As a barometer of consumer confidence, this year's "Double Eleven" e-commerce promotion is the earliest launched "Double Eleven" and has the longest cycle. The competitive pressure of e-commerce platforms is evident.
From the marketing strategies of platforms such as Tmall, Taobao, JD.com, and Pinduoduo, terms such as cost-effectiveness, lowest price, and bottom price sales, which were originally used to attract traffic, have basically disappeared. Instead, a series of burden reduction strategies targeting merchants have been implemented, including waiving service fees, fast payment collection, and subsidizing shipping costs.
Consumers have also returned to a rational state from years of fervent pursuit. Behind this transformation, it also reflects changes in consumer habits and the entire e-commerce industry. When dividends are no longer available, how can consumer brands find new increments? Can new consumption potential be tapped into?
Recently, a survey initiated by the media collected over 500 valid questionnaires, with an age range of 22-45 years old, and more than half of the consumers coming from cities outside of first and second tier cities. The survey report shows that over 80% of consumers choose to shop on e-commerce platforms, with their occupations concentrated in industries such as teachers, doctors, and civil servants. The proportion of users who choose Pinduoduo during the "Double Eleven" period is slightly higher than that of "Taobao series" (including Taobao, Tmall, etc.).
The purchasing power of 'young people in small towns' should not be underestimated. The data on household income and consumption expenditure for the first three quarters of 2024 released by the National Bureau of Statistics shows that the income gap between urban and rural residents is steadily narrowing. In the county-level market, brands are expected to experience new explosive growth through insights into consumer demand from emerging e-commerce platforms such as Pinduoduo. When the increment of first tier cities slows down and the consumption upgrade of third - and fourth tier markets has just begun, e-commerce is penetrating into the "capillaries" of small towns, seeking greater market space.
Dong Jizhou, a consumer and real estate industry analyst at Nomura China, believes that although the growth rate of online channels has slowed down, the proportion of retail sales in the entire society will still increase in 2023. In the long run, due to the high efficiency of online channels and the extremely developed domestic logistics system, the proportion of online channels will gradually increase, and brand merchants will definitely make more layouts in county-level channels. We have seen many brands that have not yet reached third, fourth, or fifth tier cities offline, but consumers can still purchase on e-commerce platforms, which is a very good trend. In addition, how to manage online channels well, brands will also make increasingly detailed plans, which is much better than crazily opening stores offline
Correcting the previous crude "investment flow buying volume" competition model, seeking a balance between price wars and profit wars, unleashing its own value, and meeting the multi-level needs of users is a long-term practice for both businesses and brands.
1、 Insight into Consumer Behavior
1. Portrait of "Small Town Youth"
In this survey, "small town youth" consumers from third tier cities and below demonstrated strong purchasing power.
They are engaged in professional professions such as teachers, doctors, lawyers, or work in public institutions and government departments. Their age is generally concentrated between 25 and 40 years old, with an average monthly income ranging from 5000 yuan to 8000 yuan.
During this "Double Eleven" shopping festival, the proportion of consumers spending over 1000 yuan on e-commerce platforms reached 47.8%, which is not significantly weaker than consumers in first and second tier cities.
The growth of this' less noticeable 'consumer group is significant. The total population of this part of our country is nearly 1 billion, accounting for 71.4% of the total population of the country. With the continuous explosion of 5G and mobile Internet applications, the number of users in third tier cities and below continues to grow. QuestMobile data shows that as of March 2024, these users will reach 647 million, accounting for 52.6% of the overall mobile Internet market.
With the expansion of the geographical boundaries and population growth of small towns, diversified "small town youth" are becoming powerful "new consumers". McKinsey once predicted that by 2030, over 66% of China's personal consumption growth will come from county-level areas.
2. Consumer preference for "direct drop" promotions
In this survey data, 78.1% of small town consumers maintain a general focus on "Double Eleven", with attractive discounts being the main reason for their attention.
Like consumers in first and second tier cities, low price and simplicity remain their main considerations. 82.6% of consumers in small cities prefer the promotion method of "direct reduction", and 65.2% of consumers prefer "billions of subsidies"; The shopping mentality also tends towards rationality. 82.6% of small town consumers will purchase goods that they "really need", 73.9% of consumers say they are "cheap and the purchased items will be useful in the future", but 17.4% of consumers also say they are "tempted by the price and do not consider whether they are commonly used" when shopping.
