On July 30th, the "Science and Technology Innovation Board Daily" (Reporter Zhang Yangyang) reported that "the price power of Douyin e-commerce is not simply to pursue absolute low prices." According to the "Science and Technology Innovation Board Daily" reporter, Douyin e-commerce held an internal communication meeting recently, where Wei Wenwen, the CEO of Douyin e-commerce, made clear business requirements. Wei Wenwen stated that Douyin e-commerce will continue to increase its investment in the second half of the year, and refine its price power more accurately, with the core goal of enabling users to buy good quality products with good prices.

In February of this year, some media reported that the price power of Douyin e-commerce is the highest priority task until 2024. Since then, Douyin e-commerce has launched activities such as Billion-yuan Subsidies for Value Purchases, Group Purchases for Numerous People, Live Broadcast Price Comparison, and "Low Price for xx Days" to attract consumers.

In the first half of the year, the order volume of Douyin e-commerce with price advantages continued to rise. In this year's "618" report, Douyin e-commerce disclosed that the transaction volume on the "Billion-yuan Subsidies for Value Purchases" channel increased by 150% year-on-year, and the order volume of the "Ten-Thousand People Group" activity increased by 101% month-on-month in April.

After nearly half a year of practice, Douyin is currently intentionally weakening the concept of low prices. Wei Wenwen clearly stated at the internal communication meeting that everyone should further strengthen cooperation, adopt more refined strategies, and improve service experience. "Improving consumer experience is the basic skill of e-commerce platforms and also the long-term direction of Douyin e-commerce's efforts."

According to Wei Wenwen, Douyin e-commerce's NPS (Net Promoter Score) has steadily increased in the first half of the year, and the proportion of users willing to recommend Douyin e-commerce to people around them has also increased by 10%. The improvement of user experience has also helped to sustain the growth of Douyin e-commerce consumers. Consumer purchases of shelf-scene goods have increased particularly significantly, with monthly active users (MAU) of shelf-scene goods increasing by more than 60% in the first half of the year. On the other hand, improvements in consumer experience have also helped to stabilize merchants' operations. The retention rate of monthly active merchant sales in the first half of the year reached about 80%, which is equivalent to the beginning of the year.

For example, Douyin e-commerce has launched the "refund if bad" service for special categories such as seafood, meat and eggs, fruits and vegetables, and flowers and plants. The order volume of these categories has increased by more than 80% year-on-year in the first half of this year.

On the merchant side, in addition to a series of policies such as commission-free product cards and reduced margin policies, Douyin e-commerce has also launched commission-reducing and commission-free preferential policies for daily necessities and fruit and fresh categories. Wei Wenwen said that Douyin e-commerce will continue to expand its solicitation of merchants, and provide targeted support for the development of small and medium-sized merchants in the second half of the year, attracting more merchants to settle in and operate stably.

Screenshot of Douyin store.

It is worth emphasizing that in order to attract consumers, e-commerce platforms such as Taobao, JD.com, and Douyin have implemented low-price strategies to varying degrees to promote consumption. There is also a more intense price war in the e-commerce market, and the most obvious manifestation here is that platform policies are almost unconditionally inclined towards consumers. However, after six months of practice, the negative effects of these extreme low-price strategies cannot be ignored.

A small appliance category e-commerce executive in Beijing told a Science and Technology Innovation Board Daily reporter that in the past, if they had an advantage in the source of goods, they could compete with their peers on price, but now the platform increases subsidies to ensure the lowest price across the network. Peers can then resort to various means, such as "selling both genuine and fake". But "if the merchant has no profit, ultimately it is the consumer's interests that are harmed."

"E-commerce platforms do not have area or shelf restrictions, and in principle can infinitely enrich non-famous brands and white-label goods. But for merchants, they have already incurred costs for listing and shelf placement. If the sales efficiency is not high, merchants will lose confidence in the platform over time. They will not only be unwilling to set low prices, but may even delist their goods and leave the platform." According to Zhuang Shuai, a retail e-commerce industry expert and founder of Bailian Consulting, on the current low-price strategy in the industry.

Obviously, major platforms have gradually realized the severity of the problem and begun to make changes.

According to Taobao, after the end of "618", Taotian Group held a closed-door meeting for merchants, attended by first-line business executives, where several changes were made clear and will be officially implemented in the second half of the year. Among them, Taobao will weaken its absolute low-price strategy and instead allocate according to the GMV system, which is divided according to the seller's total sales.

The person in charge of the small appliances category of the e-commerce platform mentioned above told the journalist from the Star board daily that Taotian Group has already modified its store assessment standards, gradually abolishing the previous DSR system and adjusting it to PXI (product experience score). Taotian has recently decided that for the "only refund service" previously promoted, the merchants with the experience score exceeding 4.8 points will be "untied". Whether to accept the "only refund" is up to the merchants who meet the standards to decide on their own, and the platform will not actively intervene to support the consumer's "only refund" request.

Related notices from the Taobao platform

For merchants in other segments, the platform will give different levels of autonomy based on experience scores and industry characteristics. The higher the experience score, the greater the autonomy of the merchants.

At the same time, the journalist from the Star board daily also learned from JD.com that although Liu Qiangdong has emphasized many times that low prices were JD.com's most important weapon for past success, it is also the only fundamental weapon in the future. To achieve this, JD.com has also launched a 10-billion-yuan subsidy area, directly subsidizing product prices to attract consumers. However, overall, due to JD.com's own business model, JD.com is relatively restrained compared to PDD and Taobao 1688 in pursuing extremely low prices.

JD.com is currently using its previous "JD Joy" to promote its low-price strategy. Recently, JD Joy, which was once closed, has been adjusted and renamed "JD Self-Operated", focusing on a full-service model and once again entering the sinking market. Currently, most of the products sold are priced at less than 10 yuan, and they are touted for "strict selection of products, factory direct sourcing, free shipping for one piece, and official service".