E-commerce promotions, farewell to the prosperous era

Editor's note: This year, whether it is Double 11 or Double 12, we can feel that the e-commerce promotion has been "cold". Why is this? Is there an antidote to dispel the coldness of the promotion consumption? With these questions, the author of this article talked to consumers, small and medium-sized businesses and brand merchants, and interpreted the business and consumption codes behind the promotion from the perspective of various market players. Let's take a look.

Coincidentally, all major e-commerce platforms did not announce the sales of the big promotion after the Double Eleven in 2022 as in previous years. This is also the "longest" Double Eleven in recent years, lasting for a month, almost connected with Double Twelve.

But whether it is Double Eleven or Double Twelve, whether it is brand merchants or small and medium-sized merchants, or ordinary consumers, they can all feel the "coldness" of the big promotion - consumers "can't buy", and merchants seem to "can't sell", and the whole market is filled with a chilling feeling.

Why has the big promotion, a commercial carnival, suddenly cooled down this year? Is it because the big promotion itself is no longer popular, or have Double 11 and Double 12 become less important? Who can be the antidote to dispel the cold of big promotion consumption? With these questions, we talked to consumers, small and medium-sized businesses and brand merchants, hoping to interpret the business and consumption codes behind the big promotion from the perspective of various market players.

1. Consumerism retrograde: Do not add physical space unless necessary

The change in consumer mentality is pushing the gate of Steins Gate to slowly fall for the two major promotions at the end of 2022. To study consumer mentality, it is necessary to look at the Douban Kou Group, an online community that gathers consumers from first-tier cities to small counties.

On February 12, 2018, the Douban group "Stingy Women's Association" was established, known as the "Stingy Group". Four years later, here, there are 600,000 young people supervising each other "not to buy too much" and jointly condemning classmates who squander and waste. Zhao Jinjin, a member of the Stingy Group, told Hedgehog Commune: "Every year after Double 11 and Double 12, there will be a group of new people joining. The last time I logged into this group was in the first half of this year, when there were 530,000 people. When I checked again two days ago, there were nearly 600,000 people."

In this regard, Zhao Jinjin explained: "After seeing the bills, more and more young people have become sober, and in the past two years of the epidemic, no one dares to spend money indiscriminately." Zhao Jinjin was once a member of the "shopping army". The amount she spent on Double 11 in the first year she joined the company was not repaid until Double 11 of the following year. Since then, she resolutely joined the "stingy group" and no longer consumed passionately.

In addition to the "stingy group", there are more young people who are tired of shopping festivals, and their attitudes are also quietly changing. On the eve of Double 12, Hedgehog Community interviewed three young people at different stages of life, including college students, young people entering the workplace, and a new mother. They all have a similar understanding of shopping festivals - "Don't increase the number of entities unless necessary."

According to Hedgehog Commune's observation, the reason behind the decline in enthusiasm among young people for shopping festivals is the shift from consumption habits to lifestyles.

1. Big sales become a daily routine, and young people buy as they need.

"Do you know how many shopping festivals there are in 365 days a year?" Ling Wei asked Hedgehog Commune. She answered: "In fact, there are big sales every month, plus discounts and full-reduction promotions in the live broadcast room. As long as you need it, every day is a shopping festival, and every live broadcast has the lowest price."

Ling Wei is in her third year of graduate school this year. As graduation season approaches, she will face the problem of "moving". Because she had stockpiled too much before, the space available for activities in the dormitory is getting smaller and smaller. She showed the express boxes piled up in the dormitory to Hedgehog Commune: "The tissues, wet toilet paper, and laundry detergent I stockpiled in the live broadcast room are enough for the six of us in the dormitory to use for half a year. Can you imagine?"

Ling Wei believes that "the way e-commerce promotions are played now is different from the past two years. In the past, they simply cut prices, but now they are buy three get one free, buy five get two free, which forces people to buy more. So long before Double 11, we bought everything we needed to buy."

She added: "I have now come up with an iron rule - buy when you need it, don't buy when you don't need it, and if you need it tomorrow, buy it tomorrow. You can't go to work a day earlier just because there is a discount on Sundays."

Li Jia, who has been working for more than a year, also agrees with Ling Wei's "iron rule". She told Hedgehog Commune that the things she bought on Double 11 this year were not delivered by Double 12, and some merchants even made false deliveries (there was still no logistics collection information two days after delivery). She returned all the goods in anger, leaving only some fruits and medicines. Li Jia believes that the reason for this phenomenon may be related to the epidemic. Not long after the lockdown was lifted, orders surged and the factory's production capacity was insufficient.