In addition to low prices, 52.2% of consumers also expressed the importance of "logistics and after-sales guarantee".
This year's Singles' Day, I bought skincare products on Pinduoduo, just like other platforms, which are official brand stores, "said consumer Kobayashi frankly, and Pinduoduo's discounts are more direct. This is also the platform element that small town consumers are most concerned about in this survey, which is the simpler and more direct platform discount mechanism and more favorable prices, accounting for 23.99% and 23.77% respectively.
Correspondingly, consumers' mentality is changing, and rational consumption is becoming increasingly evident. Consumers not only pursue low prices, but also hope to get a great value experience, which is a comprehensive comparison of price, quality, and service.
During the "Double Eleven" period, despite unprecedented discounts from major platforms, consumers are increasingly concerned about cost-effectiveness and platform services when making purchases. Among them, the convenience of returns and exchanges is highly concerned by consumers.
Research data shows that 71.72% of consumers believe that the convenience of returns and exchanges is very important for their purchasing decisions, 23.45% of consumers say it is somewhat important, and only 4.83% of consumers think it is not very important.
2、 The consumption structure has changed: brand and personalized demand are growing
1. Significant upgrade in consumption of branded products
From the perspective of product categories, more diverse, and higher priced items have entered the shopping carts of "young people in small towns". According to Pinduoduo data, users in third - and fourth tier cities prefer high-end home appliances, cutting-edge beauty products, imported fruits, and light luxury products. The vast number of county-level users, including young people in small towns, new mothers, and young people in county towns, are experiencing a wave of brand consumption. Brands such as sports, clothing, maternal and child care, beauty, home furnishings, and skincare are experiencing significant outbreaks.
In this survey, 69.6% of "young people in small towns" tend to upgrade their consumption decisions on electrified products such as computers, mobile phones, and digital devices (rating>3), 65.2% of consumers choose to upgrade their consumption on home and household appliances, and 60.9% of consumers choose to upgrade their consumption on fashion products such as clothing, shoes, hats, and cosmetics.
The consumption power of young people in small towns still shows an increasing trend, and their attention to brands has also increased. Research data shows that 43.5% of consumers value "complete brand official stores".
For brands, county-level markets with ample consumer potential will become their new choice for seeking incremental growth. Taking Pinduoduo as an example, since the beginning of this year, domestic and foreign brands have been accelerating their layout in Pinduoduo, seeking new growth engines.
At the end of September, global fashion brand H& M joined Pinduoduo and opened an official flagship store. H& The relevant person in charge of M stated that Pinduoduo has a massive consumer group of college students, young people in counties and small towns, who have strong brand consumption ability and tendency. In recent years, they have increasingly focused on upgrading their consumption on new e-commerce platforms such as Pinduoduo, which provides a broader market growth space for brands.
2. The rise of domestic brands and the preference for quality price ratio
According to the survey questionnaire, whether it's Singles' Day or daily consumption, Pinduoduo, Taobao, and JD.com consistently rank among the top three platforms for consumers' choices. The first round of "Super Double Supplement" on Pinduoduo platform has accumulated over 16.4 million orders, and the second round has also been launched. The person in charge of Pinduoduo's billion yuan subsidy revealed that compared to the first round of activities, the number of merchants and brands registered in the second round has increased by more than 2.5 times.
From the perspective of purchasing categories, research results show that 58.6% of consumers purchased clothing, 33.8% of consumers purchased digital products, and 31.7% and 25.5% of consumers purchased health products, home decor, and furniture. These results also confirm the current consumption trend - consumers' demand for upgraded consumer experience.
The 'young people in small towns' also show a similar trend. According to Pinduoduo's latest "Double Eleven" opening report, from the perspective of consumer groups, users in third - and fourth tier cities prefer high-end home appliances, cutting-edge beauty products, imported fruits, and light luxury products.
