Who killed the shopping festival?

In the blink of an eye, it was June again, and the 618 Shopping Festival had also started to warm up early. Since late May, major e-commerce platforms have entered a rhythm of warfare

In the blink of an eye, it was June again, and the 618 Shopping Festival had also started to warm up early. Since late May, major e-commerce platforms have entered a rhythm of warfare.

This year's 618, I found that the slogans on various platforms were shouting loudly.

For example, JD boasts that it is "618 with the largest investment and strongest measures to help businesses grow in history", and Tmall Taobao also said that this year is "a historic major investment", plus shake fast and Pinduoduo. Not to mention anything else, the postures they put on are all about fighting for life.

In recent years, shopping festivals have long been inflationary. Some people have calculated that if we add up the shopping festivals of all domestic e-commerce platforms, there may be over a hundred. This is not really a brand day or something. As long as you are willing to spend money, there will be a shopping festival every week.

But among so many shopping festivals, there are definitely only two that have real weight, 618 and Double 11. Otherwise, various platforms wouldn't have been so noisy these days.

Coincidentally, I haven't talked about the internet industry for a long time. Taking this opportunity,Let's talk about how the e-commerce shopping festival has developed to the present day, and what is the significance of the current shopping festival.

Let's make a statement first. There are no essential elements in this episode, so you can watch it with confidence.

01

The origin of 618 can be traced back to an event called "Moonlight, Black Wind, High Night", which means that JD will launch digital product flash sales at irregular intervals during the store celebration month in June each year.

In 2008, this flash sale was fixed to June 18th, which led to the first e-commerce shopping festival, 618.

By calculation, it has been 15 years since now.

The next year, Taobao Mall, which had just had an independent domain name, later Tmall, held a big promotion on Singles'Day with the slogan of "50% off". Only 27 merchants participated in this promotion, with a sales revenue of only 50 million yuan, but it later became the most prominent name in the e-commerce field, "Double 11".

The prelude to the e-commerce festival has now begun.

We can see that compared to the complex gameplay rules of constantly reducing everything and stacking orders, the e-commerce festival back then could be said to be simple and cute, nothing else, just cheap, just discounted.

Chinese e-commerce can rise, and 'low price' is the biggest killer.

We should know that at the birth of the shopping festival, the business environment in China was completely different from what it is now.

In the era of "pre internet commerce", the vast majority of consumer activities still occurred offline. Buying a pair of shoes may go to a specialty store, buying a computer to a computer store, and buying clothing and daily necessities may go to the clothing small commodity market. This is the norm for the vast majority of Chinese urban residents.

What e-commerce does is to move offline business activities online.

This is also very normal. In the early years, almost all of the internet's business was based on imitation and mapping of the real world. The same goes for e-commerce. But consumers will not easily change their offline shopping habits, and at that time, the threshold for online shopping was still very high.

Not to mention the true popularization of Alipay, it has been after the explosion of Yu'e Bao. Maybe younger students don't use online banking very much, that is, when you buy things online, you need to insert something similar to a USB flash drive to transfer the money in the bank to Alipay.

Moreover, online banking almost only supports IE browsers, which is very unfriendly for an early Chrome user like me.

In addition, the logistics of the past were far from as developed as they are now. It is normal for goods to arrive after a week, let alone buying fake goods or not wanting them. There are no complaint channels and seven days of no reason to return.

So, at that time, e-commerce had no convenience at all, and could not even be considered reliable.

In addition to being able to find some difficult to buy products, the only advantage of e-commerce is its affordability.

Cheap is the main motivation for most people to overcome inconvenience and learn how to shop online.

So for platforms, if they want to rely on shopping festivals to create a sense of presence and build their minds among consumers, the best and only way is to offer discounts. And it's a fierce discount, a discount that can only be achieved with my mother's master level bargaining skills.

But the low price requires someone to pay for it, and the platform needs to find a wealthy homeowner father to be the culprit.So, brand merchants became the real spenders.

What a brand wants is naturally sales, especially through e-commerce channels to help the brand inventory.

Can you recall, what was the brand with the highest sales volume on the first Double Eleven? It's Jack Jones. In the following years, the protagonists of Double Eleven have always been a group of Taobao brands that focus on clothing.

Why were clothing brands the first to eat crabs on Double Eleven?

It's simple, because the clothing industry has two characteristics.

