E-commerce operations: analysis of the promotion system!

E-commerce has been integrated into our lives and is involved in many daily aspects. Well, as one of the important support systems for the development of e-commerce business, the promotion system, some people may not understand what it looks like internally.

1. Introduction

The promotion system is an important part of the e-commerce system and one of the important support systems for the development of e-commerce business. Due to the importance and complexity of the business, the system is also relatively complex. This time we will disassemble the promotion system and take a closer look at what the promotion system looks like inside.

The promotion system series of articles will be divided into two parts:

1. Overall overview: Looking at the composition of the promotion system from a large module perspective, including its main functional components, is the content of this article.
2. Module disassembly: The important modules will be disassembled in detail and will be shared step by step later.

II. Overview

Before we disassemble the promotion system, let’s take a look at the types of promotions that e-commerce companies often do:

• Second kill;
• Direct price reduction/discount on single products;
• Full discount/full discount;
• Send gifts;
• Pre-sale;
• Exchange/add-on purchase;
• N yuan for any M items;
• Buy N and get M for free;
• combo;
• Group Buying…

Among these promotions, promotions can be classified into several categories.

Direct price change: The price of a product will change when it participates in a promotion. Flash sales, discounts/rebates for a certain amount, M items for N yuan, and buy N get M free all belong to this type.

On the basis of price change, pre-sale and group buying have evolved into other types:

• Group buying: It has the nature of fission, and you need to buy together with others to get a lower price.
• Pre-sale: The purchase process is divided into two stages: the deposit payment stage and the balance payment stage, and certain discounts can be obtained by paying the deposit.

Additional categories: Do not change the price of the goods, but give them as gifts or allow customers to buy other things at a lower price, such as giving gifts and adding extra items to purchase.

A package is a special kind of product that packages multiple products into one virtual product for sale, and the products can also be purchased individually. During the packaging process of the virtual set, the price of the items may change.

According to the range of commodities to which the promotion applies, the promotion can be divided into single-item promotion and collection promotion .

• Single product level: Promotions are applied to single products, and each product enjoys the same promotion.
• Collection class: Promotions that apply to a pool of goods. Promotions for the entire pool of goods enjoy the same promotion.

If both A and B have a buy-one-get-one-C-free promotion at the single-item level, then buying A+B together will give you two Cs for free; and if A and B have a buy-one-get-one-C-free promotion at the group level (A and B are from the same product pool), then buying A+B together will only give you one C for free.

In order to support the implementation of the above promotional activities, what kind of system capabilities does the promotion system need to provide?

• Creation, review and effectiveness of promotional activities: the basis for promotion effectiveness;
• Promotion display: display which promotions the product is participating in, the rules of each promotion, the price after the promotion, and other products that can be used for promotion at the same time;
• Use of promotions: which promotions can users use when purchasing products and how to use them best;
• Promotional order processing: promotional allocation and reverse refund processing;
• Promotion risk management: In order to better balance sales and profits, promotion risk management is crucial to avoid price-gate incidents.

3. Promotional activity creation, review and implementation

1. Promotion creation

When creating a promotion, there are a few main parts:

(1) Basic information

Activity name, activity time, activity type.

(2) Rules of the activity

The activity rules mainly include the discount threshold and discount content, and the combination of the two constitutes the rules of each promotion.

In addition to the discount threshold and content, there are other non-mandatory rules, such as:

① Applicable objects: You can select the objects of promotion and trial according to dimensions such as membership level and fan identity.

② Payment retention time: The payment time for some promotions will be set shorter than that for ordinary products to urge users to place orders earlier. Options can be provided based on promotion type: same as regular products/separate promotion time.

③Whether to withdraw other promotions and when to withdraw: In order to avoid price gates, some promotions cannot be shared with other promotions. At this time, you can choose whether to share this promotion with other promotions. For example, for flash sales, you can set it to withdraw other promotions n hours in advance, or you can apply flash sales together with discounts.

(3) Promotional products

There are three options for promotional items:

① All products: All products under the creator's authority are supported, including products added later; in addition, for comprehensive e-commerce, most promotions have unsupported categories, and this item can be set directly on the promotion type.

② Applicable products: Only the selected products are supported. Products added later are not supported. As for the dimension of product selection, the most basic one is the SKU dimension, which can support SPU, category, brand, merchant, supplier, etc. If it supports category brands, etc., applicable products can be used together with inapplicable products. For example, it is applicable to a certain category, but not to some SKUs under the category.

③ Inapplicable products: The selected products are not supported, but products added later may also support this promotion.

(4) Number of activities

The number of activities includes two aspects:

① The number of activities that a user can enjoy, that is, the number of activities that a single user is limited to purchase. If a single user has reached the purchase limit, the user can purchase the product at the original price and the product will not be withdrawn from the promotion.

② The total number of activities that can be enjoyed in the product dimension during the activity cycle, that is, the activity inventory. When the active inventory of a product reaches the set number of times, the product will be withdrawn from the promotion and sold at the original price.