She smiled and said: "It is precisely because it has not been delivered for so long that I realized during the long wait that most of the things I don't need or want that much."

2. Rational consumption, returning to the most authentic needs

Xixi is a freelancer. She has already walked a short distance on the road of giving up material desires and letting go of things.

Xixi showed her mobile page to Hedgehog Commune: "I have very few apps and rarely open e-commerce platforms. I haven't bought anything for a long time. Apart from buying some daily necessities in the supermarket, I don't buy anything else."

She said: "I didn't feel abandoned by the consumer society because I didn't buy things. Instead, I gained a kind of inner peace. Because I found my own life again and was no longer at the mercy of marketing concepts and gimmicks."

What does it mean to return to your own life?

Xixi believes that this is a more authentic and original need that truly makes life more comfortable.

She explained: "It's very simple, just eat healthy and safe food, wear clothes that fit my body, and have comfortable sheets, because I want to sleep better. Occasionally I buy some plants at the flower and bird market to make my living environment a little better."

"After returning, I found that many products were given too much meaning, but people's real needs were forgotten. I just hope that the simple necessities of food, clothing, housing and transportation can be met, and it takes a lot of effort to find a really useful product."

"So, I don't seem to have much desire to buy. In fact, I don't know how many products nowadays can be integrated into my life. From the perspective of a young consumer, I feel that many products are becoming more and more fancy, and my threshold for being stimulated is also increasing. But the question is, what is the relationship between the functions it promotes and my own needs?"

When talking about this, Xixi felt very confused and used the word "I don't know" several times in a row. She said something that sounded a bit Versailles: "Sometimes, I really feel like I have money but nowhere to spend it. I don't know where to spend it. I really don't know."

2. Small and medium-sized businesses talk about big sales: they just want to survive first

After talking about the changes in consumers, let's take a look at the performance of small and medium-sized businesses in the two big promotions at the end of this year. A report released by iResearch in November 2022 showed that small and medium-sized businesses with annual sales of less than 3 million yuan constitute the main body of the e-commerce industry, accounting for more than 80%.

Therefore, it is necessary to study what small and medium-sized businesses are thinking and doing.

Tara left the investment company and plunged into the entrepreneurial army in early 2020. When the company reached its third year, she looked back and felt most fortunate that she had chosen the pet food track - many of the clothing startups in her circle of friends did not survive.

Tara and her new brand have not witnessed the heyday of big promotions such as Singles’ Day, Singles’ Day, and 6.18. In the early years, big promotions had real-time reports, breaking 100 million, 1 billion, and 10 billion. The posters used red as the background, with yellow or white numbers jumping up in units of 100 million, which was as festive as the announcement of college entrance examination results.

In the past two years, the promotional activities of major e-commerce platforms have become low-key. They no longer emphasize growth and GMV, but begin to emphasize service quality or the survival status of small and medium-sized brands.

Tara, the founder of Jiusheng Pet Food, has mixed feelings about the promotion. She doesn't appreciate it or hate it. She just regards it as something that must be done to run an e-commerce business, just like peeling pineapples and watering cabbages. She sums up this emotion as love and hate.

Those who want to build a new brand have no choice but to participate in platform promotions.

Tara said that for most small and medium-sized brands, big sales are indeed a good opportunity to boost sales. "When everyone is talking about buying things, everyone feels like they are under a spell, and you feel like you will lose out if you don't buy something."

Driven by this mentality, many of the "grass-planting" contents laid out in the early stage will be converted during the promotion period. Merchants place advertisements on various platforms and find KOLs to do content marketing in order to get consumers to add products to their favorites and shopping carts, waiting for the platform promotion to come, and part of it will be converted into real GMV.

In addition to offense, another important motivation for merchants to participate in the promotion is defense . Tara said: "If you don't participate, your users will be lost, and your original old users may also buy from other brands because they are cheaper. You can't take this risk."

The special thing about pet food is that if customers find food that their pets like, they may not change the food for a long time. Take Tara's brand as an example, the repurchase rate of customers in Jiusheng Tmall flagship store is higher than 50%. Losing a customer may mean losing many future orders; similarly, winning a customer may mean winning many future orders.

This is why some merchants would rather lose money than not participate in platform promotions.

