding high-quality products based on some standards of the platform, and then give priority to display.

"Price power is not just about low prices. The platform will build more cost-effectiveness based on good products to provide consumers with a better user experience." Referring to this year's key price power strategy, Mi Lan, general manager of Taobao Tmall's sports and outdoor industry, told Yibang Power, "This year, the industry will focus on helping merchants build efficient tail goods daily sales venues and help merchants gain the love of cost-effective consumers through price." Taobao Tmall recently updated the "Standards for the Use of Minimum Prices for Marketing Activities". The key change is that the exclusive prices set by merchants for new customers, members, fans, etc. will no longer be included in the "minimum price". This means that merchants can safely set exclusive preferential prices for various users without worrying about limiting the preferential pricing for big promotions.

03 What exactly are Taobao and Tmall doing with “price”?

Recently, Alibaba has internally determined the five major strategies of Taobao and Tmall: live streaming, private domain, content, local retail and price power. Price power has been officially listed as one of the platform's important strategies for 2023. Looking back, the three-year epidemic has made many people feel like they have experienced a stagnation in time, but for Taobao and Tmall, it has experienced a huge change in the entire competitive environment.

According to the financial report, in the 12 months ending March 31, 2020, the GMV of the consumer business of Alibaba Group's digital economy reached 7.053 trillion yuan. In comparison, in 2019, JD.com's GMV was 2.09 trillion yuan, Pinduoduo's GMV just broke 1 trillion yuan, and the e-commerce scale of Douyin and Kuaishou was still in the tens of billions. Alibaba's position in the domestic e-commerce market was far ahead of others at that time.

But now, the situation has changed. At the beginning of the year, there were media reports that the actual GMV of Douyin e-commerce in 2022 was very close to the established target of 1.5 trillion yuan, and the GMV of Kuaishou e-commerce in 2022 was close to one trillion yuan. According to the growth rate estimates in research reports and financial reports, JD.com's GMV in 2022 will be about 3.48 trillion yuan, and Pinduoduo's GMV will exceed 3 trillion yuan. However, the average growth of the total amount of domestic online retail transactions in the past few years has hovered in the single digit, and the external pressure on Alibaba can be imagined.

Compared with external stimuli, what makes Alibaba more alert may be more real data. As Alibaba's core revenue, e-commerce advertising and commission income mainly revolving around Taobao Tmall continued to decline-a year-on-year decline of 9% in the fourth quarter of 2022, after two consecutive quarters of declines of 10% and 7% respectively. In an environment where user growth has peaked, the focus of increasing core revenue naturally comes to creating more stock consumption, and the five major strategies and the main theme of "progress" throughout the year also come from this.

One point that cannot be ignored is that, in addition to several short video live streaming platforms that have outperformed the overall market, the platform that has maintained a relatively high growth rate is Pinduoduo, which focuses on cost-effectiveness. In terms of annual active users, Pinduoduo briefly surpassed Alibaba and ranked first at the end of 2020. To a certain extent, this may also allow the entire market to see the power of price discounts and active users. "

Taobao and Tmall already have the most extensive online shopping population in China and are also the most efficient trading platforms. "In the recent earnings call, Zhang Yong, Chairman and CEO of Alibaba and Co-Chairman of the CGF Board of Directors, said that in terms of operations, Alibaba will further strengthen and improve the user experience and customer value of Taobao and Tmall and consolidate its leading position in the market. The specific measures are in three aspects:

1. Strengthen user stickiness and duration: Continuously increase diversified consumer content through short videos and live broadcasts, enhance consumer stickiness and the fun of discovery, and improve influence and activity;
2. Improve the cost-effectiveness of goods: Price is always the king of consumption. We will continue to improve the price competitiveness of goods through the design of the overall market mechanism, various marketing products and Taobao's factory goods, agricultural products directly to consumers and other business model breakthroughs;
3. Local retail: Organize local supply and local logistics fulfillment through local businesses such as Taoxianda and Taocaicai to meet consumers' timely needs for high-frequency and urgent daily necessities.

The three streamlined strategies have already put forward the real keywords: user stickiness and duration, product cost performance, and local retail. Consolidating "price power" is just Alibaba's "tactic".

Compared with other platforms that directly provide subsidies, Alibaba's actions in optimizing prices are slightly more "complex". In order to encourage merchants to provide competitive prices, it opens up the largest search traffic rights and interests, and constantly increases traffic scenarios such as shopping guides; in order to make it easier for consumers to find products, it redesigns the Taobao homepage and provides tools to find the lowest-priced products of the same model... These actions related to the implementation of the price power strategy will even exist horizontally in other strategies such as live broadcasting, contentization, and private domains.

"Including price power, the implementation of several major strategies is integrated into the platform's rules and product changes, and then every change can return to the business power of merchants, help merchants acquire customers and improve operating efficiency." Someone close to Alibaba pointed out, "In line with the current trend of more rational consumers, it is reasonable for the industry to launch a so-called price war. But we firmly believe that blindly low prices that cannot assist operations are meaningless."

An agent operation service provider pointed out that, taking the example of "new customers, members, and fans exclusive prices are no longer included in the minimum price", Taobao does not encourage merchants to use private domains to set bottom-line low prices, but merchants can use private domain tools to operate users in layers outside of big promotions. "Of course, merchants can only have repeat purchases if they have private domains, and the platform can also have active users and more business." He added, "Every move of Alibaba has a deep meaning, but the most advanced competition often uses the most direct means."

"Price subsidies are not new. Every once in a while, someone will take the initiative to offer subsidies, hoping to change the situation and gain an advantage. But in history, no company has been able to change the situation through continuous price subsidies. Changing the situation requires technological innovation and innovation in business mechanisms, so that merchants are truly willing to provide the best products and the best prices to their consumers." Facing a new round of subsidy wars launched by various platforms, Zhang Yong said bluntly, "One person cannot subsidize the entire platform. Only when merchants are willing to pay for their consumers and make efforts for their consumers, and this effort has long-term sustainable business returns, can there be a positive cycle."

Author: Shi Hangqian

Source: WeChat public account "Yibang Power"