This article is from WeChat official accountran dimension (ID:chaintruth), author: Zhu Xiaoyu, editor: Frankie Lam. The picture of the title is from CFP.
In June 2020, Liu Rui, a Taobao merchant, did not expect that the Taobao women’s clothing store, which he ran for three years, had already suffered losses for nearly half a year, and directly lost the company’s earnings for most of the previous year. In the second half of the year, , The situation did not improve significantly, and he had to face the company’s continuity issues with the company’s partners.
Close the store, or continue to operate? Liu Rui holds the opposite view from the partners. It took Liu Rui a month to persuade the partners, finalized the plan, closed the store, and decided to explore new opportunities on other platforms.
For the choice of closing the store, Liu Rui’s reasons are very good: if it continues to survive, the company’s chances of survival are extremely small, not only costing money, but also sacrificing other valuable opportunities; if the store is closed for reorganization, the funds will be retained. , Maybe it can make a comeback next year.
When summing up the reasons for his failure, Liu Rui believes that the impact of the epidemic cannot be ignored, but it is only a catalyst. The most important reason is that Taobao e-commerce has an obvious head effect, small and medium-sized businesses have fierce competition, and Ali’s traffic is more They tend to support factory stores and big-brand businesses. Small and medium businesses like Liu Rui need to spend more to get the same amount of traffic, and the conversion rate is not yet ideal.
“It is unrealistic to open a store on Taobao. It is unrealistic to rely on Taobao to push traffic.” Many Taobao shop owners said that every time a meeting, Taobao would say, “You must rely on yourself.”
The traffic of Taobao merchants mainly comes from content, recommendations and off-site operations. In fact, there are a lot of merchants, especially some very sticky categories, which have half of the business. They come from fans in private domains and content fields. diversion. In other words, on the entire Taobao platform, the business diversity of merchants is very high, and the growth is also driven by various channels.
Kaif, the head of Taobao’s platform business department, said that Taobao’s core business logic is to allow the most valuable supply and the most capable people to emerge under a fair market mechanism. “This is the soul of Taobao, and it is also the core reason why Taobao has been so endlessly for so many years.”
Data shows that in the past year, Taobao’s GMV growth rate was the highest in five years. In the last 1 year,The number of new active merchants is also the highest in 5 years. Earlier, Taobao disclosed that the number of new merchants entering Taobao continued to grow. For 7 consecutive years, about 1/10 of the TOP sellers each year are new stores.
According to the data of enterprises, from January to November 2020, the operation of offline stores was severely affected by the epidemic, and domestic entities such as self-employed individuals and individual enterprises were revoked and cancelled, totaling 3.01 million. Most of these businesses are turning to online.
At one time, Taobao was synonymous with e-commerce, and it was also the first choice for offline merchants to switch to online. But Taobao can’t satisfy everyone’s demands. In August 2020, the clothing store operated by Mingde was forced to close due to increased losses. In order to clear the inventory, Mingde placed orders on Taobao, and no one paid half the price. On the one hand, because there is no natural traffic, on the other hand, because there is no order printing and effective evaluation, buyers do not buy it. No way, he had to treat the inventory as waste and sell it by the catty to stop the loss of the warehouse cost.
Businessmen who have been frustrated on Taobao, or heard that Taobao is not easy to do, have turned their eyes to Pinduoduo, WeChat applets, Douyin, Kuaishou, and even Taobao special editions. These platforms have also put more and more pressure on Taobao.
In the past month, news of Taobao’s discomfort has continued.
On March 17, Pinduoduo’s latest financial report showed that as of the end of 2020, Pinduoduo had 788.4 million active buyers for many years, surpassing Taobao and becoming China’s largest e-commerce platform with users. According to QuestMobile data, on February 12 this year, Pinduoduo had 259 million daily active users, surpassing the 237 million on Taobao on mobile phones for the first time in history.
On March 24, Tencent’s latest financial report showed that in 2020, the transaction volume generated through WeChat mini programs will more than double simultaneously, and the transaction ecosystem will continue to grow. According to previous data calculations, the transaction volume on the WeChat Mini Program has approached 2 trillion yuan.
Previously, the news that Taobao Special Edition is applying for WeChat Mini Programs continued. On March 25, Alibaba Vice President and General Manager of C2M Business Unit Wang Hai responded in an interview with the media, “Taobao Special Edition hopes to cooperate with Tencent. , And seek the best way to cooperate. The application process has been initiated to the relevant departments of Tencent and has not yet passed the review.” Another data shows that Taobao special edition has become the main position for online transformation of industry belt merchants. There are already more than 1.2 million.
