E-commerce platforms are fighting hard for the New Year Shopping Festival

E-commerce platforms are fighting hard for the New Year Shopping Festival

As the Spring Festival is approaching, e-commerce platforms are also trying to use the "New Year Goods Festival" at the end of the year to make another push for their annual performance targets. But can the "New Year Goods Festival" bring the expected results to e-commerce platforms? What challenges are e-commerce platforms facing? In this article, the author expresses his views, let's take a look.

The twelfth lunar month has arrived, and the Spring Festival is not far away. While workers are counting the days until the holiday, the e-commerce industry has ushered in the last busy period of the year - the New Year Goods Festival.

Among all the e-commerce platforms ready to go, Taobao is particularly active. On the one hand, Taobao has adjusted the preferential rules of this year's New Year Goods Festival, no longer issuing shopping coupons, canceling cross-store discount activities, and changing to official direct discounts of 5%-15%; on the other hand, the first Metaverse live broadcast is also being prepared and is expected to be launched during the New Year Goods Festival.

Although not as high-profile as Taobao, platforms such as JD.com, Pinduoduo, Douyin, and Kuaishou are also secretly accumulating strength. Classic routines such as 10 billion yuan in subsidies are all ready. Around the promotion node of the New Year Goods Festival, major e-commerce platforms can be said to have held back their efforts and made the final sprint for their annual performance targets.

The reason behind the platforms' desperate efforts is not hard to understand. Affected by objective factors such as the epidemic and rising inflation, the performance of several e-commerce shopping festivals this year has fallen short of expectations. The Double Eleven, which no longer publishes GMV, has become less popular, and the Double Twelve has been directly forgotten. At the end of the year, the New Year Shopping Festival has become the last hope for the entire e-commerce industry.

However, challenges still exist: many provinces and cities have experienced the first wave of infection peaks after optimizing epidemic prevention and control, logistics have been paralyzed in many places, and online and offline consumption are experiencing pain.

Can the much-anticipated New Year’s Goods Festival really achieve the expected results?

1. E-commerce platforms prepare for the Lunar New Year Shopping Festival: Alibaba grabs traffic, JD.com and Pinduoduo spend money crazily

For this year's New Year Goods Festival, each major platform has different focuses in their preliminary preparations.

Alibaba Taobao, which has always been good at marketing and has the most prominent traffic anxiety, has tried its best to attract users' attention and become the platform with the most publicity in the pre-New Year's Festival. In particular, Taobao's Metaverse Live, although not yet officially launched, has successfully aroused the curiosity of many netizens and achieved the expected publicity effect.

According to the test footage circulating on the Internet, the Metaverse live broadcast room prepared for the New Year Goods Festival has a lot in common with the previous Double Eleven Metaverse Commercial Street. After the official launch, users can watch the real-time live broadcast of the city on the big screen in the live broadcast room through their digital avatars, directly place orders online and receive goods offline, and the transaction process is no different from that of a regular live broadcast room.

In fact, Taobao e-commerce has always attached great importance to the development of immersive shopping functions such as Metaverse and AR. Long before launching the Metaverse live broadcast room, Taobao Live launched the "Future City" project, allowing users to try on and place orders online, and also receive the goods directly offline. Other media reported that Taobao's Metaverse live broadcast room and Baidu's Metaverse platform Xirang have similar functions, but the former has a stronger sense of communication.

Currently, Taobao and Tmall have provided a large number of traffic entry points for Metaverse Live and Future City, trying to make them the new business cards of the platforms. Taobao Live even launched eight scenes such as brand store top products and Crystal Island adventure, providing users with a variety of new ways to play.

Unlike Alibaba, the two giants, JD.com and Pinduoduo, have a simpler and more direct way of attracting user attention: spending money.

On Pinduoduo's side, the 2023 New Year Goods Festival was officially launched on December 26. The event will last for a full 15 days. The platform will invest 3 billion yuan in on-site resources and red envelopes. Statistics show that during last year's New Year Goods Festival, the highest subsidy ratio for most categories of goods on Pinduoduo reached 60%, and this year's subsidy intensity is believed to be no less than this figure.

