Recently, it was reported that Tiktok E-commerce set "price power" as the highest priority task in 2024. According to the First Finance reporter, Tiktok E-commerce has introduced white brand products to support the business of individual stores. But officially establishing a low price strategy is the first time. The so-called white label refers to products produced by some small manufacturers without a brand, which are relative to the brand.
In addition, Taobao, which focuses on the Kwai of sinking market and accelerates the process of low price strategy, has gradually formed a situation of encirclement of "shake fast Taobao". Pinduoduo has previously dominated the low-priced field with consistently good financial data. Many industry insiders believe that due to the long cycle of supply chain construction and user mentality, the current trend of multiple platforms gathering on the low-priced battlefield has little impact on Pinduoduo in the short term, but in the long run, it will weaken its low-priced competitive advantage.
"Doukuai Taobao" Gathers on the Low Price Battlefield
From March 2023, Tiktok e-commerce will open more business categories to help individual businesses. Individuals only need to provide the required ID card and pass the real name authentication to register "Tiktok Store" in Tiktok E-commerce as a business. The "personal store" model has lowered the threshold for opening a store and opened up a path for experienced e-commerce practitioners to convert their interests into business. But at that time, the white label and small and medium-sized business groups were mainly concentrated in the shelves, and this low price strategy may directly expand to the content field.
Cao Lei, director of the Economic and Social Network E-Commerce Research Center, told reporters that as a super app with a daily life of more than 700 million, Tiktok has a huge flow pool, but its GMV and user scale growth has gradually hit the ceiling. Everyone wants to get a share of the pie, and the track is becoming increasingly competitive, with growth rates showing signs of fatigue. The pressure Tiktok is facing now mainly includes financial pressure from businesses, user trust and external competition. Alibaba, JD and other e-commerce platforms are also actively developing short video and live broadcast services, trying to seize the market share of Tiktok e-commerce. If they do not change, Tiktok is likely to fall into a situation of "internal and external problems".
It is understood that the total turnover of Tiktok e-commerce in 2023 will be about 2.2 trillion yuan. In 2024, Tiktok E-commerce set a target of total turnover of more than 3 trillion yuan for the whole year. Tiktok denied the data.
Before Tiktok, Kwai, Taobao, JD and other platforms have made efforts in the field of low prices. In 2023, Cheng Yixiao, the founder and CEO of Kwai Technology, proposed the strategy of "low price and good things" to encourage businesses and talents to cooperate and win the "Chuanliu Plan". The annual traffic increased from 30 billion to at least 60 billion.
Cheng Yixiao said that the original purpose of Kwai e-commerce is to provide users with a good and inexpensive life, so the connotation of trusting e-commerce is to let consumers find good things at low prices through trustworthy anchors and content. He encouraged operators to take this as the direction and conduct in-depth business in the content field and shelf field of Kwai.
In addition, Taobao has also involuntarily moved towards lower prices in the past year. In February 2023, Zhang Yong, then Chairman and CEO of Alibaba, stated when discussing industry low price competition that "price subsidies are not a new thing, and no enterprise in history can change the situation through its own continuous price subsidies." However, in March, with the official launch of JD's 10 billion yuan subsidy, Taobao's "low price" process is also significantly accelerating. At a closed door discussion meeting of Tmall brands in March that year, Dai Shan, then President of Alibaba's domestic digital business sector, listed "good goods and good prices" as one of the three directions for the development and investment of the Tmall platform. In April 2023, Taobao launched the 99 Special Sale Channel on the homepage of the app. Insiders stated that the launch of this channel was mainly aimed at launching more cost-effective products.
In May 2023, Alibaba founder Jack Ma's internal speech made Alibaba abandon its previous bet on consumption upgrading. He pointed out three directions for Taobao Tmall Group: returning to Taobao, returning to users, and returning to the Internet. He emphasized that due to changes in the environment, the next opportunity is Taobao, not Tmall.
Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, told reporters that firstly, the low price strategy has always been the fundamental competitiveness of the retail industry, and only on this basis can a strong scale supply chain system be established. Therefore, Tiktok e-commerce must follow up. Secondly, the retail industry is an industry that has been in dynamic competition for a long time. After entering a new round of low price competition throughout the industry, it will inevitably continue to upgrade in other aspects. In addition to low prices, Pinduoduo is also continuously evolving in after-sales service innovation, ecological construction, and cross-border e-commerce.
