Until May 30th, Cheng Shi (pseudonym), who works in finance, had no perception of this year's June 18th. "There seems to be no activity this year, I haven't seen any promotional activities, nor have I seen any friends sharing some activity games or wool that can be harvested." Cheng Shi told reporters that she is more Buddhist about this year's "6.18" promotion.
In fact, Taobao's "6.18" shopping festival started around 8 pm on May 20th and cancelled the pre-sale process, selling directly in stock. In the past, during major promotions, the opening time of the "cat and dog battle" could almost be said to be close combat, while JD.com seems less anxious this year. Tiktok also officially opened the "June 18" Good Things Festival at 0:00 on May 24. It was not until May 28 that JD officially announced that this year's "June 18" was officially opened at around 8:00 p.m. on May 31.
Although actively delaying the start of the major promotion, as the initiator of "6.18", JD. com still attracts attention on how to start the home game. This is also the first JD. com "6.18" that JD. com CEO Xu Ran faced since taking on the role of JD Retail CEO in November 2023.
JD.com has played two cards this year around the most sensitive prices for consumers. A card is from the JD sales live broadcast room that broke through last year's "Double 11". At the JD "6.18" kickoff meeting, Xu Ran not only appeared in the JD sales red vest, but also attended by multiple frontline JD sales personnel. In order to motivate the sales team, on May 27th, JD Group also raised the salary of JD Sales again. The annual fixed salary was increased from 16 to 20, and performance incentives were not capped, which shows JD's emphasis on the low-priced JD Sales live broadcast room during this year's June 18th shopping festival. Another card is the launch of the "2-yuan free shipping day", an industry leading product, this year, in addition to billions of subsidies.
However, with consumers showing signs of fatigue towards the e-commerce shopping festival, how much more attractive is low price?
Disappearing pre-sale system, shortened campaign
Looking back at JD's June 18th, 2023, the entire event started around 20:00 on May 23rd and continued until June 20th. The entire JD "6.18" period lasted for 29 days. However, the pre-sale period is from May 23rd to 31st, during which consumers can pay a deposit to lock in the goods. The final payment will not start until around 20:00 on May 31st.
Last year on Double 11, JD.com began to cancel the pre-sale system. This year's "6.18" promotion, Taobao has also cancelled the pre-sale system and advanced the start time to around 20:00 on May 20th, with the entire front line lasting for 32 days. On June 18th this year, JD.com also chose to cancel the pre-sale system. Unlike Taobao's early start of the war, JD.com chose to shorten the war period, with the event starting on May 31st and 20th, and the entire June 18th promotion time shortened to 21 days.
Looking back at the early e-commerce boom, news of express logistics shortages often emerged due to sudden surge in sales. On the merchant side, there have also been many cases of backlog of goods due to errors in estimating sales for major promotions. Shortly thereafter, e-commerce platforms began to introduce pre-sale systems during the promotional period.
Zhao Xiaomin, an expert in express logistics and CEO of Guanshuo Capital, told reporters that the emergence and cancellation of the pre-sale system is not directly related to express delivery shortages, but mainly related to e-commerce platforms based on their own industry changes and market competition.
In 2012, Alibaba introduced a pre-sale system during major promotions, which was later imitated by major e-commerce platforms. "The main purpose is to enhance the survival space of merchants, so the platform and merchants have joined forces to introduce the pre-sale system." Zhao Zhenying, a researcher at the National Engineering Laboratory of E-commerce Transaction Technology, told reporters that in the past, e-commerce could lock in sales in advance through pre-sale. Therefore, the emergence of pre-sale system can to some extent reduce the inventory risk of merchants and lower the cost of capital use.
The most obvious impact of canceling the pre-sale system is undoubtedly the increase in inventory pressure on merchants, but in recent years, both Taobao and JD.com have chosen to abandon the pre-sale system. "The actions of Tmall and JD.com can actually reflect consumers' preferences for simple and direct shopping experiences, as well as concerns about some issues in the pre-sale model. Therefore, canceling pre-sales is also imperative," said Mo Daiqing, a senior analyst at the Network Retail Department of the Economic and Social E-commerce Center.
Zhao Zhenying believes that in the past, there were some situations where the goods were not on the right track and the after-sales service was out of place during the pre-sale promotion, which led to a large number of complaints from consumers and affected their shopping experience, resulting in the loss of platform users. "Nowadays, platforms are abandoning the pre-sale system in order to improve user experience, enhance user stickiness, and reduce user churn. In addition, he pointed out that after canceling the pre-sale system, businesses have to face objective inventory risks again in an unfavorable environment. The platform will also experience a significant decrease in data revenue due to the shortening of user online time, and ultimately, all losses will still have to be borne by consumers.".
In the context of the cancellation of the pre-sale system in the major promotion, some platforms have chosen to extend the front line, while others have chosen to shorten the front line.
In fact, the early "Double 11" and "6.18" e-commerce promotions were only one day long, and since then, the time has been continuously extended. Today, some platforms have even extended their promotion time to more than a month.
"I think it's also good to have time differentiation, which can leverage their respective advantages and provide consumers with better choices. However, the duration is too long, and consumers may also feel tired. In recent years, the opening time of '6.18' has not been much different from each other, and JD's approach this year can be considered a bit innovative," said Mo Daiqing.
