Why is GMV less and less important on Double 11?

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Text / He Yueyang

Source/Market Cap List (ID: shizhibang2021)

When Double 11 entered its fourteenth year, some changes were also quietly taking place.

In the first Taobao Double 11 in 2009, only 27 brands participated, the GMV was 52 million yuan, and the highest sales record for a single store was Jack Jones’ 5 million yuan.

In 2012, the sales of three brands on Tmall exceeded 100 million yuan, and the sales of Double 11 exceeded 10 billion yuan for the first time; in 2016, the transaction volume of Tmall Double 11 exceeded 100 billion yuan for the first time. In 2019, this number doubled again. .

In the years when e-commerce was savagely growing, the double 11 national carnival created by Taobao became the key to the popularization of e-commerce. The numbers on the big screen of the battle report continued to expand, and GMV once became the belief of the industry in that era.

But whether it is a platform or a merchant, GMV has never been its ultimate goal. As the industry enters a mature stage, the quality of growth gradually replaces the quantity of growth, and figures such as cash flow, profit, and ROI that better reflect business fundamentals are placed in a more important position, and the meaning of GMV is also followed. become less and less. Since 2017, Ali canceled the announcement of GMV in the quarterly report and changed it to an annual release. Going to GMV has become the choice of more and more platforms and merchants.

After all, other more specific dimensions, such as the sales growth of brands, especially mid-waist brands, and the number of members achieved, are more related to the future of the industry than a relatively unrealistic number.

Going to GMV, what does it mean? Why go to GMV? After GMV aside, what should we use to measure the success of each Double 11 on the platform? This article will answer these questions

It’s time to redefine the standard of Double Eleven

What does it mean to go to GMV?

We first need to know what GMV stands for, and what the focus on GMV is actually about.

The earlier GMV not only reflected the consumption power of the people and the vitality of the economy, but also promoted the progress and improvement of the platform’s operational capabilities. The climb of GMV is also the process of constantly exploring the limits of China’s Internet in the period of rapid development. During this process, changes in information flow, capital flow, and commodity flow have made mobile payments, online transactions, express logistics facilities, and servers again and again. Under pressure, break through again and again.

The prosperity of the consumer side has forced the production, sales and logistics of commodities to a more efficient path.

When we look at the exponential growth of numbers, we actually care about the merchants who make money behind the numbers, the consumers who get affordable and high-quality services, and the increasingly perfect Internet infrastructure.

As of this year, Double 11 is the 14th year, which is also the 14th year that e-commerce has grown from savage growth to gradual maturity. GMV is changing, and so is everything else. These changes make GMV less and less suitable to represent the prosperity of the retail industry, and it is no longer suitable to evaluate the operating results and efficiency of e-commerce platforms.

First, the continuous evolution of the e-commerce industry has fundamentally changed the meaning of GMV to the industry.

After 20 years of development, most of the products can be purchased online, and there is not much virgin land left for the industry to develop. According to the National Bureau of Statistics, the penetration rate of e-commerce in social retail sales has stabilized at about 30% in recent years, and it is difficult to make fundamental changes in the short term.

Under such a pattern, it is not realistic to want to achieve growth far beyond the market.

However, the fact that the increment does not increase the profit has made the merchants gradually realize that this kind of impact on GMV not only fails to bring high-quality growth to the merchant, but increases their own burden.

GMV may no longer be suitable for the current stage of e-commerce development.

Second, external factors are also forcing businesses to pay more attention to operational efficiency.

From the perspective of the general environment, the economy is in a period of shifting gears, especially under the epidemic, whether it is a large enterprise or a small company, it has transformed its business thinking from focusing on scale to focusing on sustainable growth and profit margins. Such a change is also an inevitable result of the gradual maturation of the strategic focus after the expansion.

In other words, both platforms and merchants should have high-quality growth in order to survive in the future. After all, the competition now is not about who runs fast, but who lives longer.

At present, it is more meaningful how many potential users can be converted into transaction users compared to how many users are reached; compared with pure GMV, it is more meaningful to comprehensively consider how much cost has been used to drive such sales; compared to the battle report Ranking for similar purposes, it is more meaningful to do a good job in word of mouth, increase the repurchase rate and the unit price of customers.

E-commerce is still essentially a retail industry. For the retail industry, improving operational efficiency is the most important thing. Starting from this, whether it is to improve ROI, ensure a certain conversion rate, increase the repurchase of regular customers, and establish brand precipitation, it is far more important than a single-dimensional GMV number.

