Behind Taobao Special Price Edition Breaking Through Billion Yuan: Ali Breaks Through The "Sinking" Market

The sinking market still has an inexhaustible dividend. Alibaba's latest quarter financial report also shows this trend. On February 2, the company released the third quarter financial report data of fiscal year 2021, which showed that in December 2020, the monthly active users of Taobao special price edition focused on sinking the demand market exceeded 100 million for the first time. From the year 2020, Taobao special edition annual active purchase users also exceeded 100 million.

From this point of view, Taobao special edition has ranked among the top three e-commerce platforms in the sinking market. "The global environment is indeed changing. In the context of uncertainty, Alibaba needs to do something stable. One is high-quality growth, the other is cross track development, both need to have a better grasp of the details and market

Previously, Dai Shan, President of Alibaba Group B2B business group, said in Shanghai that Alibaba's launch of Taobao special edition was a strategic choice because it saw a huge space in the domestic demand market.

Under the promotion of Alibaba, the industrial belt factory also began to cross track development in Taobao special edition. 3C digital products in Guangdong, daily necessities in Jinhua in Zhejiang, home textiles in Jiangsu, paper products in Fujian, bags in Hebei and so on, a number of industrial belts with high degree of digitization have taken the lead in the wave of digital upgrading of traditional manufacturing industry.

With the growth of user scale and c2m orders, customization is sinking and consumption demand is becoming more and more refined, which puts forward higher requirements on the supply side. At present, pinduoduo's financial report in the third quarter of 2020 shows that the annual number of active users of pinduoduo has reached 731 million. Jingxi, a subsidiary of Jingdong, has also been upgraded from a business unit to a business group, and Zheng Hongyan has been appointed as the head of Jingxi business group, reporting to the CEO of Jingdong group, Liu qiangdong. The battle between the three e-commerce companies in the sinking market may officially start in 2021.

However, the average annual consumption of pinduoduo users is still low, at present, it is only 1993 yuan, which is far from being comparable with the per capita consumption of Alibaba platform above 6000 yuan. An e-commerce investor told the 21st century economic reporter that from the perspective of revenue, pinduoduo's scale does not have the ability to compete with Alibaba Jingdong. With the advantages of mature supply chain and its own flow, Alibaba is bound to stir up the pattern in the sinking market.

It is worth noting that after the announcement of Alibaba's financial report, many institutions continue to be optimistic about the future of Alibaba. Daiwa continued to reiterate Alibaba's "buy" rating, giving it a target price of HK $325 for Hong Kong shares; Morgan Stanley gave Alibaba a "overweight" rating for us shares, with a target price of US $320.

Behind the rise of Taobao's special edition is Alibaba's continuous breakthrough in the sinking market and new shopping methods. IC photo

C2m upgrade supply chain

According to financial report data, in the fourth quarter of 2020, Alibaba's core business income was 195.5 billion yuan, accounting for 89% of the total revenue. More importantly, the growth rate of 38% in this quarter was significantly higher than that of 19%, 34% and 29% in the previous three quarters, which means that Alibaba has held the core position in the epidemic year.

According to the financial report, the number of mobile active users of Alibaba in China's retail market has reached 902 million. The annual number of active consumers reached 779 million, with a net increase of 22 million in a single quarter, reaching a new high in the past eight quarters.

This report card is not easy. In 2020, the "sinking market" is obviously the place that strategists must contend for. The influx of giants and the battle of traffic witnessed the opportunities and growth points brought by the new air outlet. However, no matter in which market, the business competition of e-commerce platform will eventually return to the competition of quality and efficiency, and businesses will not accept the existence of a single platform. And "Taobao special edition" is undoubtedly the latecomer in the sinking market competition pattern.

In the past sinking market, supply was difficult to meet the demand, Shanzhai rampant, lack of brand, inconvenient life service, and the traditional channel was difficult to sink, and gradually became the inventory sewer of online channel. On the other hand, affected by the global epidemic, the international supply chain has been seriously affected. A large number of foreign trade factories are facing the challenge of transformation and domestic sales, and good goods are hard to sell.

And Taobao special version of the c2m enabling factory model to sink the market more than a choice. Zheng Liang, marketing director of Alibaba's c2m business department, said that in the early stage of Taobao, the c2m mode was adopted to improve the quality and efficiency of Taobao. Consumers placed orders directly through the platform, and the factory received personalized demand orders from consumers, and designed, purchased, produced and delivered goods according to the needs, thus helping the factory to make a hit.

In particular, in September last year, 1688 platform announced the industrial belt upgrading plan, launched three internal circulation channels for 6.7 million manufacturing enterprises in China, fully opened Taobao special price edition, and integrated the three digital platforms of processing customization, wholesale distribution and retail, to help the cross track development of industrial belt factories.

