The annual 1111 mega sale is approaching—what’s your plan to ramp up sales? Are you still considering entering the price war? If so, you might want to reconsider.
Although extreme discounts, influencer-driven sales campaigns, and generous return policies have enriched the sector, these very practices are now harming the industry.
According to Shanghai-based e-commerce operator Lu Zhenwang, who caters to small vendors, "The e-commerce boom is over. This year, competition is intense, and I doubt many sellers will last another three years."
The fierce price competition among Chinese e-commerce platforms seems to be easing. Both Douyin, a sister app to TikTok, and Alibaba's Taobao are shifting from focusing on ultra-low prices to boosting overall online sales, as reported by Nikkei Asia. The focus is now returning to Gross Merchandise Volume (GMV).
GMV = Selling price of items x Numbers of items sold
More e-commerce platforms are realizing that competing solely on price is unsustainable against Pinduoduo, known for its unbeatable deals. For instance, Douyin’s "low price first" strategy in the first half of the year resulted in slower-than-expected growth of 30% to 40%, compared to over 50% last year, according to sources cited by Nikkei.
Taobao has introduced a "store experience" rating system to drive traffic to merchants with better customer service scores, shifting away from its previous "five-star pricing system," which compared product prices to those on other platforms.
This change coincides with a new temporary regulation for the internet industry, effective September 1, which will prevent platforms from "imposing unreasonable restrictions on the prices of goods."
6 ways to effectively increase your GMV
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Set a free shipping threshold slightly above your average order value (AOV).
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Upsell and cross-sell by using comparison charts on product pages to showcase the benefits of upgrading.
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During checkout, encourage customers to add related items.
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Offer bundled products.
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Provide easy payment options.
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Minimise checkout friction.
Source:
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