|
In June, the most competitive 618 promotion in history kicked off a long tug-of-war. Many giants came to the table and faced a more intense competition. They all showed their low-priced chips and threw billions of subsidies at each other.
In July, a similar promotion storm was brewing in the overseas e-commerce arena. Before the charge of Amazon Prime Day was officially sounded, various business groups that had been eyeing it for a long time had already taken the lead. The core of the order stories in the e-commerce carnivals staged in different fields is surprisingly consistent - the competition of price power . When consumers' decision-making scales unanimously lean towards the calm and rational side, the price comparison consciousness gradually prevails, and the competition mode of e-commerce platforms also turns to low-price close combat. Now, the dust has settled on the 618 Wushu Conference in China, and various factions are testing their edge with their sales weapons, but Taobao still takes the top spot with its years of profound skills. On the other hand, in the overseas e-commerce world, Amazon, also the leader of the Wushu world, is about to face the test of a big promotion. Facing the joint encirclement and suppression of the leaders of various factions, Amazon has begun to practice Taobao's internal skills. Amazon is getting more and more naughty In the first half of 2023, Amazon's wave of change seems to be particularly turbulent. In March, Amazon's front-end search page began to display periodic sales data, and at the end of April, the product page views display function was also put into testing. Recently, many sellers have found that when searching for keywords for some products, a new button has been added to the lower left corner of the picture. After clicking it, a new search box "More Like This" will appear, and the system will automatically recommend other similar products. This set of reforms and changes has a bit of Taobao style. As we all know, Taobao's search results interface often displays product sales, and comes with an ascending and descending ranking function, which helps users get sales information at a glance and make decisions quickly. After entering the product details page, you can also use the Find Same Item module to compare similar products and accurately locate consumer demand. Earlier, there were reports that Amazon had hired a technical team of dozens of people who had previously worked for Alibaba. Now that it has launched sales volume display and search for similar products functions, it is inevitable that people will wonder. What is the deep meaning behind Amazon’s series of innovative policies that are moving closer to Taobao?
Returning to the rectification itself, the first thing is to display the sales data on the front end. Its actual purpose is to optimize the consumer's shopping experience, accelerate more users to place orders, and improve the conversion rate of platform products. However, under the herd effect, consumers' herd mentality often pushes them to prefer products with higher views and sales, which means that traffic will further tilt towards the top links, especially for products with low average order value. Consumers have less time to think about completing browsing conversions. The direct consequence is likely to be that the snowball of top monopoly will continue to grow, while the traffic space of mid- and low-end products will gradually be eroded . The same principle applies to the Find Same Item function. First, the new same item recommendation module exists independently on a new page. After being attracted, users are likely to give up browsing the search interface, resulting in a lot of traffic that originally belonged to other display pages being snatched away. Second, the majority of customers' click-through rates are concentrated on the first page of keyword search results. The accurate recommendation results of this function may reduce the possibility of users turning pages.
In fact, the essence of these two major reforms is to improve consumer experience and thus enhance the competitiveness of the platform. But on a deeper level, for the sellers on the other side, the direct impact is that the price war is further escalated - in order to compete for exposure, the simplest and crudest way is to roll up low prices. On a deeper level, this also leads to a narrower and narrower road for homogeneous products, and inferior merchants will be gradually cleared out. In order to avoid being eliminated, digging deep into the moat of the product is an inevitable trend. Ultimately, the rectification reflects Amazon's future development focus: attracting and retaining consumers. The means it uses to achieve this goal focus on enhancing the consumer experience and maintaining the low-price flywheel. The e-commerce industry has developed to this day and will inevitably shift from an incremental market to a stock market. In the new cyclical environment, e-commerce platforms need to return to the essence of consumption and focus on the most original user demand. Therefore, rather than saying that Amazon has begun to become like Taobao, it is better to say that various e-commerce factions will eventually merge into the mainstream. Simply pursuing low prices and low quality is not the optimal solution, but price will always be the primary driving force behind consumer shopping behavior and the best competitive weapon for the platform. Amazon's continuous moves can be attributed to the bloody market competition, and Temu is obviously the key man who emerged halfway and stirred up the market with his unique internal skills. Some sellers admit that Temu's entry into the market is a dimensionality reduction blow to Amazon sellers. For the same product, Temu 's pricing is only 1/3-1/2 of Amazon's. Taking the solar lamp category as an example, the total sales volume of the top eight Amazon Best Sellers in the past 30 days is about 65,000 orders, and the price range is between 20 and 50 US dollars. In contrast, Temu's total sales volume of the same product is about 400,000 orders, and the pricing is basically within 10 US dollars. Consumers' demand motivations change with the times, but their price sensitivity remains unchanged. Especially in an environment full of macroeconomic uncertainty, consumers' shopping decisions are becoming more rational and cautious, and they are turning to more competitively priced consumption channels. Therefore, Temu's extremely low prices have indeed taken away a portion of Amazon's pie, especially for public model products that lack premium capabilities. Faced with Temu's torrential low-price offensive, Amazon appears unwilling to engage in a head-on collision with it.