It is worth noting that they have the highest level of attention to domestic brands. According to research data, as many as 78.2% of consumers in small cities prefer domestic brands, a significantly higher proportion than consumers in first and second tier cities. In contrast, "niche trendy brands" account for 13.0%, while the selection ratio of "international brands" and "internet famous brands" is relatively low, at 8.5% and 0.2% respectively.
Pinduoduo data also shows that the sales of 5 new products of Bull socket increased by 12 times compared to September; The sales of Zhumi robotic vacuum cleaners increased by 778% month on month; Li Ning's sportswear sales increased by over 140% month on month; The female lead lip balm of the emerging beauty brand Into YOU has risen to the top of the sub category during the big promotion period, with a cumulative sales volume of nearly 300000 units.
3. Focus on "emotional value" and increase personalized consumption
Targeting county-level areas, the product selection logic behind the changes in the brand's product structure and consumption power is completely different.
Dong Jizhou believes that from the current macro environment, Chinese consumers are becoming increasingly confident, which is reflected in several aspects:
Firstly, there is no longer a need to wear big brands to showcase social status or identity recognition, especially for young consumers who no longer care much about brand logos, but pursue the functionality, materials, and whether the product can meet their needs.
Second, many consumers go shopping for emotional value, which is reflected in many ways to please themselves, and they are very active in trying new things, including cultural tourism, horse dress, China-Chic, etc.
Thirdly, the shift from physical consumption to service consumption pursues the experience itself, and the rise of outdoor racing is a very typical case.
Therefore, cultivating categories with better quality price ratio or cost-effectiveness is an important opportunity for brands to seize the domestic market in the future.
Correspondingly to this viewpoint, research results show that the majority of consumers indicate that they will continue to upgrade their consumption and purchase higher quality goods to improve their quality of life. 30.14% of consumers are willing to purchase products that bring joy and emotional value to themselves.
Emotional release is becoming an important factor influencing the decision-making of the younger generation of consumers, and is expected to create a new consumption hotspot in the future. On the one hand, with the people's yearning for a better life, spiritual consumption is increasingly valued. When people consume, they not only consider the functionality and practicality of the product itself, but also pay attention to the personalized, pleasurable, and emotional emotional value that the product can provide. On the other hand, in today's fast-paced work and life, people also need to find channels for emotional release, whether it is empathy or venting. Emotional commodities have become carriers for emotional adjustment.
3、 The Transformation of Platforms and Brands: Moving Away from Price Wars and Taking a Long Term Path
Related experts believe that the purchasing power of third - and fourth tier cities has been increasing in recent years, and the fundamental reason is that overall demand is growing, and the relationship between developed regions in China and third tier cities is becoming closer. The release of consumer power, the diversification of product categories, and the stratification of consumers have all promoted the rise of related market consumption. Especially with the changes in consumer groups, young people in small cities are getting closer and closer to those in first tier cities, which is completely different from their parents
At the same time, during the "Double Eleven" promotion period, more price sensitive groups will participate, and existing platforms (such as Pinduoduo) have strong technological accessibility, which can cover more of these consumer groups.
Of course, in recent years, China's consumption and growth have been undergoing transformation, and the consumption demand of young groups (whether in big cities or third - and fourth tier cities) has strongly promoted the transformation and upgrading of consumption; In production, the adoption of digital technology has rapidly reduced production costs, providing some support space for price reduction.
In summary, with the evolution of various shopping festivals, e-commerce platforms have long moved away from the price war of "seeing red with bayonets", and affordability is no longer the only focus of attracting users.
For brand merchants, experiencing a shopping frenzy is a grand parade of multiple dimensions such as brand awareness, consumer demand, integrity and reputation, logistics services, and after-sales capabilities. The fans and users who have settled from it will be the foundation for its continuous operation and steady flow.
The new pattern of the e-commerce industry has arrived, and the 'young people of the small town' will dominate the world. At present, both Taobao and Pinduoduo have over 900 million users, and there are still dividends to be tapped in third - and fourth tier urban and rural areas.
This market location with enormous potential is increasingly valued by various platform manufacturers, therefore, county-level and attracting new customers are undoubtedly important tasks and directions for major brands. Through cooperation with e-commerce platforms, a large number of brands are expanding into broader markets and gaining a large number of county-level markets and young users. （CIS）