There is usually an entry threshold for participating in the official promotion activities of the platform. Only merchants who meet the requirements can get the admission ticket to the promotion activities. For example, this year, the entry standard for Tmall's Double Eleven event is that the product price must be 10% off the lowest price within 90 days, and participate in the full discount promotion of 50 yuan off for purchases over 300 yuan on the entire platform.

Tara's fingers slid quickly across the table as she muttered the calculations: "250 divided by 300 is 83 (off), and then I multiply it by 0.9 (10% off), which is 25% off. You know, generally speaking, the gross profit of our pet food is about 40%, and then I deducted 25% of the gross profit." Rumor has it that some merchants will raise prices in advance, and then offer a seemingly exaggerated big sale discount when the big sale is approaching, but for products with a high repurchase rate, such unorthodox methods will not work - old customers are already familiar with the daily prices of the products.

Considering the initial advertising costs, the operating costs during the event, and the rising shipping costs during the promotion, the ROI in the short term is not fair. In order to retain old customers and attract new customers, Tara is willing to bear certain losses during the promotion, provided that the losses are controllable. "If I feel that the loss is too great, I might invest less."

Tara is both a merchant and an online shopping enthusiast. As a merchant, she certainly hopes that the threshold for big promotions can be lower and the platform fine conditions can be more humane; as a consumer, she can also understand that everyone wants to save money as much as possible and receive the goods as soon as possible.

However, not everything can go as planned during the promotion period. This year, the platform set a delivery time limit for merchants. The warm-up period from order placement to package collection cannot exceed 48 hours, and it cannot exceed 72 hours on the day of Double Eleven. If the time limit is exceeded, a fine will be imposed.

When parcels are flying everywhere, couriers and delivery trucks become "hot cakes" that need to be fought for. "You not only have to fight for time, but also for the truck, because there will often be logistics trucks saying that the truck is full at the previous warehouse and they can't go through today, but you have to ask them to send the package today."

During the Double 11 promotion this year, Tara encountered a logistics company that raised prices. Because it was difficult to ship goods from warehouses outside Beijing, the company activated a backup warehouse in the suburbs of Beijing. As a result, the logistics outlets near the park where the backup warehouse was located gave a quote much higher than the usual price. In a fit of anger, she found a car and took all the goods to the company office to ship them herself, because the price of shipping in the city did not increase.

Halfway through the interview, Tara's cat Xiaoguai jumped up and opened the door of the company's conference room, and crawled into her down jacket piled on the stool. The pet industry was relatively less affected by the epidemic. According to a relevant report released by China Business Intelligence Network, the domestic pet food market size increased by 35.39% from 2019 to 2021. This is an important reason why Tara can stick to it.

But the chill of the market can be felt by everyone involved. Tara often communicates with other entrepreneurs, and everyone has a similar understanding: "The current situation is that many people still have money, but the entire market is too cold, and they have no confidence in consumption, so they don't want to spend their money."

After the national epidemic prevention and control policies have been adjusted one after another, the situation where goods could not be shipped due to the blockade of warehouses should no longer occur. Tara is looking forward to the market heating up again. But that may take a long time.

As for this year, she has only one priority: "Our goal this year is to survive."

3. It’s not that consumption is not doing well, but that the big promotions need to be upgraded?

More than a decade ago, when the Double 11 shopping festival was just launched, the situation was different: in 2009, during the first Tmall Double 11 shopping festival, consumers purchased 100 million yuan worth of goods; a year later, in 2010, sales were nearly 10 times that of the previous year, reaching 936 million yuan. Sales of large merchants also soared, such as Jack Jones, which had sales of 5 million yuan in 2009 and quadrupled to 20 million yuan in 2010.

This growth rate seems incredible today.

Both platform sales and large brand merchants have gained a growth myth like a commercial article. But today, the article is no longer there, and the myth is no longer there. The direct reason is the evolution of the e-commerce format itself: the rapid growth in those years was because consumers had a real demand for cheaper e-commerce platform products, and online consumption was not a daily routine. A shopping festival just filled the huge gap in user demand.

Now, the marketing environment faced by merchants and platforms has undergone profound changes:

From the perspective of the platform, there are currently more than 100 shopping festivals related to e-commerce promotions, with an average of one shopping festival every three days. Consumers have become numb and lost their sense of novelty in the face of so many shopping festivals. They no longer concentrate their consumption on a certain node as in the past, but instead spread their consumption across multiple nodes throughout the year.

