38 big promotion, fierce competition for traffic

38 Festival is approaching. As the first major promotional event of the year, major platforms have extended the duration and increased the intensity... Various incentive policies have been launched to increase the first promotion of the year. This article summarizes the incentives and promotions launched by Douyin, Pinduoduo, JD.com and other platforms for merchants and consumers. Let's take a look at the new price and traffic war at the beginning of 2023. Recommended for friends who pay attention to e-commerce.

The first promotion of the year, new products in spring, and women as the protagonists, with the combination of these consumer elements, the 38th Festival has become the first major promotion after the Spring Festival of the Year of the Rabbit.

The efforts of the platforms are obvious:

• For merchants, major platforms have provided strategic guidance, participation details and specific incentive policies as early as mid-February.
• For consumers, on the one hand, the platforms "extended the duration" by turning the originally one-day festival into an event of nearly a week; on the other hand, they "intensified the intensity". Taobao and Pinduoduo both launched special activity areas, JD.com took this opportunity to launch the "10 billion subsidies" that attracted much attention in the industry, Douyin directly changed the "e-commerce" entrance on its homepage to 38 festivals, and Kuaishou said it would "accumulate 1 billion consumer coupons to subsidize users."

At a time when e-commerce promotions have become the norm, although there have been corresponding promotional activities on March 8th in the past few years, they have been relatively "quiet" overall and have received far less attention than 618 and Double 11. However, the importance of this year's March 8th Festival is particularly prominent.

This change is not due to the major platforms' late realization, but rather reflects the competitive anxiety brought about by the fact that so many platforms are all "selling goods".

1. Full discounts have become "consumption vouchers" and 10 billion yuan in subsidies have become "standard"

Different from the mid-year promotion and Double 11 and Double 12 which have been extended to one or two months, the gameplay of the 38 promotions on various platforms is still relatively clear and concise as a whole: there are no sign-ins and mini-games to increase user time. The core is to use "discounts for purchases over a certain amount" to stimulate consumers to place orders.

The simplest and most intuitive way is to provide official discount coupons on the platform, which are applicable to all products participating in the promotion. Users can directly receive them on the event page. For example, during the 38th Festival this year, Xiaohongshu directly provided two exclusive coupons on the event page, namely, discounts of 20 yuan for purchases over 199 yuan and discounts of 40 yuan for purchases over 399 yuan. The second is cross-store discounts. The specific discount amount, applicable products, etc. will be clearly marked on the product details page. This is also a "basic" discount available on many platforms.

Xiaohongshu discount coupons, Douyin cross-store discounts

However, users are already used to such “full discounts”, and if there is no particularly large discount, its appeal is limited. Therefore, in this year’s 38 promotion, full discounts have a new name - “consumption vouchers”.

Although it is still a discount on purchases, the concept of "consumption vouchers" makes users feel more credible and attractive. In addition, the platforms that announced the issuance of consumption vouchers all issued multiple vouchers at one time, which gave users the feeling of "stronger discounts".

For example, on the homepage of Kuaishou store, you can see the pinned information "Get up to 2,000 yuan in consumer coupons"; Pinduoduo announced that in addition to the discount, an additional 388 yuan in consumer coupons will be issued to each user.

Kuaishou consumer vouchers, Pinduoduo consumer voucher packages

Of course, consumers will not really get hundreds or thousands of yuan in discounts at one time, as each platform has restrictions on the vouchers. Kuaishou's vouchers are for digital products and department stores; Pinduoduo's 388 yuan voucher package is also limited to online payment for designated promotional products.

Moreover, the discount amount of the consumption coupons is relatively high. Users need to spend at least 100 yuan to use them. Therefore, this is more suitable for incentivizing users to order relatively high-priced "big items" or to "stock up" in one go.

In addition to discounts on purchases over a certain amount, JD.com’s officially launched “10 billion subsidies” has also made competition in this year’s 38 promotions even more intense.

From the APP, JD.com put the "10 billion subsidy" in a prime position on the homepage, which is higher than the positions of flash sales, 9.9 free shipping and live broadcast. After clicking into the special area, JD.com also put its advantageous categories in a more eye-catching position. For example, the top one is the Apple subsidy area, and the top of the 10 billion subsidy product category labels are mobile phones, digital computers, and home appliances. At the same time, JD.com also emphasizes the "double compensation for expensive purchases" service to ensure the absolute credibility of the discount.

JD.com’s “10 billion yuan subsidy”

However, the "10 billion subsidies" are not new, and other platforms have also made efforts here. For Pinduoduo, the 10 billion subsidies are already a normal practice. In order to show the discount during the 38 promotion, Pinduoduo also launched "double subsidies", adding a limited amount of coupons on top of the 10 billion subsidies, as well as limited-time coupon purchases for some designated products.

For example, the price of the same Dyson hair dryer in Pinduoduo's "double subsidy" limited-time sale is more than 100 yuan lower than Juhuasuan's 10 billion subsidies and JD.com's 10 billion subsidies. It can be said that the discount is maximized.

