Author | Huang Yu
Editor | Zhou Zhiyu
Over the past year, Alibaba, JD.com, and others have been caught up in a &#34;low-price&#34; battle, while Pinduoduo, which has been labeled as &#34;low-price&#34; since its inception, seems to be living the most leisurely. However, faced with fierce attacks from competitors on low prices, Pinduoduo, which claims to have the &#34;lowest price on the entire web,&#34; finally couldn't sit still.
According to Wall Street News, on May 28th, when JD.com held a high-profile 618 launch event, Pinduoduo quietly launched a &#34;low-price weapon&#34; - an automatic price adjustment system.
If merchants choose to use this &#34;weapon,&#34; within the authorized scope, as long as a competitor's price is lower than their own, the system will automatically lower the price even further than the competitor. At the same time, Pinduoduo will link whether merchants have activated this feature with free traffic for resources.
In short, in order to maintain the &#34;lowest price on the entire web,&#34; Pinduoduo wants to transfer the &#34;price adjustment&#34; button from human hands to more timely and responsive algorithmic hands. Previously, Douyin e-commerce also announced a small-scale internal test of a similar &#34;automatic price adjustment&#34; feature.
For merchants, this is a decision that needs to be carefully weighed. Choosing to activate automatic price adjustments may mean getting more platform traffic support, but it will inevitably compress profit margins; on the other hand, it may result in losing traffic and orders.
To balance the relationship between buyers and sellers, it can be seen that Pinduoduo has also begun to adjust and optimize this new feature. After all, low-price competition cannot fall into an endless vicious cycle, and the industry-wide &#34;low-price war&#34; that has lasted for over a year may also reach a turning point.
<h2>New Weapon</h2>
After years of expansion, Pinduoduo is not as high-profile in its low-price strategy as JD.com or Taobao. The automatic price adjustment system launched this time has not been officially announced by Pinduoduo.
On May 28th, many merchants reported on social media platforms that they received a system pop-up window in the background, with the window title showing &#34;Activate automatic price adjustments for resources to ensure they do not go offline.&#34; The maximum daily price reduction for a single product does not exceed 10 yuan and is not more than 15%. The effective range of products includes all resource items, and once activated, it cannot be turned off until the end of the June 21st promotion.
The so-called resources usually refer to promotional channels on the Pinduoduo homepage such as &#34;Billion Subsidies,&#34; &#34;Limited Time Flash Sale,&#34; and &#34;9.9 Special Sale.&#34; Obviously, in this 618 promotion, Pinduoduo hopes to offer more competitive products to compete with other platforms.
Several merchants told Wall Street News that when signing up for promotional activities, products are also automatically checked for &#34;automatic price adjustments,&#34; which can be accidentally activated. Merchants can adjust the maximum price reduction, but the minimum value is the system default of 10 yuan or 15%.
One merchant revealed that in the past, if you wanted to occupy a resource position on Pinduoduo, you had to accept price comparisons. The platform system would periodically send pop-up windows telling you that your price was too high and there was a risk of losing orders. If you did not adjust the price within the deadline, you would lose the resource position. This automatic price adjustment system is an enhanced version of the previous price comparison mechanism
The feature has just been launched and there are still many immature aspects. Pinduoduo has been making adjustments, such as subsequently canceling the &#34;not supporting closure before the end of the big promotion on June 21&#34; policy.
On June 5th, a merchant provided a screenshot to Wall Street News showing Pinduoduo's price adjustment pop-up window. Pinduoduo further clarified: &#34;No price cycling within the platform, prices will not be endlessly reduced&#34;, &#34;Price adjustment can be made at most once a day, with a minimum price reduction required by the activity&#34;, &#34;Adjustments can be made at any time, and price reductions will be notified&#34;.
&#34;The launch of the automatic price adjustment system on Pinduoduo is a choice made in the increasingly fierce competition in the e-commerce market.&#34; A professor from the Digital Economy Department of Shanghai University of Finance and Economics told Wall Street News that merchants must have the right to be informed and set the minimum acceptable price, or make commitments to ensure a certain profit margin within a certain period.
Low prices are an important means for e-commerce platforms to attract users. Over the years, Pinduoduo has established a strong perception of low prices, surpassing Alibaba and JD.com in this new consumption trend to become the &#34;new king&#34; of e-commerce.