One is high gross profit, with a 50% discount on Double Eleven. These top brands of clothing still have a chance to make a profit, even if you let them get a 30% discount.

The second is that the clothing industry is most afraid of high inventory, which can drag down a clothing brand.

Why do clothes require such high gross margins? Often, it's paying the price for clothes that cannot be sold.

Therefore, clothing brands are the least afraid of discounts, and they also need the help of Double Eleven to inventory them the most.

Here, we can list a triangle Balance theory about shopping festivals.

In this theory, consumers want low prices, brand merchants want more sales, and platforms want user intelligence and GMV(Total transaction amount). In the early stages of the shopping festival, the three parties took what they needed and formed a balance.

This early equilibrium stage was probably from 2008 to 2012.

With the help of the shopping festival, the e-commerce industry has taken off.

02

Time has come after 2012.

In recent years, the e-commerce industry has experienced an unprecedented wave of rapid growth, which largely relies on the rapid development of mobile internet.

On the infrastructure end, 4G networks have become commercially available, and China is rapidly entering the 4G era.

On the hardware side, the rapid popularity of smartphones has greatly expanded the base of Chinese netizens. The number of netizens has rapidly increased to 600 million levels.

At the software level, the launch of Yu'e Bao promoted the growth of users of Alipay and the popularity of Internet finance with the interest rate of more than 6 points at the early stage. WeChat Pay was launched online and quickly popularized by accessing Didi Taxi and grabbing red envelopes during the Spring Festival next year.

It can be said that this era is a turbulent era for the entire internet industry. With the continuous flow of PC internet traffic to mobile devices, more and more offline and PC consumer power is flowing towards mobile e-commerce.

In 2011, the total sales revenue of Double Eleven was only 3.3 billion yuan, but by 2014 it had skyrocketed to 57.1 billion yuan,

In this turbulent era, changes are also quietly brewing.

The biggest change is the shuffling of e-commerce players.

If you observe, from 2012 to 2022, there have been some changes in the best-selling brands in several major categories during the Double 11 period.

In the beauty category, from 2012 to 2014, the sales champions were Yunifang and two consecutive winners, both of which were Taobao brands. After 2015, the famous brand of domestic products, Pechoin, has been making beauty cosmetics for three consecutive years. After 2018, the sales revenue was divided among Lancome, L'Oreal, and Estee Lauder.

In the category of women's clothing, from 2012 to 2014, the top three women's clothing brands were almost divided by Inman, Handu Yisha, Aka and Lebo. After 2015, Uniqlo achieved six consecutive championships, while Fast fashion such as veromoda Bosideng and ONLY also quickly occupied the list, and the Taobao brand soon disappeared.

Overall, 2014 was a milestone, and previously, the native Taobao brands on e-commerce platforms were highly regarded. But after 2014, with the increasing presence of e-commerce in the Chinese consumer society, local and international brands quickly entered the market, reaping traffic dividends, while Taobao brands were quickly marginalized.

This story was reintroduced later in the new consumption era, in Tiktok and Xiaohongshu. Of course, this is the later part.

Here we will review the triangular Balance theory we mentioned earlier.

During the period from 2012 to 2014, there has been some imbalance in the triangle of consumers, platforms, and brands, with a sign that brand merchants have started to adopt a price increase followed by price reduction approach.

Why would the price increase first and then decrease? In fact, as more and more merchants start doing e-commerce, the categories are becoming more diverse. But the gross profit of many categories is not as high as that of clothing and beauty. If you only have a profit margin of 5-10 points and the platform holds a shopping festival, you will be asked to give a 50% discount, which means you will sell at a loss. What will you do? That must be a price increase followed by a price decrease.

But for merchants, there is no option not to participate in the shopping festival.

This is easy to understand. The e-commerce platform has organized an event to invite everyone to participate in the grand event. Your brand doesn't give face, don't you want to stay on my platform in the future?

Moreover, the shopping festival is not only a festival for selling goods, but also a node for brand marketing and exposure. Even if there is not much profit, even if you brazenly increase prices before lowering them, the brand can feel a wave of presence without losing.

So at this stage, it is evident that in the triangle balance, the platform has shown a certain degree of strength in facing brand merchants.

03

The third period of the shopping festival, I believe, is from 2015 to 2018.

At this stage, several iconic events have occurred.

