How can Alibaba's Double 11, which makes you confused, hit 150 billion yuan?

In 2009, Tmall (then known as Taobao Mall) began to hold promotional activities on November 11, "Singles' Day". The original starting point was just to create a festival belonging to Taobao Mall so that everyone would remember Taobao Mall. The result was out of control, and " Double Eleven " has now become synonymous with the e-commerce consumption festival. In 2017, the single-day transaction volume reached 120.7 billion.

It is said that Alibaba has set the sales target for Double 11 in 2017 at 150 billion yuan, and 60%-80% of the daily target, that is, 90 billion to 120 billion yuan, must be completed in the first two hours, while 120 billion yuan was the full-day sales last year.

Can Alibaba achieve 150 billion and how to achieve this goal? The Operation Research Society will create the "2017 Alibaba Double 11 Operation Series Special Topic" in the next month, breaking down the complex and huge Double 11 operation ideas into clear clues and presenting them to everyone.

As the first article of this special topic, we will study the most important discount strategies in e-commerce promotions and analyze this year's Double 11 based on the "Double 11 Strategy" officially released by Alibaba:

• What are the ways that make users go crazy shopping?
• What is the most important promotion method this year?
• What are the strategic changes in promotions compared to previous years?

The most effective way to get users to spend like crazy is to use profit-making tools (officially called discount tools by Alibaba) based on the users’ profit-seeking mentality. These can be virtual e-vouchers or physical objects with market value (such as an iPhone ). In fact, anything can be used as a discount tool as long as it meets user needs. For example, many public accounts will offer information packages for free. In such a simple activity, the information package is a discount tool (it can be considered a knowledge service).

The traffic coverage of Alibaba's discount tools is divided into: platform-level discount tools that can be used by any industry, merchant, and product on the entire platform; industry-level discount tools that can only be used by merchants and products in a single specific industry; and merchant-level discount tools that can only be used for products in a single store.

Platform-level preferential tools, deposit inflation is the protagonist

In order to better achieve a transaction volume of 150 billion yuan during the Double Eleven in 2017 and make users more willing to spend money, the biggest change in the discount strategy compared with previous years is the upgrade of "deposit inflation" to a platform-level discount tool. (The "deposit inflation" preferential tool means that after the buyer pays the deposit, he will enjoy a deduction benefit higher than the deposit amount according to a certain inflation ratio. In 2016, it was only an industry-level preferential tool.)

Judging from the current Double Eleven pre-sale main venue, except for some imported products and Alibaba smart products, almost all other products support corresponding inflation of deposits, among which the highest inflation multiple is 20 times in the home appliance venue. The pre-sale main venue uses the "deposit inflation" as the recommendation logic for products, merchants, and sub-venues.

Compared with coupons and discount coupons, deposit inflation can not only help merchants know how much inventory they need to prepare and which warehouses in which cities need to stock more inventory, but also achieve a higher discount tool redemption rate at a lower cost.

1) Prepayment of deposit

I believe everyone has had such a shopping experience. On Double Eleven, you saw a very nice down jacket, and there happened to be a "100-100 for purchases over 1000" coupon in the coupon list that you had grabbed before. When you need to pay on the day of Double Eleven, you will still complain in your heart, "MD, Double Eleven is not much cheaper", and you will feel that you did not get much discount. If you spend 1,000 yuan to get a 100 yuan discount, you will feel that it is too little. In consumer psychology, this is called "proportion bias."

You are complaining about the merchant's lack of sincerity, but in fact the merchant is bleeding for the 100 yuan profit. The discount coupons put merchants in a passive position. They either have to offer large discounts to eliminate users' "proportional bias" and increase the redemption rate to win by volume, or they have to accept the lower redemption rate of the discount coupons and give up market share.

The "deposit inflation" discount tool can very well make up for the "proportional bias" drawback of the full-discount coupon. It can achieve a win-win situation in which users feel they are getting a bargain while merchants can make more money.

Let's take the purchase of a down jacket as an example. This down jacket supports pre-orders with a 20 yuan discount to 100 yuan. At this time, users will feel like they have exchanged 20 yuan for 100 yuan. " Using 20 yuan to get the multiplier of 100 yuan" will make them feel that it is a great deal. (Compared to the 100 yuan discount for purchases over 1,000 yuan, users actually spent 20 yuan more.)

In addition, the proportion of the final payment for the "deposit inflation" discount tool on Double 11 will definitely be higher than the redemption rate of the full-reduction coupons. Why do I say that? (In order to strengthen your impulse to buy, many merchants have launched activities to give gifts to the first N orders to pay the balance.)

When people do something, they not only look at its future input and output, but also look at how much they have paid in the past. The more they pay, the more likely they are to get more investment. We call this interesting and irrational psychology "sunk cost."

When you are undecided about whether to buy the down jacket on Double Eleven Day, the 20 yuan you paid in advance will play a psychological role, and you will persuade yourself that “I can’t waste that 20 yuan, this down jacket is actually very nice”, and then you may spend another 900 yuan to buy the down jacket.