As of January 27, official data of Taobao's special price edition showed that since the connection with 1688, Alibaba's domestic trade platform, more than 70000 "wholesale and retail" factories have been added to the platform. On average, more than 500 industrial belt factories use Alibaba c2m to transform retail factory direct supply every day.

Among them, Guangzhou Caici Cosmetics Co., Ltd., which has been engaged in beauty business for 13 years, has achieved a monthly sales of 1 million yuan with a 0-base hand cream in just two months after accessing Taobao's special price edition at the end of August last year. Previously, 80% of its performance came from wholesale. The outbreak of the retail terminal has aroused the attention of wholesalers, many wholesalers take the initiative to find words to pick up goods. In 1688 CI factory stores, the same hand cream can be wholesale sold 200000 per month. Under the joint promotion of 1688 and Taobao special edition, CI collection factory realized the transformation and upgrading of B + C cross track.

In an interview with the 21st century economic reporter, Fang Hao, a factory of Zexi daily necessities factory in Yiwu City, Zhejiang Province, revealed that the epidemic situation last year caused the factory to lose 10 million foreign trade orders before March of that year. For this factory, which was originally small in scale, it was a huge blow. Subsequently, Zexi daily necessities factory officially settled in Taobao special price edition in March. After seven months of platform operation, the c2m mode allows customers to directly place orders and pick up goods from the factory, and customized personalized products for customers, which slowly turns the crisis into opportunity. "In October, the new wave was displayed on Taobao's special edition platform, and it achieved a sales volume of 500000 yuan in less than three days. This is something we dare not even think about when we do wholesale and foreign trade. "

From B2B mode to c2m mode, Zexi achieved 40 million yuan sales performance in Taobao special price edition only in the second and third quarters, which made up for the loss caused by foreign trade orders.

Under the c2m mode, 9.9 yuan of electric toothbrush, 9.9 yuan of rimless underwear, 1 yuan of package mail 100 dental floss sticks A large number of cheap and high-quality goods become popular, which stimulates the consumption enthusiasm of the sinking market.

The reason is that the sudden outbreak of the epidemic has given more consumers a more rational view of consumption. According to the data of Mintel survey company, the financial situation of half of China's consumers has become worse under the influence of the epidemic, which has a more obvious impact on young consumers, low-income people, employees of private enterprises and self-employed enterprises.

In the short term, the decline of income expectation directly leads to the adjustment of residents' consumption concept, the reduction of consumption tendency and willingness, and the prominence of rational consumption consciousness. According to the data of the central bank, residents' propensity to save has been strengthened. In the first three quarters of 2020, RMB deposits increased by 18.15 trillion yuan, an increase of 4.93 trillion yuan over the same period of last year; by the end of September, the balance of RMB deposits reached 211.08 trillion yuan, a year-on-year increase of 10.7%.

On January 26, the annual report of China Mobile Internet 2020 released by questmobile, a third-party data consulting agency, showed that with the full mining and deep cultivation of sinking demand, the user scale of Taobao special edition increased by 550% year-on-year in 2020, becoming the mobile phone application with the fastest growth rate of annual mobile Internet user scale.

New mode stimulates new consumption

Behind the rise of Taobao's special edition is Alibaba's continuous breakthrough in the sinking market and new shopping methods. Zhang Yong, chairman of Alibaba's board of directors and CEO, said in the financial report telephone conference that Alibaba's main driving force is still sinking the market, and Taobao's special edition is its main way to touch the market.

In October last year, Taobao launched the "1 yuan more fragrant Festival" in advance for double 11. One hundred million factory goods are sent home with only one wallet per piece, and the activity lasts until the end of the double 11.

Wang Hai, vice president of Alibaba and general manager of c2m business unit, said in an interview with 21st century economic reporter that the concept of factory goods still needs an educational process. The purpose of launching this activity is to help industries bring factories and let Chinese consumers really know these good products. As for whether this mode can make businesses make money, the purpose of all factories is to increase the business. Even if it is not a national big brand, it does not need to spend a lot of cost and cost to build their own national sales channels. "Through a very simple digital sales mode and e-commerce mode, it can make business quickly."

The innovation of mode is very important. In the view of the industry, the core of c2m is the e-commerce platform to help factories understand consumers and the market. Therefore, the price war is not the most fundamental factor, "good goods" or not is crucial.

"Taobao special edition wants to create a popular system is very clear, first of all, it is not an absolute price oriented, because we are already the cheapest price in the whole network, so it will not be like some platforms, just focus on the price to judge." Zheng Liang stressed. Taobao's special price version clearly targets the people who pursue the cost performance and creates products around the needs of consumers. The number of users of Taobao's special edition has exceeded 100 million, which is not Ali's counterattack in the sinking market, but the rise of Chinese factory merchants and the rational return of consumers.

