As consumers, we only hope that the platforms that participate in the competition can learn more and give us real benefits.
Editor’s note: This article is from WeChat public account “Economic Observer Observer” (ID :eeoobserver), author Chen Yongwei.
[Super Platform]
I heard a rumor very early, saying that “Valentine’s Day” is a festival created. It is the American merchants who want to clear the New Year’s goods and find St. Valentine in the pile of paper. The legend has created a festival. At first, I laughed at this rumor until I saw the “Double Eleven” turned out.
“Double Eleven”, this “single-single festival” with a little ridiculous and self-deprecating, has become a shopping spree under the packaging and promotion of e-commerce platform. At this time of the year, each e-commerce platform will be able to promote it.
Compared with the “Double Eleven” in previous years, this year’s “Double Eleven” seems to be somewhat different. The first is the change of participants. In the past, “Double Eleven” was the opposition between the two powers. Ali and Jingdong were all on one side, but this year, they have quietly become “three pillars.” After a lot of efforts, GMV has surpassed Jingdong and became the second largest e-commerce platform. Second is the change in the propaganda strategy. ,
In the past, “Double Eleven”, the main propaganda of each platform was a positive advertising campaign, but this year, there seems to be a “fight” between the major platforms. As a “reservation topic”, “two choices” have been turned over by major platforms, and the more they fry, the hotter they are.
So, what kind of information is hidden behind these changes? What is the fundamental motivation for determining the direction of e-commerce and rivers and lakes? What efforts have the major platforms made in the competition? What is the so-called “two choices”? What will happen to the future e-commerce market? To answer these questions, we are afraid to start with some basic concepts.
Open the “black box” of GMV
When we analyze the competition of e-commerce, we usually use the Gross Merchandise Volume (GMV) as the most important variable. If a platform has a high GMV, it will be considered very powerful; conversely, if a platform has a low GMV, it will be considered uncompetitive.
If our goal is simply to know how static competition is in the market at some point, then such an analysis is sufficient. However, if our goal is to know how the competitive situation in the market develops and evolves, then simply relying on the outcome indicators such as GMV is not enough. We must break it down further and know what it is determined by itself.
Generally speaking, GMV depends on three factors: flow, conversion rate and customer unit price. Expressed in a simple formula, it is GMV = flow × conversion rate × customer unit price.
Traffic is how many potential users have paid attention to this e-commerce platform, which determines how much the e-commerce platform has potential. As the saying goes, “It’s easy to get money from the world”, just as it’s easier to make money in a supermarket in a busy city. E-commerce with more traffic will have a big advantage in the competition. As long as its conversion rate and customer unit price are not too low, its GMV is easy to grow.
Conversion rate is the ratio of real volume to traffic, which reflects the ability of e-commerce to turn “passers-by” into real customers. It is not so easy for users who access the platform to take out real money, which comprehensively examines the soft and hard power of the e-commerce platform.
From the hard indicators, the price of goods is not low? Is the service good? Logistics is not fast? Can the quality of the goods be reassuring? Is the relevant consumer finance support not in place? All of this will affect the final conversion of the customer. From the perspective of soft power, the design of the platform on the page and the placement of the merchants will have a huge impact on the conversion – even when the given hard power is close, the impact may even be larger and more direct.
The customer unit price refers to the average amount of a valid order. This variable is closely related to the seller’s position. If a person is going to the supermarket, then his shopping will easily cost a few hundred dollars, and if he is going to a convenience store, then the consumption may be only twenty or thirty yuan.
The same is true, if the e-commerce platform sells mainly small items, then its customer price is low, and if its sales focus is “3C” (ie computer, communications and consumer electronics) When it comes to large commodities, its price per customer is very high. Of course, given the platform positioning, the platform’s sales strategy will also have a huge impact on the customer unit price. For example, the strategy of price reduction promotion, discounting and other factors will easily stimulate the purchase enthusiasm of the users, thus greatly increasing the unit price.
It should be noted that the three indicators of “traffic”, “conversion rate” and “customer unit price” are not isolated from each other. In many cases, they will change together and even affect each other. For example, a promotional strategy may increase both traffic, conversion rate, and customer price; for example, a higher conversion rate may lay the groundwork for the platform to get more traffic in the future…
These effects cannot be ignored in practice. However, for the convenience of analysis, we put aside the interaction between several factors in the analysis below, and focus on the internals of these three indicators.
Traffic battles
In different eras, the importance and determinants of traffic are quite different. In the era of material scarcity, the logic of retail activities is “goods-field-people”, and the core is “goods”. The final sales potential is determined by the presence of goods and how many goods are in the hands of the merchants. onlyIf you have the goods in hand, someone will line up to buy them. At this time, traffic is a variable that is completely ignored.
Afterwards, social production has improved, the supply of materials has gone from scarcity to abundance, and the entire market has shifted from sellers to buyers, and traffic has become important. The logic of retail activities has gradually become a “field-goods-people” and the scene has become the core. Since the merchant cannot accurately locate the individual’s needs, occupying a favorable geographical position and creating a good shopping atmosphere is the key to obtaining traffic and winning users.
Early e-commerce, roughly adhering to the logic of “field-goods-people”. At that time, the network search engine was still underdeveloped, and it was very difficult for users to retrieve information from the Internet. Therefore, the portal as the information distribution center became the most important traffic portal. To win the traffic competition, the e-commerce platform needs to occupy a prominent position on the portal.
In this era, e-commerce platforms often put large sums of money into advertising on the portal and then introduce traffic to themselves. However, the return on this investment is also very high. Under the condition that the cost of search is high, once the user discovers an e-commerce platform, the experience is not bad, they will always use it. In other words, the e-commerce platform at this time has a high customer cost, but the customer’s stickiness is very high.
Later, with the development of search engines, the situation began to change. When people can easily retrieve information from search engines, their search costs at the time of shopping are greatly reduced. During this period, the user stickiness of the e-commerce platform was greatly reduced. In order to maintain traffic, e-commerce platforms need to spend a lot of money to search engines to advertise, Baidu, Google and other search engines have become the biggest beneficiaries of the e-commerce war.
However, this situation did not last long. After the rise of the mobile Internet, the overall Internet landscape has undergone major changes. First of all, as mobile phones replace PCs as the main tool for Internet access, the time and space restrictions on people’s Internet access have been completely eliminated. Along with this, the competition for traffic between Internet companies has also evolved from “local war” to “all-round war”. Second, changes in Internet tools have also caused major changes in the composition of the Internet.
In the PC era, PCs have higher acquisition costs and a lower penetration rate, which determines that Internet users are dominated by highly educated and high-income people. As mobile phones become the main tools for accessing the Internet, the Internet has moved from elite to popular, and the wider population has begun to join the netizens.
According to the 44th “Statistical Report on the Development of China’s Internet Network” released by the China Internet Network Information Center at the end of August this year, China’s Internet users have a bachelor’s degree or above, accounting for only 9.7% of the total number of Internet users.
Overall, people with different educational structures have different habits in accessing information—people with higher academic qualifications tend to search on their own, while those with lower education tend to receive information, so netizens Knot