Cao Lei told reporters that low price strategy and high cost performance products are the eternal "magic weapons" that the platform can directly achieve customer acquisition, traffic attraction, and promotion of GMV. Tiktok is now starting a low price strategy to join the market competition, with a clear purpose. After all, the low price strategy is in line with the current needs of consumers, and people's demand for low-priced goods exists at any stage. In the past few years, against the backdrop of consumer upgrading, Pinduoduo has still risen rapidly with its low price strategy and the provision of high cost-effective products, which is enough to illustrate one or two.
Industry Encirclement Pinduoduo
To some extent, "taking the path of Pinduoduo, leaving Pinduoduo with no way to go" has become the direction of Alibaba's efforts. In 2023, Taotian Group emphasized "price power" multiple times at the 618 Merchant Conference and stated that "as long as small and medium-sized merchants can make prices, there will be traffic." Taobao also set up a Good Price Festival sub venue for the first time in this 618 event, and the relevant person in charge mentioned "hoping that this activity can bring more users and orders to Taobao in county-level and below markets", pointing to Pinduoduo.
The importance of price competitiveness for the growth of e-commerce platforms is beyond doubt. On November 29, 2023, after Pinduoduo released its financial report, the US stock market value surpassed Alibaba for the first time. In that quarter, Pinduoduo's trading service revenue reached 29.15 billion yuan, a year-on-year increase of 315%, far exceeding the industry growth rate. In its financial report for the third quarter of the 2024 fiscal year, Alibaba also stated that after the "Double 11" event, Taotian Group's order volume in the second half of the third quarter increased in double digits year-on-year, promoting the strategy of price competitiveness and enhancing consumer demand and willingness to purchase.
With the promotion of the "price power" strategy, in the past year, Taobao has made many reforms in recommendation algorithms, exclusive entrances, and other aspects to guide traffic towards low-priced products, encouraging merchants to lower product prices. At the same time, Taobao is also canceling the "Double 12" and changing it to the "Taobao Good Price Festival" at the end of 2023, aiming to further establish the platform's low price mentality.
In the future, in the competition of e-commerce price power, Pinduoduo will face increasingly fierce "encirclement" on platforms such as Taobao, Tiktok and Kwai. On February 7th, Wu Yongming, CEO of Alibaba Group and Taotian Group, stated in a financial report conference call that in 2024, Taotian Group will increase investment in user core experience, provide "good goods, good prices, and good services" to different consumer groups under the consumption classification system, increase investment in branded and industrial products, strengthen platform supply advantages, and increase investment in product capacity building and optimizing the business model relationship between merchants and platforms, creating better cost-effectiveness on the Taobao platform.
This also means that Taobao's low-priced strategy will further penetrate the supply side, posing a challenge to Pinduoduo's low-priced supply chain advantage. On January 18th this year, Taotian Group released the first batch of "Taotian Billion Industry Belt" lists, involving 50 industry belts. Taotian Group revealed that industry belt merchants have become the largest source of new Tmall brands, accounting for more than 40% of new merchants. Taobao will vigorously support the development of small and medium-sized enterprises in the industry belt.
"The price power we focus on is the good price based on good goods, which is the demand of consumers to cross cycles and also the responsibility of doing business." When discussing Taobao's price power strategy, Wu Yongming expressed his determination. In this race that spans the cycle with price power, whether it is Pinduoduo who started first, or Taobao, Jingdong, and Tiktok who are chasing now, they are obviously ready for a long fight.
Will this Doukuai Taobao gathering in the low-priced market form a siege on Pinduoduo? Cao Lei told reporters that Douyin, Taobao, and JD.com are both attacking the low-priced market, which may pose a certain threat to Pinduoduo. At the consumer level, Pinduoduo's low price competitive advantage may be weakened, and some consumers may turn to other platforms to find cheaper products. At the merchant level, the low price strategy of other platforms may lead to the loss of merchant resources for Pinduoduo. Zhuang Shuai said that due to the long cycle of supply chain construction and user mental impact, the short-term impact is not significant, but it will definitely have an impact in the long run.