Double 11, and even the entire e-commerce track, need to get rid of the shackles of GMV-only theory and seek a new value anchor.

Before the opening of this year’s Double 11 event, Dai Shan, President of Alibaba’s domestic digital business sector, proposed at the press conference that the 14th year of Double 11 will maintain the original intention of making consumers happy, adhere to the user-centered long-term value creation, and bring businesses to the market. Comes with more business certainty.

Users and merchants are the core of the development of e-commerce platforms. Their interests are the guarantee for the platform to obtain sustainable development and considerable profit margins.

Boosting user loyalty is more important than numbers

On the eve of Double 11 this year, Bain conducted a consumer survey, and there are two sets of data worthy of attention.

The first set of data is that among the respondents who participated in last year’s Double 11 and intend to continue to participate this year, 34% of consumers plan to reduce consumption expenditure, and only 24% of the respondents said they will increase consumption expenditure.

In the current environment, this is not difficult to understand.

The second set of data is that 70% of the respondents said that the number of platforms scheduled to be used during Double 11 was at least 3, compared with 56% last year. Breaking down this number further, 66% of respondents said they would use at least 4 platforms, up from 27% last year.

Consumers may not use every platform, but the large proportion of people who intend to use multiple platforms has increased, at least it shows that consumers’ requirements for platforms continue to increase.

So far, after the weakening of GMV, the core problems faced by the platform on the user side actually boil down to one point: how to cultivate and maintain user loyalty under uncertainty?

The goal is clear, but it’s not easy to get there.

Whether a user is loyal or not is affected by multiple factors including product quality, product type, membership plan, pre-purchase trial, after-sales service, logistics service, flexible return, accurate recommendation, and product price. Especially when the competition intensifies and the merchants are missing in any link, it may lead to the loss of users. This determines that not only consumers, but also merchants have higher and higher requirements for platforms.

What’s more, even if the platform has no obvious shortcomings, users may leave.

In the last century, American marketers Christopher W Hart and Michael D Johnson found in a large number of empirical investigations on Xerox Corporation in the United States that among buyers of corporate products and services, the relationship between customer satisfaction and customer loyalty is positively correlated. But not necessarily a linear correlation.

To put it simply, the improvement of customer satisfaction level does not always lead to the improvement of customer loyalty. Many customers who claim to be “basically satisfied” and “satisfied” do not necessarily have high loyalty. At that time, some scholars summarized this phenomenon as “customer satisfaction trap”.

Referring to the “customer satisfaction trap”, at present, if merchants want to maintain user loyalty continuously, they must not just provide the expected “satisfaction”, but make greater differentiation in customer service and improve the “very satisfied”. ” proportion of the population. This determines that in this situation, merchants must seek a better and more complete platform to enhance certainty and retain regular customers.

As an important position for business operations, Taobao and Tmall, with more complete infrastructure and more mature business tools, have naturally become an important venue for businesses to enhance user loyalty and improve business efficiency under this trend.

Over the past few years, Alibaba has continued to innovate and invest in building customer loyalty, whether it is the early large-scale investment and improvement of e-commerce infrastructure, the resolute transformation in the mobile Internet era, or the live broadcast e-commerce model in the post-mobile Internet era. The exploration on the Internet is essentially to improve user loyalty.

It is also in this process that Double 11 will last forever.

Some time ago, Ali’s financial report showed that as of June 30 this year, Ali’s 88VIP members had 25 million members, and their per capita consumption in Ali in the past 12 months was 57,000 yuan. At the same time, Ali has more than 123 million consumers who have spent more than 10,000 yuan in the past 12 months, and the retention rate of such users in the following year remains at 98%.

Ali obviously didn’t stop there. This year’s Double 11 has launched a series of initiatives to optimize the consumer experience.

For example, Tmall has upgraded the “shopping cart”, and the maximum number of shopping carts has been upgraded from 120 to 300; in the past, users can enjoy price protection within 15 days after payment. This year, Taobao and Tmall upgraded the price guarantee service rules, and changed to the full price guarantee within 15 days after the end of the event on November 11, after the payment/payment of the balance, and the longest price guarantee period was extended from 15 days to 27 days.

For another example, Taobao launched a logistics abnormal order hosting service on October 19, which can actively identify and intervene in consumers’ problematic logistics orders.