JD.com divides the entire event into five stages: warm-up period, Laba New Year's Eve period, scenario period, small New Year's period and Spring Festival delivery period, providing different discounts and gameplay. These include traditional full discount activities of 40 yuan off for purchases over 300 yuan and limited-time red envelope rain, as well as the superposition of multiple benefits such as coupons, total price promotions, and Jingdou.

As for new e-commerce companies such as Douyin, Kuaishou, and Bilibili, they are leveraging their advantages in content and continue to focus on live streaming scenarios.

At the New Year Goods Festival Merchant Conference held earlier, Kuaishou announced four special activities: the Fan Pampering Special, the Top 100 Anchors Festival, the Authentic New Year Goods Category Day, and the Commercialization Co-construction Dividends, and promised to provide traffic and financial support for merchants and anchors.

Among them, top anchors who sign up for the New Year’s Goods Fan Special can obtain free short video traffic support and 100 million yuan in red envelopes from the platform; mid-level anchors can sign up for the New Year’s Goods Festival Top 100 Anchors Ceremony and share special live broadcast traffic resource packages.

Douyin also held a New Year Goods Festival Business Conference earlier this month, continuing to build the Douyin Goods Festival as a signature event. The successful live broadcast rooms for good goods and celebrity live broadcast rooms in the past two years will be restarted, and a new hometown New Year Goods live broadcast room has also been launched to try to provide consumers with a sense of freshness. In addition, the linkage between live broadcasting and shelf e-commerce is also being strengthened, and the platform will divert traffic to the shelves through multiple pages such as search bars and live broadcast rooms.

Even second-tier e-commerce platforms such as Gome and Suning, which have been in poor condition and surrounded by negative news, and Vipshop, which has always been low-key, have made full preparations for the New Year Goods Festival and brought out their own unique skills. Gome launched promotional activities such as old-for-new and 30% off for popular products in its offline stores, while Vipshop launched a special New Year Goods Festival area in the "Haoguang" channel on its APP, providing special traffic support of tens of millions.

In short, all major platforms are gearing up and ready to go, just waiting for the moment when consumers empty their shopping carts. After a year of struggle and dormancy, both platforms and merchants need a festive holiday to improve performance and wipe out the downturn.

However, unlike previous years, today's New Year Festival has some more uncertainties - when the peak of the epidemic infection hit, problems arose in the operation of the terminal logistics system.

Facing the last wave of logistics peak after the New Year, are major platforms and logistics companies ready?

2. Logistics is the biggest challenge in the post-epidemic era

When the e-commerce market was just emerging and various shopping festivals were springing up, logistics was the Achilles heel of the entire industry. In the past few years, Alibaba and JD.com have invested a lot of money and manpower to build logistics and warehousing systems, turning the weakest link in the past into the most stable moat.

But as mentioned above, the wave of infection sweeping across the country has brought new uncertainties to the domestic logistics industry. The logistics paralysis in Beijing, Shijiazhuang, Chongqing and other places has sounded the alarm for the last wave of e-commerce promotion wars at the end of the year.

Public data shows that on December 1 this year, the daily express delivery volume in China once again exceeded 100 billion pieces, and the number of orders on major e-commerce platforms has returned to the high level of previous years, laying the groundwork for the pressure on the logistics system. By mid-December, the month-on-month growth trend of national logistics shipments was more obvious, and various terminal distribution stations began to operate at overload.

According to statistics from relevant departments, on December 19, the express collection rate of the postal system increased by 2.3% month-on-month to 267 million pieces, and the delivery volume increased by 1.1% month-on-month to 285 million pieces. The number of trucks passing through national highways increased by 12.2% month-on-month.

In the northern region, which was the first to be hit by the epidemic, a large number of JD.com and Cainiao outlets have been shut down. A netizen living in Shijiazhuang complained on social media that he had not even received the goods he bought on Singles' Day, and a total of 124 express parcels were stuck in the logistics process.

