Young people are returning to shelf e-commerce

Shelf e-commerce seems to be beginning to show new vitality. For example, platforms such as Douyin and Kuaishou have begun to make layouts in this module. So, why has shelf e-commerce become the focus of many platforms? What is the connection between the development of shelf e-commerce and live streaming? Let's take a look at the author's interpretation.

A migration is quietly taking place beneath the water.

In the past few years, the most fascinating story told in the e-commerce industry is "live streaming with goods". Live streaming is like a traffic depression that was suddenly discovered in an industry that has been a red ocean for many years. Young, high-quality customers with sufficient purchasing power and who follow the trend are gathering from all directions. Compared with shelf e-commerce that has lost its "story", live streaming is shining a dazzling light in the retail industry.

But recently, the direction of consumer flow has quietly changed, and the persuasiveness of live streaming, which once exuded magic, seems to be declining at a visible speed. Young people have turned a few corners in the river of fashion and suddenly found that their destination is still the starting point - young people are returning to shelf e-commerce.

This trend has become more obvious after the optimization of epidemic prevention and control measures. Consumption has recovered vigorously, but young people are rational in their choice of platforms. Comparing prices on multiple platforms has become the norm for most young people. Young people want everything, including cost-effectiveness, shopping experience, and delivery efficiency.

Whether it is platform-based e-commerce Tmall, self-operated e-commerce JD.com or special sale e-commerce Vipshop, e-commerce companies that mainly use the shelf model are opening their doors to welcome the return of young people. Even the leaders of the live e-commerce industry, Douyin and Kuaishou, have recently begun to make efforts in shelf e-commerce. Douyin has pushed the mall to the center position and occupied the important position on the homepage; some users of Kuaishou have a mall entrance in the top center. Previously, the Kuaishou mall was hidden in the secondary entrance in the pop-up bar on the homepage. The desire of Douyin and Kuaishou to become "shelves" has begun to expand.

Shelf e-commerce, a business model once thought to be gradually aging, has suddenly regained new vitality.

1. “New” Choices for Young People

Even the most loyal fans of live streaming have to admit that compared to the previous enthusiasm, the consumers who are now flocking to the live streaming rooms have become more "picky".

Is it authentic? How many days will it take for the logistics to arrive? Is the lowest price only available in the live broadcast room? Is it convenient to return or exchange goods? Can the logistics be delivered to your door? Countless similar questions appear more and more frequently in the live broadcast room. Compared with the past where everyone shouted the brand name in unison to urge the goods to be shipped, the current barrage reflects a certain anxiety among young people.

In the past two years, in an environment full of uncertainty, the deciding factor for young customers' shopping is not just cheapness, they also need a "sense of security". When they found that compared with live streaming e-commerce, shelf e-commerce did not have a clear disadvantage in price and could give users more sense of security, a migration from live streaming to shelf platforms quietly began.

Ling Han, a girl born after 1995, is a witness to this migration. In the past six months, she suddenly found that in her once bustling circle of friends, there were fewer and fewer messages about finding treasures in the live broadcast room. Among her friends, she is almost one of the few who still insists on watching the live broadcast every day.

Ling Han's consumption habits are also slowly changing. After the optimization of epidemic prevention and control measures, consumption has ushered in a sustained recovery, and young people are also developing a rational consumption concept. Recently, Ling Han has gotten rid of her obsession with live broadcasts. When she needs to shop, she will carefully compare the discounts, logistics and services of goods in different apps. Her shopping focus is gradually shifting to JD.com and Tmall. When she needs to buy warm clothing, she occasionally logs on Vipshop.

Even when she came to the live broadcast room, Ling Han's choice was to quickly browse the small yellow cart and leave quickly when she found that there was no product she needed. High-quality service and cost-effectiveness are indispensable, she has no time, and she is tired of repetitive words, which became her reasons for escaping the live broadcast.

In fact, data from e-commerce platforms also indirectly confirm the occurrence of migration. JD.com's Consumer and Industry Development Research Institute released the "2022 Z Generation Consumer Index Report". JD.com's sales show that since 2022, the sales of products with "Chinese red" elements purchased by Generation Z have increased by 326%. Among them, the categories with the highest sales are personal care and health, liquor, clothing and underwear, mobile phones, and tea. Since 2022, the sales of high-value products purchased by Generation Z have increased by 166% year-on-year. Among them, the sales of high-value products in the categories of kitchen and bathroom appliances, home furnishings, baby and children's bedding, outdoor equipment, and clothing have increased by more than 10 times.

Coincidentally, Vipshop, an online discount e-commerce platform, mentioned in its Double 11 data that Generation Z has become one of the fastest growing customer groups on the platform. This year, women's jackets are particularly popular among those born after 1995, with their purchases increasing by 104% year-on-year. Sales of women's suits, shirts, and POLO shirts among those born after 1995 increased by nearly 50% year-on-year. In addition, the number of women's dress suits purchased by those born after 1995 increased by 70% year-on-year.

Beneath the water, a torrent is surging.

2. “Science” versus “Magic”

Why are more and more young people starting to return from live streaming to shelf e-commerce?

The myth of the lowest price for live streaming is being shattered, which may be one of the most important reasons why young people are choosing shelf e-commerce again. The lowest price was once regarded as a moat by anchors, but the moat will one day backfire on anchors and live streaming.

