E-commerce 618: The knife edge of the platform is aimed at the merchants

Wei Shijie talks about business

2024-06-18 18:32

商业漫谈 Jane's interview

E-commerce 618: The knife edge of the platform is aimed at the merchants

We seem to be getting more and more "affordable" low prices,

In fact, it may suffer from an increasingly deformed consumer society.

Text | Wei Shijie

Jane's interview

"This year's June 18 is really the worst June 18 I've ever seen. I even doubt that there will be 6 · 18。」

A few days ago, an e-commerce practitioner who has been in the business for 15 years let out a long sigh in front of me.

On the eve of 618 last year, he and another colleague organized a roundtable live broadcast called "Pinch the Fight", and the focus of the fight was whether the big promotions such as Double 11 and 618 have become a cruel game of exploitation of merchants by the platform.

At that time, he was still speaking for the platform. emphasizing that shopping festivals "are still a mechanism to centralize user needs and give platforms and merchants the opportunity to touch the gaps" – although the response to this mechanism is getting weaker; However, "the motivation of the platform is still good": the shopping festival has the opportunity to achieve a win-win situation for brands, platforms and consumers.

After all, this is related to his experience: his name is Uncle Ni, he has been operating in Ali for seven years, and he has experienced the most prosperous era of Internet e-commerce.

But in 2024, the former Ali employee, e-commerce veteran, and industry guardian will also bow his head.

This year, he said, it was very clear that

"The knife edge of the platform is aimed at the merchants."

Jane's interview

Just a week before we met, there was a hot news in the e-commerce industry.

Shen Haobo, the founder of the well-known publishing group Motie Publishing, published a long article in the circle of friends, publicly accusing JD.com of forcing Motie to participate in the 6.18 promotion——

"In the case that Motie has completely stopped shipping to JD.com and repeatedly expressed opposition to JD.com's behavior of disrupting the market order with low prices, JD.com still ignores our demands and continues to forcibly allow our products to participate in their low-price promotions. It's rubbing our face on the ground repeatedly."

What is the friction method?

According to JD.com's official publicity, from May 19 to June 20, JD.com's book categories will be promoted at a 2-3% discount on the price of all kinds of books - this is the "good price" that JD.com has "calculated" for booksellers.

The background of this incident is that JD.com is determined to regain its "price power" and regain its low-price mentality. The larger background is that since last year, the whole industry has entered the era of "low prices".

What Shen Haobo said about "JD forcibly allows merchants to participate in low-price promotions" refers to the fact that due to JD.com's self-operated mechanism, merchants' goods are often stored in JD.com's warehouses - several practitioners revealed to me that almost every year, there will be an outbreak of merchants withdrawing stores during the big promotion shopping festival. The reason is that "even if you (the merchant) do not agree to reduce the price, JD can directly lock your backend, and then change the price for you without authorization, and directly send the goods out of JD's warehouse." In the end, it will be settled with you based on the actual transaction."

听起来sufficient 魔幻。

But such cases are not uncommon, and even "open secrets" in the industry. Another friend of the e-commerce industry said lightly, "It's all too common."

In the past, most businesses and brands would choose to settle down or swallow their anger – "Many people will settle the ledger and make some money, so they will endure it."

After all, the cost of defending rights against large corporations can be much higher than these lost profits.

But this year is different.

In grinding iron, Shen Haobo warned his peers, "Don't follow the price!" A few days later, as many as 56 publishers jointly issued a letter to boycott JD.com's 6.18 low-discount promotion.

Compared with the fierce attitude of Shen Haobo's publishing industry, a screenshot of a group chat record that went viral in the e-commerce circle on June 14 may be more representative of the negative attitude of most brands.

In the screenshot, a JD.com's liquor junior posted everyone's data in his industry group - the average data for each brand fell by about 70%.

Xiao Er asked all merchants: Why don't you participate in the activities of 6.18? Is everyone lying flat? Have you given up?

Obviously, the willingness of merchants to participate in the big promotion has dropped to the freezing point this year.

How did it all happen? Why is it happening this year?

There are three key nodes:

1. Pinduoduo's market capitalization surpasses that of Taobao.

2. Xinhua News Agency issued an article in support of "refund only".

3. After the end of the pandemic, spending power in the first half of 2024 fell short of expectations.

The first two events have made the entire industry realize that consumers are the core of the game in the post-e-commerce era, and winning consumers will win a bright future.

The third thing reveals that the current consumption power is so weak, and consumers are the object of protection at all costs; In the face of fierce competition between platforms, it is impossible to hurt themselves, and even individual platforms still want to earn traffic tolls.

Then, if you want to continue to tell the story of the big promotion and profit, the knife edge can only be aimed at the business.

In fact, this year, even the platforms have begun to be indifferent to 6.18: Pinduoduo has normalized low prices, and 6· 18 It is not positive at all; Douyin is very low-key this year, concentrating on selling traffic; Taobao and JD.com have opened their own game bureaus, and they can only play like this year after year...... In the past, it was to spend money to make a lot of fun, at least to grow; Now it's time to spend money to fight bayonets, and the game has shifted from offense to defense - 6.18 and Double 11, and has gradually become a node for competitors to take advantage of their attacks.

A war without growth has lost its original meaning.

