The annual 618 shopping festival may take on a more straightforward approach this year. JD.com and Taobao have decided to skip pre-sales and go straight to sales at the end of May.
JD.com will kick off the 618 promotion on the evening of May 31st, selling products in stock, followed by special periods, peak periods, and return periods. Public information indicates that JD.com will continue to focus on its low-price strategy for the promotion this year.
Meanwhile, Taobao Tmall has introduced a cross-store discount policy of 50 yuan off for every 300 yuan spent, skipping the classic pre-sale and final payment periods of the past Taobao promotions.
This year, promotions around the 618 festival from the Taobao ecosystem have become more frequent, with extended durations. From April 23rd to 28th, there was the "Hundred Billion Second Kill Festival," serving as a warm-up for the 618 main event. The first wave of 618 activities ran from May 21st to 28th, with the second wave scheduled from the evening of May 31st to June 20th.
For consumers, the most significant change in this year's 618 is the shortened shopping cycle, making the math simpler.
In previous years, 618 promotions also started at the end of May, with Taobao and JD.com offering pre-sales where customers paid a deposit first, followed by the final payment about a week later, along with the distribution of numerous coupons between these two phases to build momentum.
Taobao had previously innovated its pre-sale mechanism, allowing for combined orders to qualify for discounts, unlike the initial requirement of separate final payments. Reports suggested that pre-sale orders accounted for one-third of the total orders during major promotions.
So, why have Taobao and JD.com suddenly decided to cancel pre-sales this year?
Looking at the presale system itself.
Retail e-commerce expert Zhuang Shuai analyzes that as the scale of major promotions increases, the number of merchants and consumer groups participating in presales continues to expand, leading to issues such as delayed delivery of presold goods, price increases during price adjustments, inconsistent after-sales service compared to regular products, and even financial risks.
These issues can worsen consumer experiences, increase consumer risks, and impact the platform's reputation and regular merchants selling other products. Therefore, both JD.com and Taobao have independently decided to cancel the presale system, essentially addressing historical legacy issues.
During the 2022 618 shopping festival, a consumer reported encountering a price increase during a presale on JD.com.
She shared that before 618, she added a product priced at 3599 yuan to her cart, planning to order it during 618. However, when the store started the 618 presale event, she found that the price of this product had increased by 1500 yuan compared to before.
The consumer mentioned that another item in her cart had a similar situation, with the prices changing three times within three days before and during the presale.
This issue is actually a result of flaws in the promotional mechanism. When merchants participate in major promotions, they are required to follow the platform's discount policies and offer direct discounts or participate in buy-more-save-more promotions. However, merchants still retain the autonomy to set prices.
On one hand, they cannot afford to miss out on major promotions, but on the other hand, it's challenging to offer significant discounts. This dilemma leads some merchants to resort to secretly raising prices as a last resort.
While not all merchants engage in such questionable practices, even if all merchants comply with the rules during major promotions, the presale system itself significantly impacts consumer experiences.
Previously, consumers pointed out that they could quickly place orders and receive goods, especially when urgently needing certain items. However, during major promotions, they are forced to adapt to the platform's pace, from paying a deposit to receiving the goods, taking at least a week or more.
In the current e-commerce landscape, where the focus is on faster logistics and better consumer experiences, major promotions present a paradox.
Moreover, the tangible discounts offered during major promotions are decreasing.
As a result, consumer experiences worsen, leading to higher considerations of returns during the "cooling-off period" between deposit payment and final payment, ultimately increasing the rate of returns and refunds for merchants, followed by logistical pressures and post-sales disputes.
Looking at the overall e-commerce environment, major promotions have become more of a gimmick than a practical benefit. Achieving low prices no longer solely relies on major promotions, and the attitudes of e-commerce platforms towards major promotions have drastically changed. E-commerce may no longer require extensive major promotions.
The presale system was originally a way for platforms to collaborate with merchants to lock in consumer demand before major promotions by offering lower prices.
From the initial presale regulations, consumers could only request a full refund after paying the deposit once they paid the final payment. To some extent, deposit orders helped sellers and platforms achieve a portion of their sales targets.
In the era of intense competition for GMV, live streaming sales, and heavily discounted major promotions, the benefits of presale orders in securing sales before major promotions can be clearly seen in the post-promotion GMV results presented by various e-commerce platforms.
In a sense, this serves the "battle data" of each platform rather than the consumers.
In recent years, e-commerce platforms have shifted their focus away from GMV, with some no longer disclosing GMV figures from major promotions. Sales volume has gradually become a thing of the past in the e-commerce sector, replaced by a focus on operational quality and consumer experience.
Now, major promotions are more subdued, with shorter durations and reduced hype compared to before.
This indicates that major promotions no longer bear the same weight in terms of pre-promotion hype, exposure levels during the event, or post-event sales results.
"The emergence of live streaming and platforms like Pinduoduo driven by price have made promotions a daily occurrence, and most brands no longer heavily rely on platform promotions for sales," Zhuang Shuai stated.
What will future major promotions look like? JD.com and Taobao are taking different paths.
From JD.com's recent actions, low prices remain central, but the approach has been simplified.
In addition to continuing to prioritize low-priced items on the platform, JD.com introduced a new strategy called "Lowest Price in Six Months" during the 618 promotion this year. If a merchant successfully registers for the 618 promotion and the price of their product during the event is lower than the average price over the past 180 days, they can automatically participate in this strategy.
In essence, JD.com is directly asking merchants for the lowest prices, returning to the core essence of major promotions. For JD.com, which is rekindling the price war, flashy promotions and presales alone cannot achieve their low-price goals. The significance of major promotions lies in offering more tangible discounts to pave the way for future price wars.
On the other hand, Taobao quietly experimented with a "Billion RMB Flash Sale" before the "May Day Promotion" and 618, offering a direct 30% discount.
Taobao's business model differs significantly from JD.com, with numerous individual sellers and decentralized logistics, leading Taobao to take a different and more comfortable path. They continuously run promotional activities, building an impression of price competitiveness through frequent discount battles.
The cancellation of presales may just be the beginning. Returning to a more rational approach to major promotions, JD.com focuses on practicality from the perspective of merchants and the platform, creating an atmosphere of "the cheapest prices here." Meanwhile, Taobao excels at creating festivals, following an intensive promotional path, aiming for a reputation of "always on sale."
When major promotions strip away the glamour and focus on the essence, the platforms are left with the fundamental question of how to consistently offer real and substantial discounts. After all, no matter how it's packaged, the essence of e-commerce remains retail, and in retail, it's impossible to avoid the issue of pricing.
