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Text｜Financial Stories Collection, Author｜Lu Yuantu, Editor｜Wan Tiannan

In order to win the price war, during this year's 618, JD.com promoted all categories of books at 20% to 30% off, despite the joint boycott of publishing houses.

However, on Baidu's e-commerce platform Baidu Youxuan, it is a common phenomenon to sell books at high prices: a copy of "Diet Cure for All Diseases" costs 68 yuan, a copy of "Half a Step to Win the Heaven" costs 99 yuan, and two copies of "Children, Why Do You Have to Work Hard" cost 139 yuan. However, these books can be bought on JD.com, Taobao, and Pinduoduo platforms for 10 to 30 yuan.

The prices of many books with considerable sales volume on Baidu are even 2-5 times more expensive than those on other e-commerce platforms.

When Taobao, JD.com, Pinduoduo, and Douyin are all offering the lowest prices, why are Baidu e-commerce users willing to be "suckers" and pay for the "highest-priced books on the entire network"?

Despite the sky-high prices, merchants did not make a lot of money, "because the cost of traffic is too high."

The popular book is 5 times more expensive than Jingpintao, and its main selling point is “the highest price on the entire network”?

Last May, Baidu launched a new e-commerce brand "Baidu Best Selection". As soon as the news came out, the market was full of doubts. After all, Baidu has been in and out of the e-commerce track for many years, launching e-commerce projects such as Baidu Youa, Lekutian, and Baidu Mall, but all of them failed and never became big.

More than a year later, Baidu Best seems to have delivered a good report card. According to Ping Xiaoli, general manager of Baidu e-commerce, Baidu Best's GMV increased by 594% year-on-year in 2023, and the GMV in January-May this year increased by 227% year-on-year. Although the GMV scale of Baidu Best is far from comparable to the trillion-dollar Taobao, Jingdong, Douyin, and Pinyin, the rapid growth rate reflects its good growth potential.

At the moment, e-commerce platforms are all offering the lowest prices. How does Baidu Youxuan attract users to place orders, and what products does it rely on to support its growth?

According to a Baidu e-commerce product category data provided to "Financial Story Collection" by an agent, among the TOP500 consumer products on Baidu's e-commerce platform from June 24 to June 30, there were 213 medical devices, Chinese and Western medicines, and health products, and 287 non-medical products, with a category ratio of approximately 4:6.

What’s interesting is that among the 287 non-medical consumer products, 50 are books and magazines. It can be seen that medical and book products occupy an important position on Baidu’s e-commerce platform, showing Baidu’s dual DNA characteristics of “seeking medical advice” and “reading books to learn”.

Baidu e-commerce can be divided into the pharmaceutical vertical e-commerce platform "Baidu Health Mall" and the general consumer goods platform "Baidu Best Selection". Baidu Health Mall is the result of Baidu's targeting the big health track in 2021 and focusing on pharmaceutical vertical e-commerce. The platform's products are mainly medical devices, medicines, health products, etc., benchmarking Ali Health Pharmacy and JD Pharmacy. Baidu Best Selection sells non-pharmaceutical daily necessities and other products.

According to the above TOP500 consumer goods data, one of the most popular categories on Baidu's preferred platform is books and magazines. Another merchant provided the "Financial Story Collection" with data from the past seven days, showing that the transaction index of books, newspapers and magazines ranks at the top.

Among them, the book "Half a Man's Victory over Heaven" is particularly popular, with an average daily sales of an astonishing 50,000 to 100,000 yuan, and the average customer spending is between 98 yuan and 102 yuan.

When searching for the product on Baidu’s preferred platform, Financial Stories found that most copies of “A Half Man to Win” were sold in a bundle with “Open Conspiracy”. The best-selling product was priced at 99 yuan, and many were sold at 139 yuan. However, the same book was mostly sold individually on Taobao, JD.com, and Douyin platforms, with each copy priced between 10 yuan and 20 yuan. By this calculation, the highest price difference was more than 5 times.

