Ali's last battle in 2022

Fast Reading

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For Dai Shan, this is not only her first tough battle since she took over the entire Taobao business, but also a battle of great significance.

Consumers are tired of dealing with various routines, merchants are forced to participate in unprofitable year-end promotions, and Double 11, which is entering the middle age, is full of crises.

Double 11 is no longer the exclusive stage of Taobao, consumers and merchants have more choices. Taobao had to make changes, but it was difficult to cure the symptoms.

A melee is slowly kicking off: the 14-year-old Double 11 has changed from Taobao’s unique secrets to a gluttonous feast on major platforms.

JD.com, an old player, is still a formidable rival. Pinduoduo’s tens of billions of subsidized channels should not be underestimated. Douyin Kuaishou draws its sword with the momentum of live broadcast e-commerce. Dangdang, Vipshop, Bilibili, and Meituan have also joined the battle.

For Dai Shan, president of Ali’s domestic digital business sector, this is not only her first tough battle since she took over the entire Taobao business, but also a significant battle to defend the competition.

Double 11, which was born in 2009, has witnessed Taobao’s 13 most prosperous years and has also become a barometer of China’s largest e-commerce platform. On the double 11 battlefield, Taobao still sits on the top spot, but the hidden worries of GMV have already emerged. Merchants and consumers are getting increasingly tired, and powerful enemies on the side of the couch are staring at them.

To this day, Taobao, who has reached the age of 20, is still inseparable from Double 11, but "stability" is ranked first.

At the Tmall Double 11 press conference on October 24, Dai Shan announced that Taobao had made "unprecedented investment" this year, trying to maintain the original intention of making consumers happy, so that merchants can feel more business certainty. Since she took office, Ali has repeatedly stated that the development model with GMV as the growth target will become a thing of the past.

At 8:00 p.m. on October 31, Double 11 officially went on sale. Taobao, which announced that it no longer pays attention to the growth of GMV, couldn’t help but show off its achievements: 102 brands’ turnover exceeded 100 million within an hour of the sale, and the number of live broadcast audiences increased year-on-year. The growth rate was 600%, and the transaction volume of waist anchors increased by 250% year-on-year.

For Taobao at this moment, morale is more important than every previous Double 11. But surrounded by strong enemies, internal and external troubles, can Taobao, which is not only concerned about GMV, win the battle and break through smoothly?

Double 11 cools down, businesses know the cold

In the eyes of merchant Awei, whether a Tmall store can be successful, "all depends on Double 11".

In 2016, Awei opened his first handicraft store on Tmall, and every year on the eve of Double 11 is the golden period for him to expand his store. "When I first came to Tmall, the cost of opening a new store was about 300,000 yuan, but the profit generated was much higher than the cost."

Registering a new store one to two months in advance, reaching the registration standard by swiping orders and making data, and starting the quantity during the Double 11 period is the standard process for Awei to copy the store. In this way, he can operate up to 6 stores on Tmall at the same time.

But before Double 11 this year, Awei reduced his stores to only one. The reason is simple: not making money.

Yang Jie, who helped Awei resell Tmall stores, has only sold three stores since Double 11 last year. "In the past, I could sell more than a dozen stores in a month, but now I can only sell two or three stores a year."

In the years when Taobao’s business was the most prosperous, reselling Tmall stores on the eve of Double 11 was a good business that made money. Since there is a certain threshold for entering the platform, many merchants who want to open a store on the platform will purchase ready-made stores. Buying at a low price and selling at a high price is Yang Jie's secret to making money.

"About two years ago, the profit from selling a store was 10,000 to 10,000 to 10,000 yuan, and it will be even higher before Double 11. There is no need to worry about selling as much as the store below 200,000 yuan." Yang Jie told Snow Leopard Finance and Economics. But since last year, she has become very cautious when closing the store, and will only pay after confirming the buyer, "It is impossible for me to advance a penny."

The year-end promotion began to cool down, and merchants on the platform were the first to feel the chill. Together with them, there is also Taobao, the creator of Double 11, who fell into growth anxiety.

On Double 11 in 2021, Taobao’s GMV growth rate in its home court was less than double digits for the first time, setting a record for the lowest growth rate since the first Double 11 in 2009.

In the second quarter of 2022, Alibaba's revenue will grow close to zero, and the core Da Tao business will also go downhill. China Commerce realized revenue of 141.935 billion yuan, a year-on-year decrease of 1%; customer management business revenue reflecting the performance of Taobao and Tmall fell by 10% year-on-year, a drop of more than 1% in the first quarter.

Riding on the east wind of e-commerce dividends for several years, the story of GMV growth has become unsustainable.