Amazon has also long adhered to the development logic of cost-effectiveness. It has formulated a fair pricing policy to constrain the pricing power of merchants. It uses price search algorithms to check whether the products sold on the platform are comparable to the prices of competitors. If the seller's pricing is unreasonable, Amazon will impose penalties. Recently, Amazon announced that Temu did not meet the implementation standards of its pricing policy and therefore removed it from the pricing algorithm. Temu's low-price barrier comes from extreme cost control, burning money for subsidies, and using profits to exchange for growth. For Amazon, which attaches great importance to product quality and user experience, blindly engaging in a low-quality price war with Temu is tantamount to "going against the grain." But this does not mean that Amazon is willing to give up its low-price flagship. Amazon's unique flywheel system starts with customer experience, attracts consumers and third-party sellers through lower prices, thus bringing more choices and lower costs, driving traffic through word of mouth, and ultimately achieving a virtuous cycle. If the low-price core is lost, the entire growth system will be unsustainable. Therefore, instead of engaging in low-price battles between platforms, Amazon has handed the stage to internal third-party merchants, sparking a price war between sellers. The increasingly Taobao-like front-end reform is just one part of Amazon's plan. Last week, Amazon threw out another weapon: starting from August 29, 2023, Amazon will terminate the Small and Light Commodity Program and instead implement a lower standard FBA rate for all low-priced products priced below $10. In the eyes of many sellers, the new policy is actually a way to compete with other platforms by passing the costs on to sellers: the logistics rates of links that were previously stuck in the 10-12 price range and have joined SnL have increased significantly, and some may choose to reduce prices to below US$10 to maintain their rankings. This means that a large number of links will be added to the 9-9.99 price range, resulting in a sharp increase in competition, and after a certain stage, a price war will begin, with prices dropping from 9-9.99 to 8-8.99, and from 8-8.99 to 7-7.99. The pressure will continue to pass downward, and profits will be eaten up in the process.
It is obvious that under the low-price bombardment of Temu and other platforms, the sense of crisis that users' low-price mentality is being plundered has forced Amazon to accelerate its changes. Whether it is Taobao-style rectification or more new policy changes, they are all Amazon's overt and covert countermeasures. Temu saw the opportunity of consumption downgrade and carried out low-end subversion to seize the low-price market. Although the industry generally believes that the Temu model cannot shake Amazon's dominance, let alone compete with Amazon. However, amid the growing doubts, Temu has been running faster and faster without distraction, and now this threat is taking shape. This inevitably reminds people of the competition between Taobao and Pinduoduo. In 2015, Alibaba and JD.com were competing fiercely on the road to consumption upgrade, but the emergence of Pinduoduo broke the balance. When the competition among the giants in the mid-to-high-end market became fierce, Pinduoduo took a different approach and took the opportunity to take over the eliminated white-label manufacturers. Pinduoduo integrated the simplest low-price strategy into innovative social e-commerce, occupied the sinking market through misaligned competition, and then firmly circled its target audience. By the time Alibaba and JD.com reacted, it was too late. Pinduoduo, which has been surrounded by controversy and has not been favored all along, finally completed a beautiful surprise attack. So can Temu, one of its subsidiary platforms, create the same shopping mall miracle? Price is the common weakness of all e-commerce platforms. In this year's 618 promotion, the slogan of "the lowest price on the entire network" has become the key to competition for many e-commerce platforms, using low prices to alleviate growth anxiety. Amazon Prime Day is also coming, and facing the fierce offensive of Temu and other platforms, it will also be caught in a protracted battle over price and value.
|
