Author | Liu Baodan
Editor | Zhou Zhiyu
When the news of Tmall canceling pre-sales for the 618 shopping festival came out, a senior industry insider who has been cooperating with Taobao for many years found it somewhat unbelievable. In his opinion, pre-sales are a core strategy for Tmall and wouldn't be easily canceled.
12 years ago, Tmall pioneered the pre-sale system, which became a powerful tool for its rapid growth in GMV. Nowadays, with low prices and large promotions becoming routine, the pre-sale system has completed its mission. Apart from Tmall, JD.com and Kuaishou also canceled pre-sales for this year's 618 shopping festival.
Canceling the pre-sale system is a difficult decision for Alibaba. This means that Alibaba's operational model and platform revenue focus will change. As the focus of e-commerce platforms shifts from merchants to users, mainstream e-commerce platforms are collectively trying to please users, completely changing the game in the e-commerce industry.
Since last year, Eddie Wu and Richard Liu have successively emphasized the importance of users. Alibaba and JD.com are facing strong competition from new e-commerce forces like Pinduoduo and Douyin, and have come up with ways to deal with it. In the current e-commerce industry, users mean everything.
Change has already happened, and the seating arrangement in the e-commerce industry will also be reshuffled with these series of changes. Players in the industry need to be fully prepared and immerse themselves in this unprecedented challenge.
End of the Pre-sale System
This year's 618 shopping festival, mainstream e-commerce platforms have coincidentally chosen to cancel pre-sales.
On May 6th, Wall Street News learned that Tmall's 618 festival started accepting registrations on that day, with the biggest change being the cancellation of the official pre-sale section, and direct sales starting at 8 p.m. on May 20th. In addition, JD.com and Kuaishou will also start selling directly on May 31st and May 20th respectively.
For e-commerce platforms, canceling the pre-sale system is not easy. Tmall and other e-commerce platforms have been implementing the pre-sale system for 12 years. At the beginning of its establishment, this was a sales model beneficial to all parties.
Through pre-sales, merchants can grasp sales situations in advance, reduce inventory risks; platforms can &#34;lock in&#34; consumer wallets in advance, helping the platform achieve GMV growth targets; and consumers can be the first to secure popular and new products through pre-sales.
An insider from Tmall mentioned that pre-sales were mainly done in the past because of consumer demand surges, where Tmall's top brands often faced supply shortages, and pre-sales could help secure orders in advance; for merchants, pre-sales could better guide inventory preparation. Now, merchants must readjust to the platform's new rules.
With the cancellation of pre-sales, merchants will be the first to be affected.
Ma Kaiyue, founder of Laoma E-commerce, has been in the industry for many years. He believes that major brand merchants are still accustomed to pre-sales. They have a large share on Tmall and will be somewhat affected, while mid-tier and lower-tier merchants do not feel strongly about participating, as they can manage with existing inventory.
Ma Kaiyue further stated that pre-sales can be understood as C2B, a form of reverse customization, where merchants decide on production quantities based on orders. Due to the large sales volume of top merchants and their presence on various platforms, canceling pre-sales will put pressure on these top merchants in terms of inventory preparation.
However, after many years of the e-commerce pre-sale system, issues such as high costs associated with pre-sales, significantly longer delivery times for consumers, and problems like users being taken advantage of have emerged. The effectiveness of the pre-sale system in attracting new users and increasing platform GMV has greatly diminished
In 2023, JD.com will no longer disclose the sales figures for the 618 promotion. The previous year, Tmall had already stopped disclosing the sales figures for Double 11. The sales figures for major promotions used to be the best footnote for the e-commerce industry, but now they have fallen into &#34;silence&#34;.
Zhuang Shuai, a retail e-commerce industry expert and founder of Bailian Consulting, believes that canceling pre-sales is overall more beneficial than harmful. At the very least, it will no longer lead to these long-standing issues that disrupt platform experience and reputation.
An insider from Tmall mentioned that the new management team led by Eddie Wu pays great attention to consumer experience and feedback. &#34;Actions such as no-questions-asked refunds, free shipping to Xinjiang, and upgrades to 88VIP benefits indicate that canceling pre-sales was within expectations.&#34;
In addition to canceling pre-sales, the 618 promotion is also returning to &#34;low prices&#34; and focusing on service itself.
