Alibaba sellers get a cheaper deal this Singles’ Day as new policies come to fruition

Zhang, co-founder of his company InReady in 2015, is participating as a Singles’ Day retailer for the WHC brand for the sixth consecutive year. This year feels different, he said.

Policy changes have resulted in less pricing pressure on retailers, Zhang said, a shift from years-old practices that pushed sellers to lure consumers with ultra-low prices. New measures this year are proving more beneficial for merchants, including Alibaba’s pledge to provide 10 billion yuan worth of resources to help merchants boost traffic.

“It’s a big sigh of relief for us,” Zhang said. “At the beginning of the year we were pushed [by Tmall] offering the lowest price on all platforms. But sometime after the 618 Shopping Festival [in June]There was less emphasis on pricing.”

In August, Alibaba began easing a controversial “refund without returns” policy that allowed customers to request a refund without returning products they were dissatisfied with – a rule that many retailers said was being abused.

Li Yuan, who has been selling sneakers on Taobao for four years, said he has had returns automatically approved by Taobao with no way to dispute them. “It’s a very, very big headache for every merchant, and I’m glad Alibaba is doing something about it.”

This reflected a broader strategy by the e-commerce giant to build more trust with merchants. It was also seen as a response to a recent government call to end unhealthy competition.

In July, China’s Politburo released a statement that also condemned “involution,” a term that describes dwindling opportunities in a highly competitive environment.

Other platform operators have also made operational changes to prevent what some saw as a race to the bottom on price and product quality. Pinduoduo, for example, began banning sellers of counterfeit products in September.

Alibaba’s core strategy is to step back from managing its sellers and give them more autonomy in day-to-day operations, said Zong Bu, who leads the merchant service experience at Taobao and Tmall Group (TTG).

“Our goal is to ultimately free merchants from ‘ineffective involution’ and push them to provide high-quality services,” Zong said at a recent media event in Hangzhou.

In another merchant-friendly move, Alibaba launched a new service called Tuihuobao ahead of Singles’ Day that reduces returns logistics costs for sellers. Additionally, artificial intelligence (AI) tools have been updated, which traders can use for free on a limited basis.

“The repatriation service is a big deal,” said WPIC’s Cooke. “This doesn’t just mean dealers are seeing strong GMV [gross merchandise value]But operationally it will also be much easier.”

Since embarking on its biggest-ever corporate restructuring last year, the Hanghzhou-based tech giant has been trying to regain its former glory while grappling with a domestic economic slowdown and fierce competition from new rivals. After taking the helm of Alibaba as CEO in September 2023 and head of TTG in December, Eddie Wu Yongming pursued a strategic focus that is “user-first” and “AI-driven.” Commerce and cloud companies.

Two months after adjusting its refund policy, TTG said it was rejecting an average of over 400,000 refund requests per day. Tuihuobao has now served more than a million merchants, helping them reduce return logistics costs by 30 percent by October.

As Alibaba’s relationships with merchants improve, e-commerce competition has gradually calmed down as Big Tech companies have begun to dismantle their walled gardens. For example, merchants on Taobao and Tmall can now accept payments via Tencent Holdings’ WeChat Pay, and sellers on JD.com can choose to use Alibaba’s Cainiao logistics service.

“General competition has begun to stabilize and slow,” Kenneth Fong, head of China internet research at UBS, said in a media briefing in late October. “Internet companies used to fight with each other, now they cooperate.”

Competition between these companies is now heating up in foreign markets as they pursue cross-border e-commerce strategies to hedge against weak consumer spending at home.

In July, in response to Shein and Temu’s increasing success overseas, Alibaba announced a global Pan Apparel free shipping plan for eligible merchants on Taobao and Tmall, allowing them to sell directly to consumers outside the mainland.

Fong said cross-border e-commerce is a “big opportunity” for Chinese companies.

“Companies don’t do this by offering discounts or stealing business from other countries,” he said. “Instead, they have pricing advantages due to redesigned supply chains and improved efficiencies,” he said.

Measures to improve opportunities and benefits for dealers have enabled sellers to increase their GMV. However, a new challenge has arisen for Taobao: the platform is having difficulty making money from traders.

An advertisement for Tmall’s Singles’ Day sales at a bus station in Beijing on October 29. Photo: Simon Song alt=An advertisement for Tmall’s Singles’ Day sales at a bus station in Beijing on October 29th. Photo: Simon Song>

Analysts have noted a gap between TTG’s customer management revenue and GMV growth in recent quarters, suggesting that the increase in GMV did not translate into a proportional increase in dealer commissions.

To increase monetization, TTG has made two major efforts this year. Earlier this year, the company launched Quanzhantui, a paid digital marketing tool. In September, the technology service fee for small merchants was changed from a fixed annual rate to a percentage of GMV, which Taboao sellers now also have to pay.

More than 250,000 merchants used Quanzhantui to sell 1.3 million products on the first day of Singles’ Day sales, Alibaba said last month. However, it remains unclear what impact the service will have on sales.

Huang Tao, co-founder of Taobao clothing store Bellkenidea Studio, is one of the merchants using the marketing tool to drive traffic on Singles’ Day.

“It’s getting smarter,” Huang said. “In recent years, there have been many so-called hidden rules in the marketing process that required dealers to go ahead and slowly understand them. Now I know where my ads are placed and what type of people they reach.”

WPIC’s Cooke said he believes Alibaba’s change in merchant policy will ultimately help boost advertising revenue. “The fact that Alibaba gives brands more respect will allow them to spend more on advertising,” he said.

As Singles’ Day comes to a close on November 11, analysts and investors will be closely watching Alibaba’s final sales performance as a gauge of the impact of its new strategies and the recovery in consumer spending in China.

InReady’s Zhang is optimistic. He said he was confident his Tmall store was on track to achieve 100 million yuan in sales – nearly 40 times more than in 2019, when he first attended the event. He expects further sales growth in the coming years.

“Today’s best performance is tomorrow’s foundation,” Zhang said, referring to one of Alibaba’s six corporate values ​​that he has made his own motto. “This sentence has been confirmed again and again in our experience over the last five years.”

This article originally appeared in the South China Morning Post (SCMP), the most authoritative coverage of China and Asia in more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Facebook pages Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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