Firstly, in 2015, JD.com reported that Tmall coerced merchants to "choose between two" during the Double 11 period, meaning that if they participated in Tmall Double 11, they could not participate in activities on other platforms, otherwise they would be punished in terms of traffic and resource allocation. Afterwards, "choosing between two" became an important topic in the public relations war between major platforms.

Then in 2017, for the first time, JD.com counted the GMV of Double 11 as a total of 11 days. Originally, the shopping festival was only held for one day, and the battle line has become longer and longer. Until now, the shopping festival has been held for a month at a time.

Another thing is that in 2018, Taobao launched games such as "Building Buildings for All", "Ideal Train", and "Open Meow Shop for All" during the shopping festival. The discount gameplay of the platform is becoming increasingly complex.

These three events all point to one outcome: the competition for shopping festivals is becoming increasingly fierce, while consumers and brand merchants are becoming increasingly vulnerable in the triangular balance.

Here we also mention an ancient internet term called 'infinite shelf theory'.

This theory was proposed by Chris Anderson, the editor in chief of Wired magazine in the United States, in his book "The Long Tail Theory". It means that offline supermarkets are limited by physical space and cannot list all products, but e-commerce platforms are not limited by this limitation and can list all products indefinitely.

Regarding "The Long Tail Theory" and his other book "Free: The Future of Business", I will dedicate two separate installments in the future to discuss the content. In this installment, I will briefly talk about it.

During the rapid development of the Internet, this theory was widely recognized,E-commerce does enable a large number of consumers to find products that cannot be found offline and discover their unmet needs.

But as the increment of mobile internet gradually peaked, it was discovered that infinite shelves did not exist.Because products can be endless, but the time users have to search for products is limited, the number of products displayed on mobile screens is limited, and the recommendation slots on e-commerce platforms are also limited. At its core, internet users are limited.

Both Luo Zhenyu's concept of "total national time" and Wang Xing's "second half of the internet" are talking about the same thing, that is, the internet industry cannot grow without restrictions. After the growth slows down, e-commerce will inevitably face internal competition.

Although Taobao made personalized recommendations for thousands of people and faces, and later e-commerce generally began to use information flow and collaborate with content platforms to increase user usage time, these were only methods to improve display efficiency and expand shelves. The infinite shelf theory has become ineffective at this stage.

At this point, the incremental benefits of e-commerce platforms will increasingly come from concessions from consumers and merchants.

The concessions made by merchants can be reflected in the "one out of two" approach, which requires giving up a portion of consumers to meet the needs of competition between platforms. In addition, the extended duration of the shopping festival also requires merchants to make concessions for a longer period of time. To some extent, merchants are increasingly becoming bullets and consumables in the competition between platforms.

The concessions of consumers are reflected in the increasingly complex rules of full reduction, the higher the threshold, and the actual benefits for consumers. In addition, with the increasing gameplay of various building games, the platform no longer only demands sales from consumers, but also includes more usage time, higher activity, and various social and interpersonal relationships.

Therefore, from 2015 to 2018, the shopping festival entered an era of involution.

But some changes are also brewing in this era.

In 2016, Taobao was the first to see the prospects of live streaming e-commerce and launched Taobao live streaming.

In the same year, Pinduoduo was born, and Kwai successfully broke the circle. At that time, these two products were considered to have a "sinking market" as their main customer base, thus their commercial influence was largely underestimated.

It has to be mentioned that this year, a product called Tiktok was launched in a low profile.

In 2018, new players began to explode.

Pinduoduo has surpassed JD in its activity, becoming a new pole of Chinese e-commerce, and has been successfully listed in US stocks. Kwai held the "Kwai Sales King" activity on the Double 11 of the same year, and entered the e-commerce market in a high profile by taking goods with live broadcast. This year, Tiktok completed its breakthrough and became the most eye-catching phenomenal product in the entire Internet industry.

The pattern of the e-commerce industry is about to undergo a reversal.

04

Pinduoduo fired the first shot of the reversal.

In 618 in 2019, Pinduoduo offered a "10 billion subsidy" for the first time. It directly subsidized 10000 products with the highest popularity throughout the network, and the actual discount was between 15% and 50%.

Choosing this node is undoubtedly a thorn in the back of JD, which occupies 618 minds.

But this is not the end. After the end of 618, Pinduoduo took 10 billion subsidies as a normal activity and continued.