Recently, the South China Morning Post quoted a number of people familiar with the matter as saying that because ByteDance is considering listing Douyin in New York or Hong Kong, its value in the private equity market has been swelling, and its recent valuation has approached 400 billion. US dollars. Previously, there wereAccording to Xi, Douyin has set the target of this year’s e-commerce business transaction volume at 500 billion yuan.
However, in 2020, the total retail sales of consumer goods across the country will be 39.2 trillion yuan, but the total GMV of Ali, JD.com, and Pinduoduo will be only about 10 trillion yuan, even with the addition of WeChat applets, Douyin, and Kuaishou. Accounted for less than one-third of the transaction volume. This proportion is far away from Jack Ma’s goal that e-commerce can account for 50%.
In other words, Taobao is still facing an incremental market competition. While making the cake bigger, everyone grabs more market share.
In Kaifu’s view, it is Ali’s original intention to make the world not difficult to do business. Taobao wants tens of millions of small and medium-sized enterprises to find their business goals on the platform. In other words, Taobao is always open. Platform. “Where to open a store, merchants can have their own choices. Taobao merchants can open stores on Douyin Kuaishou at the same time. There are also many merchants who open stores from Douyin Kuaishou to Taobao.” What Taobao has to do is to become the best shopping experience for consumers. platform.
But the road ahead of Taobao is not easy. In the face of external challenges, Taobao must have sufficient combat effectiveness; in the face of internal coordination, if you want to connect Tmall, Juhuasuan and Taobao special edition, Taobao must also have Sufficient combat effectiveness.
Taobao is a platform, and merchants are the core combat power. From the perspective of survival of the fittest, there are new businesses entering, small businesses developing into large businesses, and some large businesses falling into small businesses, and they may even close their stores and leave. But from the perspective of maintaining combat effectiveness, any business needs to figure out the reasons for leaving. After all, non-combat attrition is a taboo.
Taobao is getting harder and harder to do
Taobao was established in 2003, and then it has gradually become an ecology. Countless people have developed and grown in it, and even founded a listed company.
In 2015, Internet celebrity Zhang Dayi earned 300 million yuan from e-commerce. According to Forbes magazine, Zhang Dayi’s income completely crushed Chinese actress Fan Bingbing. In the same year, Fan Bingbing earned 137 million yuan. A lot worse than Zhang Dayi. In addition to Zhang Dayi, Taobao has also cultivated many top players, including Sydney, Teng Yujia, Mrs. Qian and other Taobao Internet celebrities who started as women’s clothing.
Liu Rui, who had thought that the e-commerce industry had grown to the top, once again saw an opportunity in “Zhang Dayi”. He believes that behind the prosperous Internet celebrity economy, e-commerce traffic dividends are still there, and the long tail effect will continue to be more obvious.
In 2018, he established an e-commerce company near a garment factory in Wuxi, Jiangsu, and started his e-commerce career, mainly dealing in Taobao women’s clothing.
At the beginning of the establishment of e-commerce, Liu Rui could not create a benchmark influencer. There were three ways for Liu Rui to obtain traffic: Taobao’s natural traffic, spending money on promotion (Taobao through train), and another private domain. Traffic, that is, the opening of the work WeChat account, to attract users through praise and cashback, so that the new store products can get more direct exposure in front of users.
Liu Rui said that at that time, Taobao’s e-commerce dividends were still very large. E-commerce companies invested five or six million yuan, deducting the costs of purchasing, manpower, express delivery, and warehousing, and could achieve a net profit of more than one million yuan in one year. The net profit margin is 18%-20%.
Although Liu Rui feels that his store has been short of traffic after entering Taobao, this is also the norm that most businesses have to face. However, in 2019, Liu Rui clearly felt that the traffic of his Taobao store had begun to decrease, and the transaction volume of the store had begun to decline. Obtaining traffic has become a difficult problem Liu Rui must face.
“The first is that the natural traffic has decreased, and the second is that Kuaishou, Douyin, and Xiaohongshu have done a good job in live e-commerce. The original users no longer only love Taobao, so our private domain traffic The conversion effect is not very good, so more capital costs need to be invested in the later period for traffic promotion.”
There are three ways to obtain traffic: One is to weight products in the early stage, such as setting baby keywords based on differences, increasing product exposure, or marking products. Marking can increase the sales of goods by 10%, etc.; The other is a popular promotion tool for sellers-Taobao Express, through a pay-per-click marketing tool, to achieve precise promotion of goods; The last one is to swipe orders to increase store turnover through “water injection” and make the store rank higher.