In 2017, Alibaba used "deposit inflation" as the main discount tool to cover the entire platform. It will soon become the standard for all e-commerce platforms to hold big promotions, and any product recommendations related to transactions will pay attention to this new type of discount method.

2) Torch Red Packet

Currently, Tmall has launched platform-level discount tools for Double 11. In addition to "deposit inflation", another tool is "Torch Red Packet" (there is no usage threshold, but it can only be used on Double 11 day).

From 15:00 on October 19th to November 10th (the end of the Double 11 Gala), during the event, users can obtain red envelopes to be lit through three methods: claiming them through the platform, helping others light them up, and looking for red envelopes in stores. By asking friends to light up red envelopes, drawing red envelopes from each other, and recharging red envelopes, they can eventually obtain lit torch red envelopes and participate in the prize pool (with a total face value of 250 million yuan, all of which comes from brand merchants sponsoring the Double 11 Gala) to obtain Double 11 super red envelopes. From the perspective of operational value, its main function is to attract new users, especially from WeChat , which has 700 million daily active users. At present, I have seen quite a lot of "Torch Red Envelopes Light Up Each Other" WeChat groups .

3) Group red envelopes and shopping allowances

Two other platform-level discount tools - "Group Battle Red Packet" and "Shopping Allowance" - will be launched on October 25 and November 1 respectively.

The former "group battle red envelope" can be simply understood as a rebate for group buying. Buyers create a purchasing group in the APP and buy products from a store together for a certain amount. The merchant will then rebate a certain amount of coupons (only available on Double Eleven Day). This new gameplay is relatively complicated, and the specific details are mainly based on the final form of participation.

The latter "shopping allowance" seems to be a very impressive thing at first glance, but it is actually the cross-store industry coupon delivery that Alibaba has focused on in previous years. This part is the profit concession made by Tmall itself (for example, the previous Tmall Hot Training Festival sports and outdoor products were 399-80 yuan, which can be used across stores).

Unlike in the past, this time there will be no restrictions on the number of coupons available on the entire platform. The final total allowance (total discount) will be displayed in your account and can be stacked with store coupons (calculate store coupons first and then shopping allowances). It can be distributed through multiple channels such as games , and the usage method is still to deduct Y yuan for every X yuan spent (for example, 400-50), with no upper limit and supports cross-store payment. (8:1, if Alibaba wants to push the transaction volume to 150 billion, based on a 60% write-off rate, it will have to issue at least 20 billion in shopping subsidies.)

Decentralized merchant-level discount tools, discount coupons are standard

Store coupons are an effective way for merchants to increase average order value and traffic conversion rate . The key point in setting the amount is to achieve the purpose of increasing average order value while making users feel that this threshold is very easy for them to reach.

Therefore, in the specific setting process, we need to set the minimum threshold for store discount coupons based on the store’s average customer unit price. The average customer price over a period of time should be selected as the average customer price, so that the data is more accurate. After knowing the customer price, if we want to increase it, we must set the minimum usage amount of the coupon to be greater than the store's lowest customer price.

For example, if the average customer spending is 256.04 yuan, then we can set the minimum threshold for using coupons to 299 yuan, thereby achieving the goal of increasing the customer spending.

But everyone knows that when buyers want to place an order to reach the minimum usage threshold of the coupon, the price is often higher than 299 yuan, and it may exceed 299 yuan and almost reach 400 yuan, so we have to set up a second-level coupon, and setting the usage threshold to 399 may encourage buyers to buy more. Of course, the amount of the coupon should also be increased, for example, 20 yuan off for purchases over 299 yuan, 50 yuan off for purchases over 399 yuan, and 100 yuan off for purchases over 599 yuan. As you move forward step by step, remember not to set the range too large, which will make it difficult for buyers to reach, as that would be counterproductive.

Industry-level discount tools, Huabei is interest-free and has no innovation

The next level of platform-level preferential tools is the industry-level "preferential tools" - Huabei interest-free installments. It refers to the function that supports "no handling fee for buyers when purchasing in installments with Huabei", and the handling fee is borne by the seller or the platform; it is commonly known as "interest-free installment", because it is too common and only meets the needs of large-scale transactions, so it will not be analyzed here.

Well, let’s make a final summary of Alibaba’s Double 11 promotional tactics in 2017:

1. Promoting the “deposit inflation” preferential tool to a platform-level tool is the core promotion method during the pre-sale period.
2. The user "Torch Red Packet" preferential tool enables the acquisition of new users from the WeChat channel.
3. Decentralize store-level discount tools to allow merchants to self-configure tools such as coupons.
4. Continue to use the platform-level "full-reduction coupons" and change their name to "allowance coupons" to improve user favorability.
5. The “Huabei interest-free” preferential tool will be downgraded and the “full refund coupons” may be cancelled.

In general, Alibaba officially took consumer psychology to the extreme during this year's Double Eleven. In addition to vigorously promoting the deposit inflation tool that can be used to eliminate users' price "proportional bias", it also used all kinds of tricks in the distribution of various preferential tools.