The counterattack horn of shelf e-commerce on price has long been sounded. In the field of home appliances, JD.com has long been regarded as a price comparison target by anchors. Before Double Eleven, JD.com's senior management emphasized low prices with unprecedented severity. An internal email from Liu Qiangdong denouncing "JD.com's loss of low-price advantage" spread throughout the Internet. In the email, he emphasized that "low price was the most important weapon for success in the past, and it was also a basic weapon." "At present, our retail business management culture is gradually being lost. With the success of our 3C home appliance business, many brothers have become arrogant and complacent, thinking that they have mastered the pricing power and no longer pay attention to our low-price advantage. If this continues, it will sooner or later become the second Suning!"

In the core categories of e-commerce such as daily necessities, shoes and clothing, e-commerce is also leveling the price advantage of anchors. Yibang Power once reported a case: a young consumer waited in the live broadcast room for more than an hour and tried his best to grab a pair of Nike shoes, but found that there was a more fashionable one on Tmall, which could be delivered by JD Logistics the next day. The price of this pair of shoes on Vipshop was no different from that in the live broadcast room which claimed to be the lowest price.

In fact, the price comparison function launched on shelf e-commerce has directly hit the lifeline of live streaming. After comparing prices from multiple parties, it is almost clear at a glance which platform has the cost-effectiveness advantage.

The underlying logic behind young people's re-selection of shelf e-commerce is actually very clear. If the ability of live streaming to stimulate consumption is called magic, the return of young people is obviously not a story of magic defeating magic. After the moat of the lowest price of live streaming was filled, the long-standing advantages of shelf e-commerce in brand, user experience, supply chain, and product operation have exploded with huge appeal. This advantage that has accumulated over time and has no shortcuts is obviously the "science" of the retail industry.

Compared with shelf e-commerce, the limitation of live streaming in terms of operation model is its inherent shortcoming. It is difficult for the business model of live streaming to form a complete closed-loop ecosystem. Live streaming e-commerce is affected by the product form, and there are obvious bottlenecks in the e-commerce content loading rate and SKU scale, which leads to the natural limitation of business scale and has to rely on external supply chains or even external platforms for product supply.

One clear proof is that half a year after Kuaishou cut off external links, it quietly restored external links before the outbreak of Double Eleven orders. In addition, consumers’ shopping choices are restricted by the anchor’s yellow cart, and the “commodity shelves” they face are very limited.

However, infinite shelves and closed-loop ecology are precisely the advantages of shelf e-commerce, especially self-operated e-commerce such as JD.com and Vipshop. On the one hand, they communicate with brands to obtain more cost-effective products from brands with more certain traffic, and display the products to users through various consumption scenarios built by the platform, extending the length of the shelves infinitely. On the other hand, the advantages of self-operated e-commerce in the supply chain make it easier to control the quality and price of goods, forming a positive cycle of purchase-trust-repurchase.

The platform provides services to users, which not only guarantees the user experience but also achieves a closed loop in services. The establishment of a high-quality image of self-operated e-commerce is also, to some extent, benefited from the dividends brought by the model.

3. Nothing new in e-commerce

In the view of many industry insiders, "shelf-based" e-commerce and "content-based" e-commerce have the same goal. The business model only affects the short-term situation, and the infrastructure determines the long-term value.

This also indirectly proves that "there is nothing new in the retail industry". Live streaming sales is one of the few new stories in the retail industry. However, whether it is live streaming sales or shelf e-commerce, we have to admit that the ability to tell stories cannot determine how far an e-commerce company can go in the future. What supports e-commerce through cycles are business values ​​and infrastructure.

Cost-effectiveness, experience, and efficiency are the most appealing stories that can be told in this industry in the future. E-commerce will undoubtedly develop in a more "heavy" direction. Self-operated e-commerce has been deeply involved in the supply chain for many years. JD Logistics' next-day delivery, Vipshop and SF Express's joint door-to-door delivery and door-to-door returns and exchanges are regarded as examples of e-commerce constantly pushing the experience to the extreme within the scope allowed by physical rules.

According to relevant experts, after competition among e-commerce companies becomes stable, the construction of e-commerce infrastructure centered around user experience will become the future direction, and service and fulfillment will be the new battlefield among e-commerce companies.

Fundamentally speaking, after breaking the "low-price superstition" of live streaming, the sense of security and experience are rapidly increasing, becoming the core factors in young people's shopping choices. Consumers' experience increasingly comes from rationality and simplicity. Young people's return from live streaming e-commerce to shelf e-commerce is, to some extent, a human choice.

The booming live streaming e-commerce is due to its deep understanding of human nature. After the rise of e-commerce, people, goods and places have been separated for many years. Live streaming e-commerce allows distant goods to be truly displayed in front of users. The sense of reality and the shopping atmosphere created by low prices have helped live streaming e-commerce to soar.

But live streaming also contains factors that go against human nature. People have limited acceptance of homogeneous content, and once it exceeds a certain threshold, they will inevitably become fatigued. At this time, simplicity and rationality have won the hearts of young people - who among today's young people can resist the pleasure of simply searching and shopping, waiting for the courier to deliver the goods to their door, or even returning or exchanging the goods?

The decline of live streaming does not mean that this business model will eventually reach a low point. Live streaming e-commerce is still very vigorous. As previously stated, shelf e-commerce and live streaming will end up in the same place, and the two will eventually form a good complement. In fact, this is also the direction of the future development of the entire industry: shelf e-commerce is embracing live streaming, and live streaming e-commerce is also beginning to regard shelves as the next stop on the road to development.

Author: Anyu, Editor: Hu Zhanjia, Operation: Chen Jiahui

Source public account: LingTai LT (ID: LingTai_LT), sharp, objective and unique business insights.