On the other hand, in the c2m mode, the needs of consumers have been unprecedented attention. Only when the factories that really meet the needs of consumers can they rise, and the value of manufacturing itself will further rise from the bottom of the industrial chain. Manufacturing factories have narrowed the distance with the market through the empowerment of platform c2m, and they also understand consumers better.

"In the past, it would take four or five months for our products to reach consumers. If they could not be sold, they would be returned to stock. In the current model, it only takes 15 days from design to consumer use, and the user experience can be timely feedback, which is convenient for us to adjust product production and design. " SHU Kai, general manager of Zhejiang Yifan daily necessities Co., Ltd., said, "in the post epidemic era, I think factory managers should recognize their own positioning and quickly change the thinking of factory management. They should live first and then find breakthrough points."

At the same time, c2m mode has the characteristics of de stocking, removing intermediate links, and determining production according to quantity. By building a "very short link" to remove intermediate links such as inventory, logistics, total sales and distribution, the cost can be reduced, which can not only help factories produce marketable products efficiently, but also make consumers easily buy good products with high cost performance, so that the sinking market can really usher in the upgrading.

Wanlian securities analysis points out that c2m can meet the consumer's pursuit of cost performance, so as to promote consumption. As consumers become more mature, commodity price information is more transparent, and the competition for homogeneous goods is becoming more and more fierce, consumers' pursuit of high cost performance will become a trend. In addition, c2m mode also caters to the long-term trend of consumption change, which is expected to create new consumption growth channels and drive the rapid development of a series of industrial belt factories and some brand companies.

It is worth noting that c2m is not a new concept. Thanks to the acceleration of digital process, China's c2m has been able to eliminate the distribution and circulation costs and allow consumers to purchase factory goods directly at wholesale price. However, it is still in the exploration stage to change the supply chain according to consumer demand and realize rapid reverse customization.

At present, Taobao special edition has gathered 1.2 million industrial belt merchants and 300000 digital foreign trade factories to produce cost-effective products for consumers. Among them, there are 13 factories with annual sales of more than 1 billion.

Innovation into core competitiveness

The ever-changing international situation and the still raging new epidemic situation make the traditional manufacturing industry realize that rapid transformation is imperative. The new productivity represented by digital economy is the main channel of production and marketing links. According to the national industrial and commercial registration information, there are 6.7 million manufacturing factories in China. Digitalization can meet the needs of more than 300 cities with a population of more than one million. Huge unprecedented opportunities are in front of practitioners.

Combing the competition process of China's Internet e-commerce, it is found that the mode of subsidy and traffic dividend can not support the dominance of one platform. The commercial competition of e-commerce platform in the sinking market will eventually return to the competition of quality and efficiency. From the early C2C competition between eBay and Taobao, then to the competition between tmall and Jingdong, and then to the competition between Taobao special price version and pinduoduo, consumers and businesses are constantly putting forward higher requirements for Internet companies and industries.

For Alibaba, innovation and promotion are the only development path, and through the strength accumulated in the supply side for 20 years, it quietly changes the competition pattern of the sinking market.

In the early competition between Taobao and eBay, Taobao withdrew the booming eBay from the Chinese market in only three years because of its accurate grasp of the drawbacks of its business model. When eBay wants to charge a certain admission fee and transaction fee to each business, Taobao proposes to implement a three-year free strategy, that is, no admission fee or transaction fee will be charged to any business in three years. The platform welfare soon attracted many businesses to turn against each other.

In 2006, Taobao had already occupied 70% of China's e-commerce market. In January of the same year, eBay announced that it had officially abandoned China's e-commerce market. Later, the emergence of a new retail model led to a new round of e-commerce scramble. Tmall and Jingdong became the main players in the competition, and the biggest difference between them was data sharing and user precipitation of merchants.

In the past, the commercial logic of sinking the market was to race on the price of the trading link, and explosive marketing provided short-term sales to factories, which meant that "low quality and high price" returned to "low quality and low price". Taobao's strategy of sinking the market at a special price is to improve the infrastructure construction with a small fire, trying to optimize the existing "low quality and low price" into "high quality and low price", and transform the production link.

The most important promotion strategies in the transformation of trading links are subsidies and price war. This kind of tactics is fast and effective, but "low quality and low price" is double harm to consumers and factories, which is difficult to sustain. After all, people's yearning for a better life is instinctive. Low price and high-quality products are the best way to compete for the sinking market users.

Only through the digital transformation of the supply side to reduce the product price is sustainable. Let all participants benefit and remove some unnecessary losses with technology and figures. This is the digital goodness of e-commerce platform.

According to the report of the Ministry of Commerce, Alibaba 1688 platform covers 172 first-class industrial belts, accounting for about 70% of the number of national first-class industrial belts. 70% of the national industrial belts directly constitute the industrial rear of Taobao's special price version, and Taobao's special price version has begun to show its advantages in c2m business. The rapid growth of Taobao special edition will undoubtedly have an impact on the "sinking" market.

