"6.18" AB page: Platform wants low prices, merchants want to make money
2024-06-18
This year's June 18th has reached its final climax. On June 17th, JD.com announced a high-profile doubling of subsidies at 8 pm, while Taotian launched a 10 billion yuan red envelope sprint. However, behind the clamor of the platform, merchants and anchors deeply feel the passive competition brought about by low prices and the fatigue brought about by internal competition. According to interviews with multiple merchants, MCN executives, and e-commerce insiders by Beijing Business Daily reporters, this year's promotion has forced some merchants to be caught up in the platform's low price loss internal friction. Top anchors have also lowered their heads to traffic, attempting to increase the density of live streaming matrices or demand profits from the supply chain in exchange for incremental growth. "6.18" is coming to an end, but the competition around price power will not stop here. Industry insiders believe that how to weave a low-cost "safety net" for merchants through systematic capabilities such as algorithms and ecosystems is the next issue that e-commerce platforms need to consider. The pricing system allows merchants to relinquish their pricing rights. When they realized that June 18th was coming to an end, Huang Li (pseudonym), the e-commerce manager of a leading beverage company in China, breathed a sigh of relief and said, "It's finally coming to an end." Regarding this year's June 18th, her evaluation was only five words - "Drive the ducks to the shelves.". "I never expected that the platform could reach this level of low prices." Huang Li told Beijing Business Daily reporters that without knowledge, the product was constantly being discounted by a certain e-commerce platform. After various mechanisms were combined, the transaction price was only about 30% of the positive price. "For the brand, the final sales of this product increased year-on-year, but the profit is definitely negative.". On June 18th this year, low prices remained the main focus of various platforms. Whether it's Taobao or JD.com announcing the cancellation of pre-sales, or JD.com launching a 2-yuan free shipping gameplay, low price is always an unavoidable competitive keyword. Huang Li revealed that some e-commerce platforms had launched a "price tracking system" before June 18th. "Merchants can set a ratio within this price reduction space, and the platform can independently lower the price of goods to ensure a price advantage across the entire network.". In Huang Li's view, this further forces merchants to relinquish brand control over product prices. We have had agreements with some e-commerce platforms before, and if the price is too low, merchants need to make up for it later to ensure a certain proportion of the platform's profits. Sacrificing profits for order volume has been a common strategy for e-commerce to compete for market growth in the past many years. Of course, when there is sufficient e-commerce traffic, brand operators of such operations feel that it is understandable. Nowadays, brand owners have changed their minds. Huang Li candidly stated that reducing prices during major promotions is a common practice for brands to attract new customers. If later services such as private domain and membership systems keep up, it can achieve a higher repurchase rate. However, as the growth rate of e-commerce traffic slows down, whether this transaction can still replicate the path of the past needs to be reconsidered by businesses now. Besides the fact that supply chain innovation has just begun at low prices, the momentum of the "6.18" e-commerce live streaming battlefield this year is not as strong as in previous years, and top anchors launching cross platform broadcasts no longer sparks new discussions like last year. Not only that, the apologies of some top live streaming agencies are even more "popular" than live streaming sales. Yu Minhong's remarks of "Dongfang Zhenxuan did a mess" and Dong Yuhui's "resistance to live streaming" have caused a thousand waves. Before that, Simba also bowed to Kwai because of his aphorism, so he was able to continue to carry goods live on "June 18". "In the first quarter of this year, Xinxuan's traffic was very low, and Xinba's platform was also anxious about traffic," said an insider close to Xinxuan. Perhaps the market is beginning to disenchante live streaming hosts. "In today's e-commerce market, anchors are returning to their core role as' sales guides'. Zhao Zhenying, a researcher at the National Engineering Laboratory of E-commerce Transaction Technology, told Beijing Business Daily reporters that as the number of users gradually stabilizes, the end of the era of live streaming e-commerce is an undeniable fact. However, the content and supply chain innovation surrounding live streaming e-commerce has just begun.". Obviously, as the content output becomes more direct, the identity and even the role of the anchor have undergone significant changes. This year's