In addition to the updates from consumers and practitioners on social platforms, a series of recent operations by logistics companies are sufficient to illustrate the problem.

Since December 14, JD.com, Cainiao, SF Express and other platforms have successively dispatched delivery personnel from other parts of China to Beijing, with a total of more than 3,000 people. JD.com has mobilized 1,000 couriers to Beijing, while Cainiao has dispatched 10 batches of delivery staff from 19 provinces and cities across the country to Beijing.

What's more, according to media reports, a JD delivery station in Shijiazhuang has been connected to the Cainiao logistics network, and JD's parcels have been added to the Cainiao station's self-pickup service at a price of 0.5 yuan per order. The historic cooperation between JD and Alibaba was unimaginable in the past, but under special circumstances, both parties can only join forces to keep warm.

However, this series of operations only treats the symptoms and not the root cause, and fails to fundamentally alleviate the phenomenon of logistics delays.

Cainiao has made it clear that the delivery personnel rushing to Beijing will give priority to delivering urgent orders such as medicines, and the delivery of other goods will not be able to return to normal for a while. At the same time, as the infection wave gradually spreads across the country, the manpower allocation model of robbing Peter to pay Paul may be unsustainable.

Although the epidemic is an uncontrollable factor, there is little that e-commerce platforms and logistics companies can do to deal with the current situation. However, from the perspective of consumers, logistics is still an important factor affecting their shopping decisions, especially traditional festivals such as the New Year Goods Festival, which have extremely high requirements for logistics timeliness. According to statistics from iiMedia Research, 51.8% of consumers in China still hope to improve the speed of express logistics.

Now that the national logistics are in turmoil, the delivery efficiency of the New Year Goods Festival is likely to be lower than in previous years, which will undoubtedly make consumers who are tempted to shop more cautious. Once consumer confidence is shaken, merchants and platforms that hope to use the New Year Goods Festival to wipe out the downturn may be disappointed.

(Picture from iiMedia Research)

The New Year Goods Festival is of course very important, especially when the popularity of artificial shopping festivals such as Double Eleven and Double Twelve has declined and their glory has faded. The New Year Goods Festival, which is backed by the most important traditional festival of the Spring Festival and has a natural traffic advantage, is even more significant. However, under the interference of various uncertain factors, the Value Research Institute believes that major platforms should appropriately lower their expectations for GMV and look further ahead.

3. Emphasis on online and offline integration, helping farmers and sinking to the grassroots are still the main themes

It is not only e-commerce platforms but also the majority of merchants who are having a hard time in 2022. During this year's 618 and Double Eleven, e-commerce platforms will regard supporting merchants and helping farmers as an important strategy, and the upcoming New Year Goods Festival will be no exception.

Judging from the investment policies currently announced by major platforms, this year's New Year Festival merchant support activities are still concentrated on several familiar links: releasing the potential of the sinking market, assisting the upward movement of agricultural products, and opening up the online and offline closed loop to help traditional merchants upgrade to digitalization.

Pinduoduo, which has always emphasized its roots in agriculture, has included increasing farmers' income in its New Year Goods Festival goals, creating a direct sales channel for specialty agricultural products from all over the country. The person in charge of the Pinduoduo New Year Goods Festival told the media that the platform will continue to implement a zero commission policy for fresh agricultural products during this year's New Year Goods Festival.

As a key support target of Pinduoduo, the "Laotongxue Mu'erhai" store, which specializes in oysters and fruits from Rushan, Shandong, became one of the best-selling stores during last year's New Year Goods Festival. In addition, there are stores in Qingyang, Gansu that specialize in selling local mutton and the "Lipu Yu" store in Lipu, Guangxi, which have all shined during the New Year Goods Festival in the past few years. In the early promotion of this year, the above stores continue to be the key promotion targets of Pinduoduo.

What is even more gratifying is that, driven by Pinduoduo, platforms such as Alibaba, JD.com, Kuaishou, and Douyin have also joined the ranks of helping farmers, competing for high-quality farmers and resources of origin.