However, every kind of access to trafficAll the ways are unavoidable expenditure costs.
In 2019, Liu Rui’s promotion cost on Taobao e-commerce increased by one-third, while at the same time the traffic conversion efficiency of the store was much lower. This year, Liu Rui invested nearly 7 million yuan, and his net profit after deducting costs was only more than 500,000 yuan. The profit rate was 8%, which was a decrease of nearly two-thirds compared with the 20% of the previous year.
However, compared to Taobao’s traffic becoming more expensive, Liu Rui thinks that Ali’s strict inspection of merchants’ order-swiping behavior will have a greater impact on the business of their stores. Because merchants need to spend higher costs to swipe orders to avoid being caught by Taobao. For example, real orders, real shipments, real evaluations, etc., increase the customer acquisition cost of merchants.
Liu Rui said that swiping orders is a must-have promotion tool for almost every store. “Because Taobao not only recommends products with reference to Evaluation and printing of products, so as long as there is a large-scale store on Taobao, there will almost always be the action of swiping orders. Taobao’s strict crackdown on this aspect will also reduce our profit margin.”
By 2020, affected by the epidemic, the offline economy has shifted to online. Short video marketing and live broadcast e-commerce have entered the highway of development. Instead, many small and medium sellers on Taobao ushered in strong competitors. Liu Rui said, “Although some offline brick-and-mortar stores have closed down due to the epidemic, more brick-and-mortar stores have begun to transform online, including many factory-managed stores and first-tier brands. In order to quickly gain a foothold, All of them are marketing hard. Whether in terms of economic strength or cost control, small and medium e-commerce companies have no competitive advantage.”
After the outbreak, Liu Rui persisted for 6 months, but faced with half a year’s loss, Liu Rui chose to close the store. He believes that in the current Taobao e-commerce environment, it is no longer suitable for small and medium businesses to survive. It is more important to preserve strength and find the next industry opportunity. In the first half of last year alone, Liu Rui lost nearly 1 million yuan.
At the same time, the factory where Liu Rui took the goods was mainly directly supplied to several Taobao sellers, and the business of the downstream takers was poor. As a result, the factory was also facing operational difficulties and unsustainable because it could not receive orders. Dilemma.
Tmall is more important than Taobao
Tmall, Taobao, Juhuasuan, and Taobao Special Edition all require traffic, but Ali does not have a large traffic pool such as WeChat and Douyin, so traffic is always not enough.
In terms of traffic distribution, Liu Rui feels that Ali’s traffic to Tmall storesTilt, so that small and medium Taobao sellers face great difficulties.
Liu Rui said, “Compared to Taobao, Tmall has more support for traffic ports. For a simple example, you can search for Tmall stores when you search on Taobao. But you will definitely not search on Tmall. Go to Taobao stores and Tmall stores also have several major advantages, such as resource locations, you can participate in a cost-effective gathering, no bad reviews, no bargaining, etc.”
Alibaba gives all the traffic to Tmall, which is a problem that many businesses have complained about. Some Taobao merchants answered in a forum that their shops had more than 30,000 page views and nearly 20,000 visitors on Double Eleven in 2018! Then this traffic gradually declined. By 2020, the number of views of its Taobao store was less than 700. The merchant believed that Ali had all the traffic to the Tmall store.
A person close to Taobao told Ran Caijing, “Taobao’s traffic is tilted towards Tmall. It has been around many years ago. It’s not a new thing. Taking Double Eleven as an example, Taobao spent a lot of money. With great efforts to publicize, Taobao’s homepage is full of Tmall’s logos. Almost all consumers are staring at the Tmall flagship store to grab the goods. It is reasonable that Taobao’s small store has no page views. Because Ali is essentially an e-commerce platform, to survive If you want to make a profit, sellers have to pay for entering Tmall. It costs 100,000 to come in and pay a commission. Of course Ali likes it. For Taobao shops, shops with marginal products are easier to survive.”
According to industry insiders, as early as 2008, when the “Taobao Mall” (the predecessor of Tmall) was founded, there was a contradiction between how small sellers and large merchants shared the same platform and portal. In 2012, Tmall’s GMV began to grow rapidly, and the growth rate even surpassed Taobao. The proportion of domestic retail GMV has also increased year by year to 44% in 2018. At present, Tmall has surpassed Taobao and has become the core of e-commerce growth. “Since Tmall’s contribution to Ali’s revenue greatly exceeds that of Taobao, it is logical to tilt the traffic to Tmall.”
According to Ran Financial’s experience, search for “jeans” in the Taobao search box, and all six consecutive pages of the display column are Tmall stores. Compared with the past, Taobao shops have fewer display opportunities.