For older consumers, Taobao has also upgraded the elder version before Double 11, equipped with exclusive human customer service for elder users, and added functions such as grocery shopping and medicine shopping.

Cash flow is more important than size

Since the epidemic, there have been temporary difficulties in the consumption track, and the thinking of operators is changing from making the upper limit of business bigger and stronger to holding the bottom line first.

The bottom line is cash flow, which is the lifeblood of a business at any time.

Against this background, Double 11, as the vane of the consumption field in a year, will naturally change. More and more businesses are beginning to re-examine the nature of business and reposition the meaning of Double 11 for themselves.

During the annual Double 11 promotion, the traffic is abundant and the transactions are active, which is a key node for merchants and e-commerce platforms to reduce uncertainty and focus on operational efficiency.

Therefore, it is particularly important for businesses to find a mature business position.

Taobao and Tmall, as the initiators of Double 11, have been exploring the “peak value” of shopping experience and consumer rights protection, and have also created a good business environment for merchants.

First, Tao Department has a strong consumer mind and conversion efficiency.

E-commerce has never been a traffic business. In the chain of e-commerce, attracting new customers – trading – retaining customers – repurchasing is a complete chain. Only attracting new customers is closely related to traffic, and the latter link is the key to operation.

Over the years, Amoy has accumulated a solid consumer mind, and the entire consumption chain has already gone through.

Whether it is to provide a complete range of commodities, or to make additions based on the refined business needs of merchants and consumers’ interest and consumption trends, the self-iteration of Taobao has made the transformation efficiency continue to break through.

Let the merchants pay attention to their own management, which has always been the direction of the Tao Department. It is worth mentioning that this year’s Double 11, Alibaba also cooperated with brand owners to identify emerging consumption trends, and used solutions such as Tmall’s New Product Innovation Center to incubate new products, grasp old trends, leverage new business opportunities, and develop business for merchants. Lay the foundation for new growth points.

Second, various content and marketing tools help merchants acquire customers accurately.

Alibaba has created a variety of content and marketing tools for platform merchants. In this Double 11, Dharma Pan will be open for the first time without any threshold, providing millions of merchants with digital and intelligent management capabilities; Lingyang, as a DaaS company that provides enterprise digital and intelligent services for small and medium-sized enterprises, will provide business consultants, management consultants, Products such as Content Advisor help merchants reduce decision-making costs and seize market opportunities.

This year, Alimama provides exclusive traffic support and easy-to-operate small-amount exclusive delivery packages for small and medium-sized businesses to help small and medium-sized businesses achieve accurate traffic drainage.

Third, reduce or exempt service fees to reduce the cash flow pressure of merchants.

This year’s Double 11, Tao Department offers a discount on payment collection service fees. Some orders can be collected in 0 payment period as soon as they are shipped. The payment collection period is shortened by an average of 7 days, which reduces the cash flow pressure of merchants, and also reduces the cost of doing business for small and medium-sized merchants. .

Under the series of iterations and support policies of the Tao Department, there are more and more businesses with steady growth. For example, 102 brands achieved a turnover of over 100 million within one hour of the sale on October 31. This may not be as eye-catching as the GMV figures in the early years, but more brands have achieved steady growth, which means that Double 11 is for more and more Merchant-operated help really comes into play.

The many advantages of the Tao-based platform have also attracted well-known big names and a new generation of businessmen to settle in.

Before this year’s Double 11, Italian high-end cashmere brand Brunello Cucinelli opened a store; Yuhuang Moncler entered Tmall Luxury Products and launched limited-edition new products for the 70th anniversary; supercar Ferrari also opened a store to sell high-end fashion… This year is also the most luxury brand participating in Double 11. .

At the moment when the engine is shifting, e-commerce platforms should explore how to do a good job in retail business for merchants. This is not only the new standard of Double 11, but also the responsibility and sense of responsibility of large enterprises.

Epilogue

From running fast to running steadily and living for a long time, the logic of the retail e-commerce industry has changed, and Double 11 is undoubtedly the center of change.

In this change, the industry will usher in a round of reshuffle, which will also bring new opportunities. For merchants, the new opportunity is to focus on high-quality growth, and for e-commerce platforms, it is to establish a differentiated advantage in terms of consumer services and merchant benefits.

Regardless of merchants or platforms, from paying attention to changes to adapting to changes to leading changes, only by taking the lead in every step can they stand at the forefront of the new market logic.

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