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TuChong Creative/Photo provided by Peng Chunxia/Drawing

Securities Times reporter Nie Yinghao

After investing heavily in low-price strategies in the first half of the year, e-commerce platforms such as Taobao, Douyin, and Pinduoduo are now "turning the cart around" again, putting GMV (transaction amount) as the top priority again, and low prices are gradually being downplayed. This means that e-commerce platforms may once again return to the battlefield for market competition.

It is reported that Pinduoduo, the initiator of the "low-price model", adjusted its business focus in the second quarter of this year, from pursuing commercialization and increasing profits to putting GMV back as the first goal.

Just before Pinduoduo adjusted its strategic goals, Douyin e-commerce also adjusted its business goal priorities in late July. "Price power" is no longer the first goal, and GMV growth has become the focus of the second half of this year. Earlier this year, GMV was ranked last in Douyin e-commerce's goals and tasks. At that time, Douyin e-commerce's primary task was to achieve low prices, followed by the "perfect order rate" that measures consumer experience and the number of monthly transaction customers that reflects the scale of e-commerce users.

Also in July, Alibaba Taotian Group downplayed the "price power" strategy after the "6.18" promotion, and GMV became the most concerned indicator of the business. It is reported that Taotian Group CEO Wu Yongming had already made it clear internally that GMV would be the first indicator, return to shelf e-commerce, and shift the assessment focus to GMV and annual active users, and no longer simply pursue the order volume brought by low prices.

Zhuang Shuai, a special researcher at the E-commerce Research Center of the China Internet Network Information Center and founder of Bailian Consulting, told the Securities Times that the major e-commerce platforms have put GMV back as the first priority, which is indeed related to the competition for GMV. Price wars can only be limited and local competitions. Major e-commerce platforms need to re-examine their category advantages, experience and service differences, increase investment in a focused manner, and form differentiated competitive advantages beyond price.

Zhuang Shuai pointed out that shelf e-commerce has two major traffic distribution systems. One is to distribute traffic based on conversion rate, which encourages lower prices to get higher order volumes. For example, on Pinduoduo, lower prices usually lead to higher conversion rates, and low-priced products will get more exposure. The other is to distribute traffic based on GMV, while taking customer unit price into consideration. For example, on Taobao, JD.com and other platforms, products with high sales will be ranked higher.

"Taotian Group has two major considerations for weakening its absolutely low-price traffic distribution system. On the one hand, consumers still have the mentality of 'you get what you pay for', and products with a high quality-price ratio are more attractive to consumers than simply low-priced products. On the other hand, one of Taobao's advantageous categories is clothing, and it is difficult to compare prices of branded clothing products. Allocating traffic solely based on price will reduce the richness of products. Moreover, well-known clothing brands with comparable prices on Tmall generally have stronger price control capabilities, and the distribution traffic obtained by low prices will not be that meaningful to well-known brands." Zhuang Shuai analyzed the Taotian Group's weakening of its low-price strategy.

The reason why Douyin e-commerce downplayed the low-price strategy is similar to that of Taobao. "When Douyin e-commerce was caught in a price competition with low customer unit prices, the results showed that it not only lowered the overall customer unit price of the platform, but also had limited help in GMV growth. Instead, more and more high-quality merchants began to switch to offline or other emerging e-commerce platforms, such as Xiaohongshu e-commerce and video account e-commerce," Zhuang Shuai pointed out.

"The reason why Pinduoduo adjusted its business focus is also to compete for a larger existing market." Zhuang Shuai analyzed that although low-price competition has always been the norm in the retail e-commerce industry, excessive and vicious low-price competition has caused great harm to consumers, merchants and platforms.

Since the beginning of this year, Pinduoduo's low-price model has set off a low-price "involution" trend in the e-commerce industry. JD.com and Taobao have successively joined the low-price war. The implementation of this strategy was particularly evident during the "6.18" e-commerce promotion this year. In order to compete for consumers in the existing consumer market, major e-commerce platforms have unanimously given a more direct preferential strategy, that is, low prices.

During this year's "6.18" period, Pinduoduo launched an automatic price-following tool. After turning on this function, if the same product appears at a lower price, Pinduoduo can autonomously lower the price according to the reduction rate set by the merchant; Taotian Group launched Taobao's 10 billion subsidies, Taobao's 10 billion flash sales, Tmall Supermarket's self-operated crazy subsidies and other activities during this year's "6.18" period.

This year, the theme of JD.com's "6.18" is "cheap and good", with not only 10 billion subsidies, cheap free shipping, etc., but also consumers can receive an additional 20 yuan subsidy every day. At the same time, it also launched "2 yuan free shipping day", bringing millions of 2 yuan welfare products, and many low-priced goods from the industrial belt are free shipping. In March last year, JD.com launched the 10 billion subsidy channel, and the cumulative number of users of this channel has now exceeded 100 million.

It is worth noting that although Douyin, Taobao and Pinduoduo have begun to downplay low prices, JD.com seems to have no signs of "turning around" for the time being.

Recently, JD.com announced a new activity called "JD.com Super 18", which means that it will hold a "6.18" promotion every month to further promote its low-price strategy. This activity will be implemented from July. Simply put, from 8 pm on the 17th of each month to the whole day on the 18th, JD.com will launch a series of selected products at a super low price of 18 yuan, which is far below the market price. These products cover a wide range of categories, from high-end liquor to home appliances, household goods and electronic products.