Taobao search display results Picture/ Ran Caijing screenshot
In this regard, Kaifu explained that the recommendation logic of the Taobao platform depends on who you are, your preferences, and your style. “For example, the results of your mobile phone search are different from my mobile phone and his mobile phone. In fact, the logic of platform personalization is that I recommend each consumer the most suitable business for him. Each business finds the most suitable consumer for him.”
In fact, the stores that enter Tmall are often corporate stores with high brand awareness and strong economic strength. These Tmall stores not only have high entry barriers (entry costs), but also put advertisements on marketing and promotion. The cost is also very strong.
As the main source of advertising revenue, the keyword bidding ranking (through train) adopts the CPC model of cost-per-click, and merchants continuously bid and bid.
Hua Chuang Securities once analyzed and pointed out that taking the online brand Yunifang as an example, the company’s sales on the Ali e-commerce platform in 2017 were 652 million yuan, of which Yunifang’s platform advertising fees had reached 108 million yuan, of which the Diamond Exhibition 19.36 million yuan, accounting for 20% of the overall platform advertising expenses, and the absolute value of the annual investment remains stable.
The expansion of foreign brands in China is more dependent on online channels. For example, the Spanish cosmeceutical brand Mertiderm has become a Tmall international billion-dollar club less than 10 months after opening a store on Tmall, with an average of more than 20% Purchase rate.
Huachuang Securities believes that the establishment of an e-commerce platform’s bidding ranking profit model is mainly due to the homogeneous competition of small and medium-sized businesses in the early stage of the traffic dividend, forming a rich supply and demand traffic pool, and Taobao has become the formulation of traffic rules To achieve advertising profit from the contention for traffic.
Currently, advertising revenue accounts for 1/3 of Ali’s retail and more than half of core e-commerce.
If Taobao continues to formulate the rules of the game based on cash flow, then there will only be one goal for the flow of flow-that is, traditional big brands and large manufacturers with strong capital and offline resources, because only they can stabilize the procurement flow. To ensure the profitability of Taobao stores, if things go on like this, small and medium-sized businesses will become more marginalized and even unable to operate continuously.
Star Taobao stores are unsustainable, which is a phenomenon worthy of vigilance. The first producer once reported that celebrity stores have a more fan base than ordinary people, and they can usually reach the state of being full and out of stock when they open. Open Taobao Star StoreOn the page, 326 celebrities have opened stores, including clothing and bags, beauty and skin care, household food, jewelry accessories, digital home appliances, cultural entertainment, maternal and child toys, books, audio and video, and others, totaling 9 categories. But in star stores, more than 180 have closed down, accounting for 46%.
Take Li Xiaolu as an example. Its Taobao store has a bleak business, with a large number of single-digit products in monthly sales, and these stores are small Taobao stores, not as good as the sales volume of general brand Tmall stores.
In Alibaba’s annual reports in previous years, the advertising revenue earned by providing marketing services to customers was Ali’s largest source of income, and Alibaba was once regarded as the largest Internet traffic advertising company.
But now, with the rise of short video platforms such as Kuaishou and Douyin, they have more traffic. Will this have an impact on Taobao?
“In essence, Douyin and Kuaishou are not a competitive relationship with Taobao. Even if Douyin live broadcast e-commerce eliminated third-party external links such as Taobao last year, it will have little impact on Taobao. Douyin Kuaishou It accounts for a very low percentage of our overall traffic. In terms of supply, I think the three platforms have something in common. They are jointly cultivating outstanding Chinese merchants. I have great respect for the two platforms, Douyin and Kuaishou. , They have cultivated many excellent entrepreneurs and merchants, from this point of view it is very similar to Taobao.” Kaifu said.
Taobao merchants come and go freely
The rise of Douyin, Kuaishou, and WeChat applets has indeed provided many small and medium businesses with another option.
After closing the Taobao shop, Liu Rui followed a friend’s suggestion, took the 500,000 yuan invested by his friend, added his own capital, and started to move to Kuaishou to build a full-category e-commerce supply chain.
At present, Liu Rui is mainly supplying the anchors of Kuaishou. By negotiating with the investment team behind the Internet celebrities, using the mode of sub-commission or pit fees, the two parties have reached cooperation. “Now the suppliers in Kuaishou basically use the split commission model, because this can guarantee the sales of the goods and prevent the large amount of pit fees from being paid. Our suppliers and anchors are based on the profit Five-fifths method, let’s talk about the proportion of shares.”