For traditional e-commerce platforms such as Tmall and JD.com, which are accustomed to shopping festivals as the main battlefield, the normalization of billions of subsidies is no different from the behavior of lifting tables. In the past, there were at most a few or a dozen shopping festivals a year, but with billions of subsidies, it was equivalent to every day being a shopping festival.

In the face of the threatening Pinduoduo, the choice placed in front of the old players has to follow up quickly.

On the Double 11 of 2019, JD announced the launch of the "Ten Billion Subsidy" campaign. In early December, Alibaba Juhuasuan announced the launch of a normalized "Ten Billion Subsidy" project.

When the battle between Double 11 and 618 turned into a competition between billions of subsidies, the existence of shopping festivals suddenly became dispensable.

Another reversal point is buried by Taobao itself.

In 2019, Taobao's live streaming broke out, with live streamers represented by Li Jiaqi emerging one after another, creating one sales miracle after another.

Regarding live streaming sales, I have said before that the essence of Li Jiaqi's people is' gathering in person is cost-effective '.

And these "humanoid gatherings are not as cost-effective as shopping festivals, which only come a few times a year. Model workers like anchors can broadcast live every day for seven to eight or even ten hours.

Which fracture prices were only enjoyed in the past on Double 11? In the live broadcast room of the head anchor, as long as you are willing to stay and snap up, you can enjoy them every day. It also comes with various gifts.

It is not only Taobao, but also Kwai, and Tiktok, who later entered the office by relying on Luo Yonghao's live broadcast room.

The battle between billions of subsidies and live streaming sales will continue from 2019 to 2023. The competition between e-commerce platforms revolves around these two keywords.

On the other hand, the increasingly fierce war is the desolation of the shopping festival.

Even though platforms are constantly trying to extend the shopping festival's cycle from 11 days to one month and then to the shopping season. From Goddess's Day, New Year's Goods Festival, Good Things Festival to Super Brand Day, the names have also undergone various renovations, but it cannot save the shopping festival from being a global carnival to gradually fading.

In 2022, the transaction amount for Double 11 will no longer be announced. As if announcing the passing of the golden age of the shopping festival.

05

Finally, when we look back at the development history of the e-commerce shopping festival, what we see is a period of history of China's consumer society.

From the Love triangle mentioned at the beginning, for consumers, the shopping festival is gradually disenchantment.The complex gameplay and the routine of raising prices first and then discounting have gradually eroded consumers' trust in the shopping festival.

For businesses, the era when online operating costs were much lower than offline is long gone. Frequent concessions have also made it difficult to sustain discounts during the shopping festival, and even the amount of traffic that can be earned at a loss is decreasing. You still have to participate, it's just a gradual decline.

So today, who really needs the shopping festival? It's actually a platform.

In the past, e-commerce festivals were a weapon, where platforms relied on genuine discounts to seize territory, occupy minds, and compete with each other. In this competition, the plates are getting bigger and bigger, and an e-commerce era is slowly rising.

But today, the E-commerce Festival is more like a defensive measure. Players have gone from being one super and one strong in the past to becoming a four legged tripod. The e-commerce festival is not only a means to stimulate consumer desire, but also a battle for discourse power.

This is also why even in 2023, the platform still needs to shout the slogan of "the strongest 618 in history".

Because many competitions are so involuntary. The boat won't move, and the oars won't stop either.

References:

Too Love to Create Festival E-commerce Is Not a Good E-commerce "Currently Tech

The Evolution of E-commerce Promotional Subsidies: The "50% Discount Era" that Cannot Be Returned, the Unknown Billion Subsidies "DoNews

210 Days after the Birth of "Ten Billion Subsidies" Burning Finance and Economics

"Double 11 Merchant Compensation Guide" Burning Finance

Juhuasuan Billion Subsidies: The Biggest Variable in the 2020 E-commerce War? "Tech Planet

New Entropy of Tiktok is still one Double 11 Shopping Festival away

Li Jiaqi Weiya Kills the Shopping Festival: Every day is at a 50% discount, why wait for Double Ten One? "Zinc Finance

2012~2022, The Rise and Fall of Double 11 Beauty Brands "Chunlei Society

Almost all the way down, what happened to the 38 major promotions this year? "Ju Meili

Double 11 Enters "Middle Age" Photon Planet

How did the world's largest Consumerism festival become "low-key"? Geek Park

13 Years of Double Ten One, Need a Face to Face Closing "Yilan Business

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