From the early merchant information, Tmall and JD.com will continue to use the &#34;cross-store discounts&#34; strategy. Tmall has also introduced an &#34;official discount&#34; with discounts starting at 15%, which is no less than last year's Double 11. Furthermore, the platforms are paying more attention to the overall user experience, such as offering free shipping, shipping insurance, price protection services, and more.
Ma Kaiyue told Wall Street News that while Tmall emphasized five-star pricing last year, it now emphasizes cost-effectiveness, quality-price ratio, and appearance-price ratio. It pays more attention to whether the prices, quality, and appearance stand out in comparison with similar products, focusing on the overall shopping experience for users.
As Alibaba's Chairman Joseph Tsai mentioned, e-commerce is truly returning to its original intention, aiming to regain the trust of users.
User Battle
The pre-sale system was born during the rapid growth period of the consumer market, with platforms using pre-sales to promote and drive rapid growth in GMV.
However, as the consumer frenzy subsides, the pre-sale system, which was a marketing tool that boosted Tmall and JD.com's sales numbers, is now exiting the historical stage.
E-commerce platforms are facing a very realistic situation, where promotions like 618 are showing signs of fatigue. Wall Street News learned that both Tmall and Kuaishou have extended the period of the 618 promotion this year. Tmall started on May 20th, a week earlier than last year. Kuaishou has extended the promotion until the end of June, about 10 days longer than last year.
An industry insider mentioned that the extension of the promotion period by Tmall and Kuaishou is mainly to increase sales, which is an inevitable choice for e-commerce platforms under intensified competition.
The trend of low prices on e-commerce platforms is becoming normalized. Pinduoduo's billion-yuan subsidies, Taobao's limited-time flash sales, JD.com's flash sales and 9.9 free shipping, all follow the low-price route. The daily live broadcasts on Douyin and Kuaishou also create a concept similar to a small-scale promotion. In addition, there are more daily marketing activities on the platforms.
Shen Meng, a director at Xiangsong Capital, believes that with the intensifying competition in the e-commerce industry, consumers' sensitivity to prices is becoming more prominent. The normalization of promotions is essentially a way to lower prices indirectly, which will be a trend in the industry's development.
As the e-commerce market enters a mature stage, emerging players like Pinduoduo and Douyin, through strategies such as &#34;no-questions-asked refunds&#34; and live-streaming e-commerce, have disrupted traditional e-commerce. By leveraging these new strategies, they have not only implemented low-price strategies but also enhanced the value-added services of their products, gaining favor from consumers
Zhuang Shuai believes that the emergence of live streaming and platforms like Pinduoduo, which are price-driven, have centralized promotions happening every day. Most brands no longer need to overly rely on platform-wide promotions.
In contrast, the once most important e-commerce platform promotions like &#34;Double 11&#34; and 618 are seeing increasingly complex sales rules and a decrease in consumer shopping experience. Tmall and JD.com also need to rebuild these events that have contributed to their glory, facing tough competition from new e-commerce players.
Whether it's canceling pre-sales or various measures to improve user experience, they all send a signal that the one who wins the user wins the world. The focus of e-commerce has shifted from the previous emphasis on GMV alone, or even adding complex rules for the sake of GMV, to the demand side.
Alibaba, JD.com, and others are also striving to make changes. After Eddie Wu took the helm at Alibaba, he pointed out a new direction for the company, while Liu Qiangdong upgraded the corporate culture once again after a decade, emphasizing that users come first.
This will not be an easy battle.
From focusing on merchants to focusing on users, there has been a drastic change in the way e-commerce is played. Many e-commerce players have adopted a low-price strategy as a long-term strategy, while also proposing to enhance service experience, balancing profits and costs.
Ultimately, the test is who can sell enough goods and make money.
Undoubtedly, the e-commerce market is undergoing a major reshuffle. By 2023, Pinduoduo's market share has reached 20%, surpassing JD.com to become the industry's second largest player, while Alibaba's market share has dropped from 44% in 2022 to 40% in 2023, narrowing the gap between Pinduoduo and Alibaba further.
Players like JD.com, Taobao, and Pinduoduo are becoming more and more alike. Competition in the low-price, service, and content e-commerce race is intensifying, igniting a new round of user acquisition battles. Players in the field are engaging in close combat.
This is a new era for e-commerce, where they need to return to users and also overturn their past selves. A great battle is about to begin

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