big promotion, JD.com and Taobao continue to expand their influencer live streaming. Not only did Taotian invite celebrities and CEOs to lead sales, but JD.com also brought out CEO digital figures to attract attention. In a rational consumer environment, how to avoid user perceived fatigue, live streaming institutions and platforms also need to find ways to adjust their stance. "Next, both the top anchors and the MCN organizations behind them should consider where their core competitiveness lies when the tide recedes." Zhao Zhenying said. "During the June 18th holiday, Cui Dongsheng, Vice President of MCN's" Make Friends "campaign, admitted to Beijing Business Daily reporters that the matrix based live broadcast room of" Make Friends "is helping" Make Friends "develop towards the" 7-11 "convenience store model. A more daily shopping experience and more comprehensive SKUs also mean higher repurchase rates and purchase frequency. Cui Dongsheng believes that just like convenience stores do not often celebrate, the matrix based live broadcast layout is also aimed at more stable daily sales." For us, the promotion is a larger traffic entry point, but in product selection and team training, we will break it into smaller pieces in our daily matrix based live broadcasts. ". According to Cui Dongsheng, as of early June, the sales of "Make Friends" Taobao live streaming rooms have reached 90% of last year's "6.18" sales. At the same time, the MCN behind Li Jiaqi is also reaching out to the factory supply chain in search of profit margins. Beijing Business Daily reporter found that Li Jiaqi's live broadcast room has recently recommended multiple products of Meiwai Youxuan. It is understood that Meiwai Youxuan's products are jointly created by Meiwai and factory suppliers. Currently, Meiwai Youxuan's flagship store has been launched on Taobao, and multiple products such as laundry beads, latex blankets, and silicone mats have been launched, with prices ranging from 20 to 300 yuan. "We have planned to sign a new contract with the platform as soon as June 18th is over," Huang Li told Beijing Business Daily reporters. "Due to the impact of low prices, it is expected that the profitability of our own brand will be affected throughout the second quarter.". "Previously, we would supply to different channels through a separate supply chain, but now, all channels' prices are compared together, and this method also needs to be adjusted." Huangli revealed to a reporter from Beijing Business Daily that previously, the cost of goods supplied by brands to some e-commerce platforms would be 20% cheaper than that of Taobao and JD.com. When it comes to low-priced strategies on different platforms, Huang Li candidly stated that brand merchants need platforms to use algorithms, user mentality, and ecological dimensions to weave a low-priced "safety net", so that merchants can achieve small profits and high sales. "The reason why we are willing to adjust the platform's supply cost from the perspective of the supply chain is because the platform's algorithm bias can drive the scale of thin profits." Huang Li said that some e-commerce platforms had very simple algorithmic mechanisms before, "whoever has the lowest price will receive traffic", putting merchants into a traffic pool to compete. Price is the only weapon, and the merchants who ultimately obtain traffic have absolute say. To achieve sustainable low prices, it is far from enough for businesses to focus solely on the supply side. Since last year when e-commerce shifted to low prices, some platforms have started adjusting their algorithm models. An e-commerce insider told the Beijing Business Daily reporter that the OPM (order volume brought by every thousand exposures) launched by Tiktok E-commerce was intended to test the price driving force of merchants, while JD also increased the order volume index of merchants outside GMV, aiming to guide merchants to exchange orders by low price products, rather than driving up GMV by high price per customer. Cui Dongsheng expressed concerns to Beijing Business Daily reporters about the low price of internal competition on the platform. He believes that if all links in the e-commerce chain only pursue low prices, it will mean that there is no additional value input in each link, and ultimately all low price results will point to the supply side. "The quality decline caused by cost reduction is a reverse development direction and not healthy.". Price war is not just a war for businesses. "Platforms should consider that behind low prices, commercial operations also require indispensable profits." Zhao Zhenying said that how to utilize big data and the supply chain established by the platform over the years, combined with the platform's ecological architecture, to provide sustainable low prices for merchants is a question that the platform needs to consider. "After all, an unprofitable ecosystem will eventually collapse." Cui Dongsheng said. (Lai Xin She)
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