Financial Stories browsed all the same products in "A Half Man Wins" by comprehensive ranking and found that the top 100 products were all from merchants on Baidu's platform, and most of them were priced at 99 yuan or more. In addition to the top 100, Baidu's platform displayed 50 JD.com products, most of which were priced at less than 30 yuan. After JD.com products, there were dozens of Baidu's products, which were still priced above 99 yuan, followed by hundreds of JD.com products, and occasionally some Taobao and Pinduoduo store products, priced at less than 20 yuan.

Obviously, in terms of ranking weight, Baidu's own merchants have the highest weight.。

The "sky-high price" of "Half a Son of Victory" is not an isolated case. For example, the top-selling books on Baidu Youxuan, such as "Yuan Hai Zi Ping", "Why Do You Work Hard, My Child", "Word and Phrases Accumulation Manual", and "Diet Therapy for All Diseases", are 2-5 times higher than those on Taobao, JD.com, and Dangdang. Some netizens on Xiaohongshu also felt the same way, saying that the prices on Baidu Youxuan are more than four or five times higher than those on other e-commerce platforms.

Other categories such as mobile phone products and food are also priced relatively higher than those on other e-commerce platforms.For example, for the same Huawei mate60 pro, the price on Baidu's preferred platform is 1,000 yuan higher than that on Huawei's JD.com self-operated store.

For cheese products, most of the products on Baidu's preferred list are priced at 99 yuan, while the products on the homepages of Taobao and JD.com are mostly priced below 20 yuan. Although they are not the same products, it can be seen that the unit price of products on Baidu's preferred list is significantly higher than that of mainstream e-commerce platforms.

When Financial Stories consulted the merchant who sold "Dietary Therapy for All Diseases" at 139 yuan per set and sold over 20,000 copies, the merchant said that you get what you pay for and that this is an authentic book.

But the real evaluations from buyers are quite different. There are many negative reviews such as "numerous typos", "rough workmanship, not worth the money, low cost-performance", "not good-looking, the paper is very thin", etc.

Sogou promotes “goods find people” and harvests “middle-aged and elderly people”?

When major e-commerce platforms are frantically offering low prices, how can Baidu Youxuan attract users at high prices?

A Baidu Preferred Merchant told Financial Stories:Most consumers shop on Baidu Youxuan not from the "Mall" entrance on the Baidu APP homepage, but by clicking on ads in Baidu's information flow.

Baidu information flow promotion is a native advertisement that is displayed in the information flow of Baidu APP, Baidu Tieba, Baidu mobile browser and other platforms. The display forms include text, pictures and videos. Merchants can set targeting according to the target consumer's age, gender, keywords, user interests, region, network environment, etc.

The above customer acquisition path explains why Baidu’s sky-high-priced books can trigger explosive sales:Traditional e-commerce is mainly based on the "people looking for goods" model, where users actively search for price comparisons and pay for low-priced goods. However, on Baidu's e-commerce platform, based on the "goods looking for people" model, users are fed high-priced goods.

Baidu Optimization took this initiative. Ping Xiaoli positioned Baidu e-commerce as an intelligent e-commerce platform that integrates search, shopping and promotion. In the four fields of search, live broadcast, video and mall, it links and interacts with users and scenarios, deeply integrates people looking for goods and goods looking for people, and promotes transactions.

From this perspective, Baidu Youxuan can indeed achieve the goal of "goods finding people" through information flow advertising. But is it sustainable for consumers to pay for "high prices across the entire network"?

In the "goods find people" advertising model, middle-aged and elderly people have become the main "prey" of Baidu's optimization. The data screenshots provided by merchants to "Financial Story Collection" show that whether in the book and newspaper category or in the grain, oil, instant food, dry goods and baking category, middle-aged and elderly users over 45 years old account for more than half, which is very different from the user structure of traditional e-commerce platforms.