However, the e-commerce industry is ever-changing, and Pinduoduo can never relax. Whether it's Alibaba or JD.com, they have lowered their stance and learned from Pinduoduo over the past year, focusing more on the lower-tier market and resolutely implementing a &#34;low-price strategy&#34;.
JD.com has stood out in this low-price competition and has challenged Pinduoduo multiple times. After calling out Li Jiaqi on Double Eleven last year, JD.com once again challenged Pinduoduo in live streaming this year, stating that they will conduct real-time price comparisons and offer discounts. This challenge from JD.com to Pinduoduo represents a further escalation of the e-commerce platforms' low-price competition, and the battle in 2024 will be even more intense than last year.
As expected, during this year's 618 shopping festival, various e-commerce platforms have reached new heights. First, Alibaba, JD.com, and others successively canceled the pre-sale system, and then all of them increased their promotional efforts.
For example, Tmall's 618 has unprecedented resource investment. In addition to the &#34;spend 300 get 50 off&#34; and 15% official discount, they also invested an additional 15 billion in red envelopes. Taobao's 618 billion subsidy launched &#34;surprise flash sales&#34;, offering an additional 50% off on top of the already discounted prices. It is worth mentioning that Taobao and Tmall have also completely integrated the spend-and-save promotions for the first time during the super promotion period.
JD.com not only has billion subsidies, cheap postage, and other activities, but also will launch a &#34;2 yuan free shipping day&#34;, where a large number of low-priced goods from industrial belts in Baoding, Yiwu, Fujian, Guangdong, and other places will be free shipping.
Therefore, Pinduoduo's introduction of the &#34;automatic price adjustment system&#34; this time can be seen as a strong counterattack in the white-hot price war.
<h2>White-Hot Competition</h2>
Low-price competition is essentially about trading price for volume. Many merchants on Pinduoduo have a consensus that Pinduoduo is a platform positioned for thin profits and high sales volume, so there will be certain differences in the categories they choose to list.
This has provided a good survival platform for a large number of white-label merchants.
However, in the increasingly intense price war, some white-label merchants seem to have difficulty maintaining their original profit margins.
In this important window showcasing price competitiveness during the 618 festival, major e-commerce platforms are directly comparing prices. Pinduoduo has labeled some products on the platform with tags like &#34;cheaper than Taobao&#34;, &#34;slightly cheaper than JD.com&#34;, etc
A brand merchant revealed that JD.com's procurement department has proposed to set some product titles as &#34;Compare xx, cheaper than certain cat and certain treasure&#34;.
Cui Lili told Wall Street News that automatic price matching systems like Pinduoduo may squeeze industry gross profit margins, leading to the situation where selling more does not necessarily mean more profit.
Many merchants are choosing to disable the automatic price matching function out of concern that profits will be further compressed. On the flip side, this decision also faces the risk of losing traffic and orders.
Screenshots provided by some merchants show that after canceling automatic price matching, they received a notification that their products had lost free traffic in major promotional activities due to high prices. The specific content reads: &#34;Your product has lost free traffic in the promotional activity resource position due to high prices. Please go to adjust the price immediately to restore free traffic in the resource position.&#34;
However, a merchant in the clothing business stated that not choosing to enable this function did not have a significant impact on their business.
Looking at the industry as a whole, many merchants who have been caught up in price wars are suffering and have recently come out publicly to resist certain platforms.
In addition, while &#34;rolling prices&#34; can attract more consumers and boost sales in the short term, when all platforms are &#34;competing with low prices&#34; at the same time, the differentiation between platforms seems to have become blurred. In the long run, e-commerce platforms may have to sacrifice product quality and service levels in order to reduce costs, which is clearly not a sustainable development strategy.
Now, as the industry's low-price competition intensifies, regulators are cracking down. In early May, the &#34;Interim Provisions on Prohibiting Unfair Competition on the Internet&#34; was released, to be implemented on September 1. Many merchants believe that some of the provisions may put a damper on automatic price matching.
Historical experience has shown that price wars do not last long in the market. When the turning point comes, only e-commerce platforms that truly master technological innovation and enhance user experience solutions can become real winners.
After more than a year of &#34;price wars&#34;, major e-commerce platforms need to quickly break out of the cycle of endless low prices and find a balance between attracting consumers and protecting merchants' rights. This is the key to the next stage of the e-commerce battle.
The landscape of the e-commerce industry is still being continuously rewritten. Let the bullets fly a little longer, time will provide the answers

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