From the perspective of merchants, marketing activities are shorter, faster and more fragmented. According to statistics from the Shiqu Research Institute, in the first nine months of 2022, brands launched a total of 45,829 marketing campaigns on social platforms, an increase of 3% compared with the same period last year; 79% of the campaigns were within 30 days of the communication cycle, an increase of 21%. This shows that brand merchants hope to conduct marketing activities at a faster speed and higher efficiency. To a considerable extent, the importance of traditional promotional activities such as Double Eleven is not that important.

From the perspective of consumers, e-commerce shopping has become an indispensable part of everyone's daily life. Especially this year, people pay more attention to the discounts and discounts of big sales. The name of a shopping festival has a smaller and smaller effect on stimulating people's consumption and is not enough to attract consumers who have returned to rationality and are accustomed to e-commerce shopping. In a word, if you want me to buy, you have to give me more discounts.

But as Tara said, no matter how effective it is, big promotions are a battlefield that brands have to participate in, otherwise they will fall behind. This is true for both small and medium-sized merchants and brand merchants. Therefore, what merchants want to do is not to give up big promotions, but to upgrade and iterate their gameplay and mentality when facing big promotions.

First of all, the connotation of the big promotion goals will be richer. It is not only to achieve marketing goals, but also to regard the big promotion as a touchpoint for communicating with users in the process of brand building.

"Big sales are a natural leverage point," said Li Ting, founder of the domestic innovative brand agency, CSRC. CSRC created the "Five Forces Model of Brand System" in the industry - vitality, memory, self-drive, influence and growth, serving the entire life cycle of brand work. Brand building is a comprehensive multi-factor matter. Li Ting believes that big sales can be regarded as part of the five forces of brand, and big sales should be integrated into the construction of brand image.

Some brands have already done this, such as Winona and Babycare. During the Double 11 warm-up period, Winona released a video adapted from the real stories of 12 members, and during the Double 11 period, it conducted cross-border collaborations with China Youth Daily, Wuling Motors, etc., focusing marketing events on young people and real social issues, in order to convey Winona's brand concept;

Iris, Chief Brand Officer of Babycare, also said that the promotion should not be viewed as a simple sales activity, but rather as an opportunity to communicate with users and a window to showcase traditional Chinese culture. She hopes that "when users flock to our flagship store, they will feel something different."

Second, some brands with high average order value and non-essential products can regard big promotions such as Double Eleven as a testing ground for daily traffic and user elite results.

"Products like ours with high order values ​​and new categories will definitely be concentrated in two major promotions each year." An emerging fitness mirror brand said that their strategy is to focus on activities in the two major promotions to achieve 50%-60% of the annual sales target.

Due to the relatively narrow user base, such products are often not greatly affected by the overall economic environment and can enjoy the continuous returns brought by the long-tail effect of brand investment. For example, on Double Eleven in 2022, the price of this new fitness brand's products was nearly 3,000 yuan more than that of 618 that year, but sales more than doubled compared to 618, and traffic delivery costs were halved.

We can conclude that the big sale itself should be upgraded, especially in the merchants’ concept of big sale - not just promotion, but to meet users’ more diverse consumption and even emotional needs.

For future promotion upgrades, Li Ting, founder of Smart Maker, gave three criteria:

1. The promotion itself must have a clear and unique value proposition and a sense of story, so that the brand can gain better conversion and more attention during the promotion;
2. The products participating in the promotion should be those that best represent the brand spirit, rather than other things;
3. The language of marketing must be guided by brand thinking to make the tone and style of marketing look more unified.

When the era of consumer carnival comes to an end, these will become problems that platforms and merchants have to face. If a single node is difficult to achieve a marketing breakthrough, brands need to create more "small and beautiful" new nodes from more angles, maintain continuous communication with consumers, continue to meet consumers' pain points, and stimulate consumers' shopping needs.

Therefore, it is not that big promotions will not be held, but that they need to be upgraded. "For example, Arbor Day is often overlooked by marketing, but environmental protection and carbon neutrality are very hot topics now. Maybe we can turn Arbor Day into a festival about environmental protection and carbon neutrality?" said Li Ting.

New potential points can be stimulated by collective consciousness at any time.

Authors: Yi Tong, Chen Meixi, Zhang Zhan; Editors: Director, Shi Can

Source: Hedgehog Commune (ID: ciweigongshe), observation and research on the Internet content industry.