Xu Yuan (pseudonym) is the founder of a food business and has participated in the "6.18" promotion activities of multiple mainstream e-commerce platforms this year. "We still think it's better to have a shorter promotion time," Xu Yuan explained to reporters. The platform's major promotion will actually affect normal sales, and the longer the front line, the slower the normal sales will recover.
"The duration of the platform promotion is not very important to us," said Cai Dan (pseudonym), who operates a self owned textile brand on e-commerce platforms. "The overall market is not ideal this year, and there will not be a significant increase in sales for self owned brands in the mid-range market."
"And now there are too many promotional activities, which makes consumers feel tired," Cai Dan added.
In the era of stock competition, what can we attract consumers with?
Li Xi (pseudonym), who works in first tier cities, doesn't have much anticipation for this year's June 18th. "I didn't plan to buy anything. I bought something I wanted at the time," Li Xi told reporters.
"I have only stocked up on some fast-moving consumer goods this year, and I haven't bought much, only two to three hundred yuan." Li Xi's friend Liu Yu (pseudonym) also agreed, "If you want to collect wool, you need to make up for it and reduce it. This means buying a bunch of unnecessary things. Now that I'm busy with work, I don't even want to use this brain."
For merchants, participating in "6.18" is actually a behavior that supports the platform. "'6.18 'is the main activity of major platforms in the first half of the year, and our store operates on the platform. We must participate in large-scale events like this and follow the pace of the platform. However, Cai Dan admitted that due to changes in the overall environment, the average customer price has decreased. For brands targeting the mid-range customer group, they will also increase their prices during the promotion, which means that participating in the promotion will actually result in a certain degree of loss.".
For food categories with relatively lower average customer value, Xu Yuan said that participating in major promotional activities can still earn some money, but his expectations for major promotions are no longer as high. "This year's sales should be similar to previous years," Xu Yuan said.
However, JD.com still chooses to focus on low prices. On the one hand, it continues to increase the volume of its sales live streaming rooms, and on the other hand, it has launched a "2-yuan free shipping day" in addition to billions of subsidies. It can be seen that JD.com hopes to stabilize the market through low prices, and even bring growth to its lower tier customer base. JD.com disclosed in its Q3 2022 financial report that as of the end of the third quarter, the number of active users reached 588 million for the year. However, in its financial reports until the first quarter of 2024, JD.com did not disclose specific data on its active users, only indicating that the number of active users had accelerated growth.
"Low price, guaranteed quality, and face-to-face communication are the reasons why JD's live streaming rooms are popular." Zhao Zhenying told reporters, "However, personally I am not optimistic about the so-called low price strategy, because only by leaving reasonable profits for the production end can the entire production and sales system have a certain degree of sustainability. Similarly, under the current logistics costs, '2 yuan free shipping' can be said to be a loss making and shouting business. In today's highly saturated market, JD's launch of 2 yuan free shipping is not necessarily to seize any market share, but purely to enhance user activity."
In terms of the overall environment, China's e-commerce industry has shifted from a blue ocean to a red ocean, and improving service quality and providing high-frequency services around existing users has become a competitive tool for e-commerce platforms.
In addition to low prices, user experience is also an advantage that JD has repeatedly strengthened. JD stated that improving user experience is an endogenous force driving JD's growth. This year on June 18th, JD.com has continuously expanded its user experience, including over 85% of products that can enjoy price protection. Meanwhile, 97% of JD's self operated products and 75% of third-party merchant stores support "free doorstep returns and exchanges".
Since last year, Taobao has also been making efforts in "user experience", launching "refund only" services, launching the Xinjiang free shipping plan, and launching 88VIP unlimited return and shipping fee services.
In order to facilitate online shopping returns and exchanges, the troublesome consumer Xiao Hu renewed his JD PLUS membership for another year before June 18th.
"User experience is highly valued by various e-commerce platforms nowadays. It is beneficial for consumers and can also promote the improvement of product quality and services for businesses. For platforms, doing so is beneficial for their healthy development," said Mo Daiqing.
From the perspective of express logistics, Zhao Xiaomin pointed out to reporters that after so many years of development, express logistics has been able to easily cope with various consumer promotions. Now, there is a situation of overcapacity in some markets. From the perspective of consumers, higher requirements can be put forward for the market, including service accuracy, transportation timeliness, service satisfaction, etc.
On the eve of June 18th this year, JD.com upgraded its instant retail brand "Houda" to "Instant Delivery". However, at the launch meeting of June 18th this year, there was not much emphasis on instant delivery services.
"With the evolution of the market, express logistics services have gradually shortened from the past few days to the next day, the same day, and the hour. The next stage may be precise customization based on minutes and seconds." Zhao Xiaomin told reporters that the logistics industry, from scale to high-quality development, plays a pivotal role in reaching e-commerce users, increasing stickiness, and improving satisfaction. "In the upcoming service process of 'minute delivery' and 'second delivery' in the next stage, higher requirements have been put forward for enterprises in terms of technology, funding, talent, solution capabilities, user stickiness, and control over upstream and downstream resources."