At the end of 2021, Dai Shan, who took over the big Taobao business from Jiang Fan, officially stopped the development model with GMV as the growth target, and asked Taobao and Tmall to return to the creation of consumer experience. This year's Double 11 will be a key battle for her to lead Taobao to boost morale at home.

In order to win this battle, Taobao has made an unprecedented investment.

The opening time of the big promotion was advanced from 24 o'clock to 8 o'clock in the evening, so that consumers "don't stay up late and don't toss". The expansion of the shopping cart, the control of false promotions and the super-long price guarantee are to avoid the past "brain-burning" routines and attract consumers to place orders with confidence.

On the eve of Double 11, Douyin’s top streamer Luo Yonghao, Dongfangxuan and the top MCN Yaowang Technology successively entered Taobao Live, which is not only a gathering of popularity, but also a hot spot. Li Jiaqi's timely return has pushed the entire industry's expectations for Double 11 to the extreme.

But will the investment pay off? Dai Shan, who said frankly that it is "very difficult" to take over Taobao, may not be able to give a definite answer.

The freshness and attractiveness of Double 11 have been worn down by time. There are not a few businesses like Awei who choose to leave because they can’t make money, and the investment of their opponents is not weak at all. The biggest problem facing Dai Shan is to leave. After 20 years, the entire Taobao has entered a crisis-ridden middle age.

The lingering sense of fatigue lingers over Taobao's most important festival.

Taobao's midlife crisis

"I haven't felt the unprecedented strength, but I have a deep understanding of the unprecedented pressure." Shi Yu, who has 7 years of experience in operating Taobao stores, complained to Snow Leopard Finance and Economics.

In Shiyu's view, signing up for Double 11 has increasingly become a tasteless choice. According to this year's double 11 investment promotion rules, the highest platform full reduction in recent years (full 300 minus 50) will all be borne by merchants who sign up to participate in double 11. But it doesn’t work if you don’t participate, “you have to participate if you can’t make money, because all your peers have signed up.” Due to the limited display space for the same product, if you miss the starting point of Double 11, it will become more and more difficult to do business in the future.

Awei is also tired of Double 11. "Every time a new store is opened, an annual fee deposit of 110,000 yuan must be bet on the platform. If you don't want to miss the golden node of opening a store every year, merchants need to spend more money for data." He told Snow Leopard Finance and Economics .

In the past two years, Taobao has become more and more strict on the control of order swiping, and the cost of making data has become higher and higher. Many merchants need to obtain display space through Taobao through-train bidding to obtain traffic. "Now if you want to open a new store on Tmall, you only need to spend 300,000 yuan, and it will take about 500,000 yuan to do it."

As the dividends of the rapid development of the e-commerce industry and platforms dissipate, merchants who once regarded Double 11 as a cash cow are increasingly feeling the burden. Participating in promotions may not necessarily make money, and not participating will open the gap between peers.

Behind the dilemma of merchants is the e-commerce shopping festival represented by Double 11, and the gold content is shrinking day by day.

On November 11, 2009, Zhang Yong, the general manager of Taobao Mall at the time, took the lead in planning and launching the first Double 11 Shopping Festival. At that time, only 27 brands participated in this year-end promotion of "50% off free shipping", GMV The final price was fixed at 52 million yuan. Twelve years later, on Double 11 in 2021, tens of thousands of brands participated in the promotion, and the GMV reached 540.3 billion yuan, more than 10,000 times that of the first session.

However, with the increasing number of merchants, the difficulty of platform management has also risen sharply. Many merchants have begun to use false promotional routines such as "first rise and then fall" to attract consumers.

According to a report released by 360 Internet Security Center in 2016, among the 7.43 million promotional products during Double 11 last year, 52.99% of the products had price increases before the promotion, and 81.99% of them had price increases within 30%. 3.26% An increase of more than 200%. The endless routines have repeatedly frustrated consumer confidence.

The more and more complicated full-reduction gameplay has also discouraged many people. From Taobao’s double 11 building to receive red envelopes in 2019, to the cat raising game in 2020, consumers not only have to spend extra time to understand the rules of the game, but also have to study a series of deposits, balance payments, pre-sale prices, and post-coupon prices. Complicated gameplay, some people have to do a math problem before complaining about shopping.

From 618 and 818 to Double 11 and Double 12, from the March 8 Goddess Festival to the New Year’s Day, various promotional nodes of various e-commerce platforms run through the year. The influence of Double 11 is still there, but the accumulated fatigue has overwhelmed consumers' shopping enthusiasm.

What's more, today's Double 11 is no longer the exclusive stage of Taobao, consumers and merchants have more choices.