What drives merchants to enter Kuaishou and Douyin is not only the platform’s traffic dividends, but also high profits.
According to Liu Rui, the largest source of profit in the full-category supply chain he provides is daily chemical products, with a gross profit margin of 50% to 70%.The gross profit margin of clothing category is about 10%. Although the gross profit margin of clothing category is not as good as Taobao’s, it wins by quantity on the Kuaishou platform. Overall, the one-year profit margin is much higher than Taobao.
A screenshot of the live broadcast of the co-host Picture / provided by the respondent
Liu Rui said, “As early as the second half of 2019, I started to have the idea of doing a fast supply chain, and I also did some work on the accumulation of supply chain resources and market development, so I have a better understanding of the profitability of the supply chain. In the second half of 2020, after Taobao’s e-commerce business starts to lose money, it can quickly make up its mind to close Taobao stores and focus on the fast-hand supply chain.”
Next, Liu Rui plans to incubate his own Douyin account and prepare his own daily chemical brand.
Liu Rui pointed out, “For daily chemicals, it’s very simple to make money from your own brand, and the gross profit of daily chemicals is also the highest.” The reason why the preparatory daily chemicals brand chooses to be Douyin, and It’s not Kuaishou. Liu Rui analyzed that, “At present, the commercialization of Kuaishou is too serious. The anchors have too much sense of drama. They often do scripts during live broadcasts, and the reputation of the top Internet celebrities is not so. Okay, so Kuaishou is not as easy to do as Douyin.”
In the first annual report released by Kuaishou not long ago, Kuaishou disclosed that 2020 Kuaishou has attracted a large number of high-quality merchants to settle in, and expanded the categories and choices of products on the Kuaishou platform. Therefore, from 2019 to 2020, the total amount of commodity transactions facilitated by e-commerce transactions on the Kuaishou platform has increased from 59.6 billion yuan to 381.2 billion yuan, and the average repurchase rate has increased from 45% in 2019 to 65% in 2020.
At the end of 2019, at the 7th Anniversary Conference of Youzan, Wang Ying, the head of Kuaishou platform governance, announced the latest data on Kuaishou e-commerce. The number of Kuaishou e-commerce authors has exceeded 1 million, and e-commerce authors with 100,000+ fans Monthly income reaches 50,000, the monthly growth rate of e-commerce authors exceeds 10%, and the scale of consumers covered by e-commerce content exceeds 100 million daily.
In February of this year, according to “LatePost” report, BYTE is encouraging merchants to become part of the Douyin e-commerce supply chain by adjusting service fees, so that merchants will be rooted in Douyin instead of only advertising in Douyin. . Starting from August 2020, if the goods in the Douyin live broadcast room originate from a third-party e-commerce platform, a 20% platform service fee will be charged. If the product comes from a Douyin store, the rate is only 5%.
Kev said that merchants who have retreated from Taobao and switched to Douyin Kuaishou do exist, but they are only individual cases. There are also many big Vs in Douyin and Kuaishou opening stores on Taobao. “In the early years, we cleared away many merchants who sold fake goods and went to other platforms to open stores, but this is our choice. Because today’s Taobao and Tmall want to build the best shopping experience platform in China, we must do something. Choose, even if we give us ten more opportunities, we will still stick to this principle and avoid bad money driving out good money.”
Statistics show that from January to February this year, the national online retail sales reached 1,758.7 billion yuan, accounting for 20.7% of the total retail sales of consumer goods. If the proportion can rise to 50%, the space left for each platform is huge.
In other words, the e-commerce field is an incremental market competition. Whether it is Alibaba, JD.com, Pinduoduo, WeChat applet, or even Douyin Kuaishou, their business development is to make the e-commerce cake bigger together.
Small and medium businesses are vital to any e-commerce platform when competing for more market share. Kaifu compares small and medium businesses to the soul and blood of Taobao. He believes that every large business has been a small and medium business before it grows up. Small and medium businesses are also the most dynamic part of the market. The increase in Taobao’s market each year is equivalent. Part of it comes from businesses that opened new stores this year or last year.
For Taobao, it is not a pity for merchants that are eliminated by the market in healthy competition, “because more distinctive, stylish, and cutting-edge merchants can emerge to meet consumer needs. “
The only thing Taobao needs to worry about is that the merchants who leave are because Taobao’s business environment is not good enough, the rules of the platform, the barriers to entry of the market, or the business costs of the merchants have gone wrong. Cafe said, “We will take care of all business issues. While dealing with related issues, Taobao will continue to optimize its own mechanism and continue to build products.”
*In the text, Liu Rui and Mingde are all aliases