Ali's new infrastructure

9 months to achieve a monthly life of more than 100 million, Taobao special edition to do what?

The products of Taobao special price version are originated from 1688, the b-end domestic trade wholesale platform of Alibaba. By connecting with 1688, businesses can directly know the needs of Taobao special price version users, remove the intermediate links such as brand and channel providers, improve efficiency, reduce price and cost, and solve the inventory risk of manufacturers, which is a good thing for both supply and demand sides.

The key is how to do a good job in matching and connecting supply and demand, which will test the ability of the platform. It needs not only huge flow, but also sufficient factory supply, as well as strong operation ability, data ability and performance ability to do a good job in collecting user demand, coordinating enterprise production, ensuring circulation and other aspects of the work.

And Ali has accumulated enough advantages in these aspects, which is also the core of Taobao's special edition to grow into more than 100 million months of live Internet products in less than a year.

Alibaba has a famous theory called "crawler development". This kind of rolling development strategy of a business promoting B business has an image explanation: "work for today, invest for tomorrow, and hatch for the day after tomorrow."

In the results of Taobao special edition, we can also find a change in the future business competition, and the possibility of enterprises to obtain long-distance race with single point breakthrough is becoming lower. In the ecological support of the digital trading system of Alibaba crawler strategy, Taobao's special price version has gone a lot. The effective cooperation of "standing soldiers, light infantry, cavalry and auxiliary soldiers" in Ali Macedonian square array has enlarged its individual combat ability.

With the help of the logistics and supply chain of rookies, financial services of ants, Alibaba cloud and nailed cloud intelligence and data technology, Alibaba has built a full link digital system from "raw materials to commodity sales" for factories in the industrial belt, while Taobao special price edition has done a good job in the communication between the industrial belt and consumers based on the system, so as to help logically The industrial belt has completed the digital upgrading and further opened a broader sinking consumer market.

As a result, Taobao special price version opens the value closed loop from the industrial belt to the consumer end, and realizes the dual satisfaction of consumers and industrial belt. In the next three years, Taobao will help 1000 industrial belt factories upgrade to "super factories" with an output value of more than 100 million yuan, create 10 billion new orders for industrial belt enterprises, and focus on building 10 digital industrial belt clusters with an output value of more than 10 billion yuan nationwide.

The data can prove the results. Alibaba's revenue in the third quarter of fiscal year 2020 was 221 billion yuan, a year-on-year increase of 37%. Compared with the previous quarter's 155 billion yuan, Alibaba had a higher growth. On the one hand, it had the influence of the "double 11" campaign. On the other hand, the domestic epidemic situation control was outstanding, and consumer confidence increased. Among them, the core business income from China's retail business is 153.679 billion yuan, accounting for 78.6% of the core business income and 69.5% of the total revenue.

In addition, for Alibaba, the future will give full play to the characteristics of the platform economy in terms of social responsibility, including creating jobs, serving small and medium-sized enterprises, assisting their production, circulation to export, and transformation and upgrading in the production process. "This is not separate from operation, on the contrary, it is highly related and consistent with the ecological prosperity of our business and platform economy." Zhang Yong believes that more social responsibility is conducive to the prosperity of the platform, and ecological prosperity in turn helps to undertake more social responsibility.

Undoubtedly, Taobao special edition, as an important layout of Alibaba's breakthrough in the sinking market, will reach the bottom users. Zhang Yong believes that Taobao special price version will let Alibaba better in-depth and contact with the audience in low-level areas. "At the same time, we can also give full play to our advantages in product supply and supply, including 1688. In fact, Ali has a very strong supply and supply capacity in terms of high cost-effective goods to meet the needs of these people with low consumption power. "

The sinking market is becoming a new engine of China's economic growth, and its huge potential means that the sinking campaign is far from over. According to McKinsey and Morgan Stanley forecasts, in the future, the proportion of China's middle-class and wealthy families will increase significantly, which is expected to reach 81% in 2022. Among them, the third and fourth tier cities will grow fastest.

By 2030, China's personal consumption will increase from 29.6 trillion yuan in 2016 to 65.3 trillion yuan, and more than 66% of the growth will come from the sinking market.

The development of the sinking market can be seen as a mirror image of China's Internet development 30 years ago. Once upon a time, first-line and second-line users only bought goods with low price and general quality on e-commerce. With the increase of income and trust in online shopping, netizens began to buy high-quality brand goods with high customer price.

Although there is no "cow" of traffic, better business and ability can also bring about faster growth, which may be the real answer to the secret that Mau can exceed 100 million yuan in 9 months.

(Intern Wei Xianghui also contributed to this article)