"Double 11 this year, my stocking volume on Taobao is basically the same as last year, but the stocking volume on Douyin has doubled compared to last year." Shiyu's stocking logic depends on the sales volume of its products on various platforms throughout the year , The sales on Taobao have stagnated for the past two years, and the sales on Douyin have grown rapidly, giving him a taste of the sweetness of the multi-channel layout.

It's too cold at the top

As the founder of Double 11, Taobao has occupied the C position of this shopping carnival stage for a long time. But now, home field advantage is being eroded by competitors.

On Double 11 in 2021, Taobao achieved a GMV of 540 billion yuan, a year-on-year increase of 8%. JD.com, an old rival in away games, achieved a cumulative GMV of 349.1 billion yuan during Double 11, a year-on-year increase of nearly 30%.

Beauty products are the star category of the annual year-end promotion. According to the research report of Sinolink Securities, this year’s Double 11, the GMV growth rate target of Taobao’s beauty products is single digits, which has slowed down compared with last year. JD.com's beauty makeup GMV target growth rate is 16%.

Taobao, which once distanced itself from JD.com in 2020, watched helplessly as its old opponent approached step by step.

Source of GMV of Taobao and JD.com’s Double 11 over the years: Capital Securities

The rise of new e-commerce platforms has made this offensive and defensive battle even more stalemate. Although Pinduoduo, Douyin, and Kuaishou have not announced the transaction volume during the Double 11 period, it does not affect their enthusiasm for joining the year-end promotion.

Facing the swarming competitors, one of Taobao's coping strategies is to launch a series of measures on the eve of Double 11, emphasizing the "simple and inclusive" gameplay to improve consumer experience.

In addition to the "biggest discount in history" of 300 minus 50 across stores, the price protection period has been extended from the past 15 days to 27 days, and a one-click price protection function has been added. Every change is closely related to consumers' wallets.

Awei told Snow Leopard Finance and Economics that this year's Tmall Double 11 investment promotion rules have added two precautions, one of which is the most concerned one is to control the two false preferential behaviors of "false warm-up" and "first rise and then fall". . "Although the platform has been controlling the false discounts during Double 11, it is the first time I have seen it written in black and white in the investment promotion rules."

Left: 2021 Double 11 Investment Promotion Rules, Right: 2022 Double 11 Investment Promotion Rules

But even with such sincerity, it is difficult for Taobao to stand out from the encirclement. After all, around the word saving money, the major e-commerce platforms have already reached the extreme.

JD.com, Douyin, and Suning E-commerce all provide price protection services or refund the price difference during the Double 11 period. Lin Chen, vice president of JD Group, summed up this year's Double 11 preferential measures with "simpler and greater strength". The investment in the whole link has increased by more than 50% year-on-year, and the strength is not inferior to Taobao. Pinduoduo directly canceled the pre-sale, and "directly gave" discounts in the form of full discounts and tens of billions of subsidies.

In other words, whether it is a horizontal comparison with major e-commerce platforms, or compared with other promotion nodes in a year, it is difficult for Taobao to come up with a sufficiently competitive price to leave its opponents behind.

Comparison of promotional discounts of major e-commerce platforms Source: Caitong Securities

In the face of menacing opponents, Taobao's actions to make up for its shortcomings in live e-commerce are tantamount to scratching the surface.

During Double 11 in 2021, the three top anchors, Li Jiaqi, Wei Ya, and Sydney, who worked together to win a transaction volume of 19.8 billion yuan for Taobao, have only Li Jiaqi left this year. Yu Minhong, the founder of New Oriental, Luo Yonghao, the head anchor of Douyin, Yao Wang Technology, the head MCN, Yao Changsheng, the anchor of Changsheng Finance, etc., have been invited to appear on Taobao live broadcast during Double 11, but their performance is still unknown.

At 6 pm on October 24th, Luo Yonghao appeared in the Taobao live broadcast room, with 26.5 million viewers that night. However, the number of likes in Luo Yonghao's live broadcast room was 3.647 million that day, which was less than 1.5% of Li Jiaqi's live broadcast room (251 million). In the following two days, the popularity of Luo Yonghao's live broadcast room dropped rapidly. At around 8:00 p.m. on the 25th and 26th, when Luo Yonghao appeared in the live broadcast room again, the number of viewers had dropped to 5 million and 2.5 million. (See Snow Leopard Finance and Economics for details)

It's too cold to be high. The e-commerce industry bid farewell to the era of rapid growth, which means that Taobao, which took the lead in reaching the top, could not grow wings, and could only watch helplessly as the opponents below approached step by step.

ZAKER