This is also confirmed by Baidu's official data. Baidu told "Financial Story Collection" that Baidu's e-commerce users are mainly men over 35 years old - this may also explain why male users may not like to compare prices on multiple platforms for high-priced goods.

Relatively speaking, young users mainly use Baidu APP for searching and leave after use. At the same time, they can easily compare prices on multiple platforms, so it is not easy for them to be acquired at a "high price across the entire network".

Middle-aged and elderly people are not familiar with various e-commerce platforms and are accustomed to using Baidu APP to read news. At the same time, they are not proficient in using e-commerce APPs or have not downloaded them at all. They also do not compare prices on multiple platforms and are more likely to make impulse orders when they see promotions.

Among the above-mentioned TOP500 products, most of them are medical and health care products, as well as categories such as "Why Do You Have to Work Hard, Child", "Yuanhai Ziping", "Handbook of Word and Phrases Accumulation", and "Dietary Therapy for All Diseases". Currently, most of the groups are middle-aged and elderly people who are more likely to place orders and purchase these products.

In short, Baidu's e-commerce is completely different from traditional e-commerce in terms of user structure and conversion model. In fact, it is the opposite - Baidu's e-commerce business is highly dependent on "traffic buying and selling".

First of all, Baidu APP is a national-level application and has no shortage of traffic.According to its financial report, Baidu APP had 676 million monthly active users in Q1 2024. Moreover, online marketing is Baidu's basic plate, and e-commerce is recognized as the largest commercial track. It integrates traffic, marketing, and e-commerce. Baidu Optimization seems to be an ideal choice for Baidu, and it forms an internal cycle within the system, leveraging the commercial value to the fullest.

Secondly, from the perspective of personnel organization, Ping Xiaoli, general manager of Baidu Youxuan, was once responsible for the work of Baidu APP and information flow products, and led the strategic transformation of Baidu APP from "search tool → search + information flow dual engines".Therefore, Ping Xiaoli is the most ideal operator for Baidu to build an e-commerce platform based on Baidu APP.

However, although e-commerce is very hungry for traffic, simply flooding it with traffic is far from enough.

When major e-commerce platforms are competing for the lowest price, supply chain, infrastructure, and merchant services, Baidu Optimize cannot accomplish all these hard work overnight.

At present, there are very few brand flagship stores on the Baidu Youxuan platform. Well-known brands in various fields such as Huawei, Xiaomi, Lancome, and Uniqlo have not opened official flagship stores on Baidu Youxuan.

Most of the merchants on Baidu's Best Selections are mid- to long-tail merchants, and most of the goods they sell are white-label products, so the quality of their products is not very certain. Without official brand pricing as a reference, it is easier for individual merchants to "arbitrarily" price their products.

Of course, Baidu seems to be interested in making up for its shortcomings. In May this year, Baidu launched three IPs for selecting good products and saving troubles: Expert Selection, Origin Selection, and Word of Mouth Selection. However, currently, when you enter the "Save Worry Selection" from the Baidu Homepage, the number of stores in the three categories of "Expert Selection", "Origin Selection", and "Word of Mouth Selection" is less than ten. Obviously, the above measures have not yet been effective.

GMV is 160,000, and traffic is 110,000. Baidu merchants cannot earn "huge profits" by paying "high prices".

In the information flow recommendation model of "goods find people", can merchants make a lot of money by harvesting buyers with "highest prices on the entire network"? However, the high cost of investment flow makes it difficult for merchants to make huge profits.

A Baidu Preferred Merchant posted his bill: The turnover in June this year was about 163,000 yuan, of which the traffic cost was about 180,000 yuan. However, the platform rebated 65%, so the actual traffic cost was about 110,000 yuan, the product cost was about 30,000 yuan, the after-sales cost was 6,000 yuan, the net profit was about 17,000 yuan, and the net profit was about 11.6%.

According to the merchant’s summary, “Baidu e-commerce basically has 60-70% advertising costs, 10-20% product costs, and the remaining 10-15% profit”, and also said, “Baidu e-commerce is more suitable for players who are good at buying traffic.”