Jane's interview

Strictly speaking, Double 11, 6 · 18 These kinds of shopping festival promotions are already a product of the last era – the product of the previous generation of e-commerce companies designed to further stimulate consumption power during the heyday of China's production capacity, economy, confidence and consumption power.

But times have changed.

A mechanism from the previous era, at a time when the macro economy has changed dramatically, consumption power has shrunk, and even the main players in the e-commerce track and the logic of competition have changed, it is actually on the verge of collapse.

In the logic of shopping festivals in the past, the cost of the entire industrial chain involved by a big promotion - content, anchors, media, data, matchmaking...... Most of the benefits of all supporting facilities and infrastructure are borne by the brand. Brands can eventually earn back these costs from consumers at a premium through product upgrades. This creates a positive cycle.

But today, when the era of debranding is coming, consumers can no longer accept brand premiums, and brand merchants have become the end point of this big promotion industry chain.

Becoming the end means that businesses have to shoulder the cost of the entire industrial chain on their own. And use their own profits as nutrients to transfuse blood into this old mechanism of ten years ago.

You can imagine how miserable it will be.

There are a few stories that provide a more intuitive feel:

This year is the hardest year for women's clothing. Merchants don't dare to stock up more, so they can only extend the delivery cycle - so many consumers are complaining: why women's clothing has become more expensive and shipping has become slower this year.

There is a policy - the platform requires participation in the big promotion, so let's participate.

There are countermeasures - merchants choose to extend the delivery time: first, give consumers time to regret (it is said that the return rate of the women's clothing industry is as high as 80%); Second, the first batch of returned goods can continue to be sent to the second batch of customers.

I don't know if it's a joke or not, but that's what my friend told me anyway - "So, the second batch of customers received the first batch of customers to return the goods, and the clothes contained student IDs, bank cards, and even underwear."

It is said that if you go to Guangzhou and the upstream of the women's clothing industry chain, you will find an apocalyptic scene: the merchants have begun to liquidate. Yes, not at the end of the year, but in June, the first big promotion after the Chinese New Year, people no longer stocked, but started to clear their inventory, and this year it was closed.

An e-commerce self-media friend ran to open a meeting on Douyin's local life, and when he entered the door, he was stunned, and all of them were familiar faces, "Eighty percent of the audience are e-commerce practitioners". They said that e-commerce was too bitter to do it, and everyone came to chase the traffic of local life.

He relayed to me a darkly humorous sentence:

"A first-class industry only needs third-rate practitioners. A third-rate industry, but it needs first-class practitioners to survive."

Jane's interview

China's supply chain advantages and excess capacity once held up a whole golden age of e-commerce.

The two-legged stand that grew in that era - Ali and JD.com, is still an ecological way of playing: merchants make money on the platform, and the platform makes money, and the platform grows up with the merchants. And because China's supply chain is large and rich enough, the two are growing so fast, and the market is maturing rapidly – so that the only way for latecomers to find new breakthroughs is to break the rules and re-establish them.

As an interloper, Pinduoduo has established a rule that puts consumers at its absolute core, and the means are to infinitely squeeze merchants' profits — but this is still a clear buy and sell rule: merchants understand that in order to make money on Pinduoduo, the price must be low enough. At the end of the day, it's a bait-and-go deal.

However, Pinduoduo alone is not enough to set off an entire era of low prices without a lower limit.

A landmark node is that, based on competition, Douyin has launched a price comparison function with reference to Pinduoduo. This has completely impacted the model of live e-commerce - you know, the cost of live e-commerce is much higher than the cost of shelf e-commerce - once the profit is infinitely lowered, the account will not be counted.

Douyin women's clothing sister "Lola Code" is a good example - in early June, "Lola Code", which has 5 million followers on Douyin, announced that it would withdraw from live broadcasting. The straws that crushed her were: high streaming fees (it is said that the percentage of streaming fees is as high as 35%), high return rates, and endless low-price competition brought about by the "price comparison function".

Theoretically, once any business today makes the style explode through the content, there can be competitors with inferior materials, lower costs and lower prices, using precise streaming, and taking away your users - in the face of such competition, if Lola Password wants to survive, only to join such a way of playing, but with her size, giving up quality means a high probability of ruin. In a way, graduation was her only option.

And the price comparison itself is the praying mantis catching the cicada, and the yellow finch is behind. When you succeed in sneaking up on someone else in this way and getting complacent, the next person to harvest you is on the way to come......

The logic of e-commerce has changed.

In the past, the platform was symbiotic with merchants – the bigger the merchants, the bigger I was. At the moment, the platform has created a model of "whether you live or die, I will become bigger first".

There is no winner in the low-price model, the winner is the platform that sells traffic - ask the merchant to make profits, collect money from the anchor (traffic fee), and then turn to the consumer and say,

"We just want to provide you with the cheapest item."

Jane's interview

At the end of May, it was said in the news that the growth rate of Douyin's e-commerce GMV slowed down for the first time.

Behind the mild title, there are bones. Take the fall of many merchants as a footnote.

Behind a series of shocking business behaviors and phenomena, a question worth pondering is conveyed: Since when has our business society fallen into a mode of mutual harm?

When every player in the industry and every link in the social production chain can only think about how to live through the present, the conventional consumption agreement is broken.

The infinite squeeze profit margin will be transformed into the deformation action of the business, and finally passed on to every consumer.

We seem to be getting more and more "affordable" low prices, but in fact we may be able to afford an increasingly deformed consumer society.

-END-

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