Pinduoduo "doubles subsidies"

In addition to the above gameplay activities, the platform also has some preferential activities that are superimposed on the 38 promotion. Different gameplays also have their own functions:

For example, Douyin and Kuaishou have launched a 12-month interest-free campaign, which can not only encourage users to spend on high-priced goods such as digital products and home appliances, but also attract new users for the platform's payment products. In addition, there are "small easter eggs" such as one-yuan flash sales and lucky draws that are indispensable in big promotions, which can not only increase the fun of the event, but also attract attention efficiently.

In addition, Douyin, Pinduoduo, and Xiaohongshu also focus on bringing the "search" function into the promotion activities. For example, the platform will pre-set the keywords of the 38 promotion in the search box, or guide users to obtain random coupons or prizes by searching for fixed keywords in the guessing search or event special. This gameplay not only improves user interactivity, but also expands new traffic touchpoints.

Douyin search for exclusive benefits, Pinduoduo "smash the golden egg", Taobao redeem gifts for one cent

2. Start a "price war" again

Strategies such as discounts, subsidies, and low prices are not new. During certain festivals, consumers are more willing to spend and more sensitive to prices, so discounts are a tried-and-tested tactic. For the e-commerce industry, the rise of e-commerce platforms is due to their more favorable prices compared to offline channels. In the subsequent rounds of competition, "low prices" can be said to be a major strategy throughout.

If we look at the entire Internet, subsidies, which are essentially a way of "spending money to buy traffic", have been successful for a long time in the past. However, the Internet has entered an era of stock competition. In this context, whether the "subsidy strategy" is still useful is the core of the industry's high attention after JD.com launched a 10 billion subsidy.

If Pinduoduo is used as a typical case, the answer to the question of "Is the subsidy strategy still useful?" is obviously yes. Initially, when Taobao and JD.com seemed to have formed a dual-giant pattern, Pinduoduo relied on low prices to stand out.

In 2019, Pinduoduo pioneered a 10 billion yuan subsidy. Although many people at the time thought it was an unsustainable "money-burning marketing", Pinduoduo's number of active buyers reached 585 million in 2019, a net increase of 166 million from the same period last year; its total revenue in 2020 increased by 97% year-on-year, and it also achieved its first quarterly profit in the third quarter of 2020.

When the 10 billion yuan subsidy gradually became normalized, Pinduoduo was able to achieve profitability and strike a balance between growth and subsidies, which also made the 10 billion yuan subsidy gradually become the standard for e-commerce platforms. In December 2019, Juhuasuan and Suning.com, subsidiaries of Taobao, launched the "10 billion yuan subsidy". JD.com actually launched a short-term "super 10 billion yuan subsidy" activity during the Double 11 shopping festival in 2019.

Taobao's 10 billion yuan subsidy and Suning's 10 billion yuan subsidy

Today, the revenue growth of Alibaba and JD.com has slowed down overall in recent quarters. Coupled with the rapid growth of the e-commerce businesses of Douyin and Kuaishou, it is obvious that the time has come for e-commerce platforms to find ways to widen the gap.

As a result, low-price subsidies, the most basic method in the retail industry, has been brought back to the main competition arena, and the involution of the 38 promotion is only one of the current manifestations. In the future, JD.com will normalize the "10 billion subsidies" like other platforms, and Alibaba has also made it clear that one of Taobao's five major strategies for the whole year is "price power."

But at this time, another question was raised: Subsidies seem to be a way of internal competition that "hurt the enemy by 1,000 and hurt yourself by 8,000", so is it necessary for each platform to do it? In fact, judging from the several platforms that have already normalized subsidies of tens of billions, "subsidies" do not mean that the platform simply burns money.

All-Weather Technology reported that industry insiders said that 99% of the products in the "10 billion subsidies" were priced by the merchants themselves, and only a few hard-standard product platforms would provide subsidies, which means that the 10 billion subsidies are more of a platform "setting the stage" for merchants to determine the margin of profit to win sales growth. Citigroup also released a report saying that investors may have overreacted to JD.com's 10 billion subsidies. In fact, most of the subsidies paid are shared with brands, suppliers and merchants, and may not necessarily drag down the platform's revenue level.

Moreover, low prices and subsidies can not only attract incremental growth from the sinking market for the platform, but also capture price-sensitive users in first- and second-tier cities. It is also the most effective way for consumers to see results.

Efficiency is extremely important at the moment. When there is new volume, players can still explore a new low point and find an opportunity to overtake through trial and error; but now it is an environment of stock competition, everyone is in the same traffic pool, and if you don’t move forward, you will fall behind.

The end of the traffic era cannot stop the platforms from yearning for traffic. The harder it is to find incremental traffic, the more the platforms need to find ways to attract new users from other platforms and retain old users as soon as possible. Because only by keeping users active and growing steadily can we ensure that brands will continue to advertise and do business here. This is a cycle composed of users, platforms, and merchants. Stagnation in any link will bring risks.

Of course, e-commerce itself is a "very heavy" business, and it is difficult to change the overall competitive landscape of the industry by "price wars" alone, and almost all players have now entered the game. At a time when social networking, communities, and content are deeply integrated with e-commerce, players each have their own "killer weapons" and ideas for moving forward.

The battle for "traffic" will continue for a long time, and the uneasy Section 38 is just one of the footnotes.

Author: Lv Yue

Source public account: Deep Echo (ID: deep-echo), global vision, value perspective