Last year, Tmall proposed the goal of "selling out 100 villages" and provided live streaming for local farmers by recommending specialty agricultural products from one province a day during the New Year Goods Festival. Throughout the event, Tmall successfully brought goods to more than 110 cities and counties in 23 provinces and autonomous regions, and the effect even exceeded the original goal. This year, Taobao and Tmall will continue the corresponding activities and continue to build live streaming platforms for farmers.

Also betting on live streaming to help farmers are, of course, the two short video giants, Douyin and Kuaishou.

In the "2022 China Farmers' Harvest Festival Kuaishou Agricultural Products Consumption Trend Report" released earlier this year, Kuaishou pointed out that Linyi, Beijing and Hangzhou have become the "agricultural products delivery capitals" of Kuaishou e-commerce, and local specialty fruits are very popular. Kuaishou also emphasized that the platform will continue to help farmers increase fruit sales through live streaming based on consumer feedback.

JD.com, which has not been very involved in live streaming e-commerce, continues to work on the supply chain to provide assistance for farmers' digital upgrades.

In July this year, JD.com established its first agricultural technology demonstration park in Suqian, Jiangsu, providing integrated agricultural technology for seedling cultivation, planting, processing and sales, which has radiated to many surrounding villages. The three major intelligent systems, including greenhouse environment monitoring, linkage control system and big data center, have provided a lot of help for the production of fruits, vegetables and grain crops in the surrounding areas.

With the New Year's Goods Festival approaching, JD.com's initial investment has also come to fruition. Improving farmers' production, warehousing, and distribution efficiency through a digital supply chain can help the platform improve user experience and gain a better reputation.

Of course, the platform’s farmer-assistance plan is not selfless - strengthening cooperation with farmers, using strategies such as agricultural product upstreaming and farmer live broadcasts to create an online and offline closed loop, and enriching the gameplay of the New Year Festival has become another goal of the e-commerce platform’s farmer-assistance plan.

In the past two years, Shenzhen, Qingdao and Xiamen have all joined hands with e-commerce platforms to create special activities for the Spring Festival, and use offline activities to redirect traffic to online platforms. For platforms that have always been worried about the depletion of online traffic and the decline of traffic dividends, offline feedback to online platforms may be a new way out.

In short, the significance of the New Year Goods Festival to the e-commerce industry has long exceeded the performance itself. Providing opportunities for struggling small and medium-sized businesses to show their faces and recover their losses, while providing a test field for the integration of online and offline, is also the mission of the New Year Goods Festival.

It is highly likely that sales during this year’s New Year Festival will not be able to return to their peak levels, but seizing this marketing node is still crucial for thousands of small and medium-sized businesses.

4. Final Thoughts

Supporting merchants has definitely been the main theme of e-commerce platforms in the past year. In addition to the fierce competition in the New Year Goods Festival, e-commerce platforms have not forgotten to provide support to other sellers who did not participate in the New Year Goods Festival, helping the latter to survive this difficult winter.

As early as mid-December, Taobao and Tmall jointly launched a number of merchant support measures with MyBank, Alibaba International Station and AliExpress. From December this year to February next year, Taobao will provide 38 days of interest-free credit and 50% discount on handling fees for eligible small and medium-sized merchants, and the collection period will be shortened to 7.5 days.

The rise of China's e-commerce industry is inseparable from the support of thousands of small and medium-sized businesses. The more difficult the times, the more attention the platform should pay to supporting businesses. Only by keeping businesses alive can the e-commerce industry retain its spark.

There is no doubt that the past year did not leave many good memories for the e-commerce industry. Platforms, merchants and even consumers hope to bid farewell to this eventful autumn as soon as possible. During the fierce competition of the New Year Goods Festival, merchants and platforms have joined forces to keep warm, and everyone is preparing for the last wave of sprint at the end of the year.

The cold winter will eventually pass, and the day of spring will finally come. All e-commerce platforms and merchants have to do is to survive the last darkness before dawn.

Author: Hernanderz

Source: Value Research Institute (ID: jiazhiyanjiusuo), focusing on the long-term value of the company.

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