It is not difficult to see from the cost structure of the merchants that the investment cost in the sales cost is too high, as high as several times the cost of the goods, resulting in the break-even or even profit only when the selling price of the goods is much higher than the cost of the goods. Therefore, it is not surprising that the books are priced sky-high. Moreover, if there is no 65% rebate incentive, the above merchants will actually fall into losses.

But the wool comes from the sheep, and it is the consumers who pay for the high investment flow in the end. This can also explain the above case. The same book can be sold for 10-20 yuan on JD.com, Taobao, and Douyin, while Baidu Youxuan costs more than 99 yuan. Other e-commerce platforms are competing for low prices, but Baidu Youxuan relies on "high prices" to harvest users.

In addition to the merchants who posted their orders above, among the TOP500 consumer product insight data provided to Caijing Story by the aforementioned agents, 42 of the 500 products had an ROI greater than 1, accounting for 8.4%. The ROI ranges of [0.8-1], [0.6,0.8], [0.4,0.6], and [0,0.4] were 29.80%, 27.80%, 28.80%, and 5.20%, respectively.

The fact that high-priced books have become popular may mean that Baidu has a higher weight in the distribution of traffic to e-commerce products - the merchant who pays for traffic is likely to get more recommendations and traffic. In response to this, Baidu's public relations department told Caijing Story that "e-commerce companies compare prices, and users make their own choices."

This is very different from the traffic distribution mechanism of JD.com, Taobao, and Pinduoduo - in order to reduce prices, the latter all tilt traffic towards low-priced goods.

For example, a JD.com insider told "Financial Story Collection" last year that in terms of the search distribution logic of traffic, Liu Qiangdong's instruction was that "the price weight cannot be less than 50%, this is the bottom line requirement."

However, according to Financial Stories,At present, Baidu Youxuan’s rebate for merchants’ traffic is much higher than that of other e-commerce platforms, and it is trying to reduce merchants’ traffic costs through various means.

In addition to high rebates, in order to make up for the shortcomings of the supply chain, Baidu Youxuan spares no effort to provide a series of assistance when attracting new merchants to settle in.

According to the official introduction of Baidu Youxuan, in 2024, merchants who are interested in settling in will be offered major benefits such as "1% commission in the first month", "cold start traffic support for settlement", "free digital live broadcast", "millions of commercial investment incentives", and "1v1 guidance from senior waiters".

In addition, Baidu is also betting on digital human live broadcasting to reduce costs and increase efficiency for merchants. At this year's Baidu Wanxiang Conference, Ping Xiaoli introduced the upgrade of the Huiboxing Inclusive Plan, which will provide merchants with 200,000 free digital human quotas, 100 million yuan in digital human exclusive consumption subsidies, and 10 million yuan in operational support resources to help merchants quickly establish smart live broadcast rooms and achieve rapid growth in performance.

But recently, other platforms’ attitudes towards digital human live broadcasts have been polarized.

Among them, short video platforms such as Video Account, Douyin, and Kuaishou have no good attitude towards digital human live broadcasts.

At the end of March this year, Douyin issued the "Douyin Governance Announcement on Improper Use of AI to Generate Virtual Characters", requiring all types of users to abide by the regulations when using AI to generate virtual characters. In June, Tencent Video revised the "Implementation Rules for Video Showcase Experts to Release Low-Quality Content", prohibiting digital people from live streaming with goods. Kuaishou also stated that the platform will not provide special traffic support for content created using AIGC technology. The digital people live streaming with goods industry still needs to be further regulated, and whether it can grow and develop is unknown. Baidu's preferred bet has not yet seen obvious results.

Overall, whether it is the high-investment and high-price harvesting model, the poor and insufficient supply of platform products, or the relative shortage of basic e-commerce capabilities, Baidu's e-commerce ecosystem is still in an early state of disorder and there is a lot of room for improvement.