For the scalability of promotion types, a function of creating promotion types can be added. This part will be introduced in a special article later.

2. Activity review

The review mechanism for promotional activities can be based on the business development of each company, and there can be the following rules:

(1) Promotions created by merchants/suppliers themselves do not need to be reviewed, but self-operated businesses will be judged based on the rules to determine whether they need to be reviewed;

(2) Set the protection rate according to the category. If the protection rate is exceeded, an audit is required. If it is not exceeded, no audit is required.

(3) Set different review levels according to different promotion types. For example, because flash sales have special resource slots, they have one more review level than ordinary price reduction promotions, which involves the operation of the platform responsible for the display slot.

3. Event Validity and End

The activity must take effect exactly at the set time without any delay.

In order to ensure query efficiency, a caching mechanism is generally used. When promotions for a large number of products are effective at the same time, it is easy for promotions for some products to not take effect. At this point, be sure to emphasize to developers: pay attention to avoiding this situation through development mechanisms.

In addition, a monitoring + compensation mechanism should be added. It is necessary to monitor the effectiveness of the promotion in a timely manner. If it should be effective but is not effective, compensation must be made to make it effective.

In addition to ending upon expiration, activities also need to support early termination before they start or during the activity, including the end of the activity and the temporary withdrawal of some products from the activity without ending the activity.

The temporary end of an ongoing activity will damage the user experience, but for the sake of the company's normal operations, this function still needs to be added. In order to avoid risks, stricter control can be exercised over its authority or approval process.

IV. Promotional display and overlapping use rules

1. Promotional display

The promotion has the following daily display positions and display contents:

(1) Product details page: The promotional labels, countdowns, final prices, and promotional descriptions corresponding to the promotions currently in effect and about to take effect need to be displayed according to the product dimensions. Promotions that are about to take effect are generally displayed with higher priority, such as the time of the flash sale, and the estimated start time is displayed. The detail page sometimes changes depending on the promotion.

(2) Promotion details page: It is necessary to display the promotion time, rules and products participating in the promotion according to the promotion dimensions. This page is mainly used for users to find promotional products and place orders, and it is necessary to add functions such as search and sorting by price.

(3) Shopping cart page: needs to display promotion labels and support promotion changes.

(4) Product list page: Promotion tags are assigned based on product dimensions. Due to location restrictions, priority rules need to be established for promotion tags.

(5) Channel page: Some promotions have dedicated channels, such as flash sales and group buying. In addition to displaying promotion rules and a list of promotional items, the channel page generally also displays some promotional features. For example, for flash sales, because of their limited time and quantity characteristics, the remaining quantity of the promotion will be displayed.

(6) Topic page: The topic page is manually prepared, and the specific content displayed depends on the content provided by the CMS module. Generally, the content is similar to that displayed on the promotion details page, except for the number of products.

5. Use of promotions and calculation of final price

Whether promotion can be used mainly considers the following aspects:

(1) Product promotion is in effect;

(2) The user meets the user level/fan rules set by the promotion;

(3) The purchase limit of the product and the purchase limit per user do not reach the set quantity;

(4) Product promotion stacking rules: Promotion stacking generally applies to single-item promotions and group promotions. Collection promotions are generally divided into store level and cross-store level. Cross-store level activities are generally platform activities and require registration to participate. Therefore, generally speaking, the promotions that can be stacked for a single product include single product-level promotion + store-level promotion + cross-store-level promotion. In order to avoid price gates, you can set the promotion type or promotion dimension to not be shared with other promotions.

(5) Meeting the preferential conditions set by the promotion;

When the above rules are met, it is necessary to calculate the final price of the product after enjoying the promotion. The calculation of the final price is divided into parallel discounts and progressive discounts. Mainstream e-commerce companies, such as JD.com and Taobao, have evolved from progressive discounts to parallel discounts.

The final price is currently applied on the details page, shopping cart page and order submission page, and the final price needs to take into account the final price after superimposing it with the gift certificate.

In addition to calculating the final price, there are also applications for order matching and best promotions;

(1) If the promotion threshold is not reached, the user can be prompted to add items to the order and items that are easier to add to the order can be placed in the front row based on the user’s preferences;

(2) If the price of the promotion selected by the user is not the lowest, the user can be prompted to switch promotions to get a better discount and the best promotion plan can be provided.

(3) If the user does not select a promotion, the best promotion will be automatically applied after reaching the checkout page.

The calculation method for the final price and the best promotion will be explained in a special article later.

5. Positive allocation of promotions and reverse refunds

After the user submits the order and completes the payment, the discount needs to be allocated to each item.

For the allocation of price reduction, you only need to calculate A discount amount = A product total amount / total amount * total discount amount, and take into account that it cannot be divided evenly.

There are two situations for the allocation of gifts:

• The gift amount is 0. The gift must be returned when the main product is returned. There is no discount sharing at this time.
• If the gift amount is not 0, the gift does not need to be returned or exchanged when the main product is returned. In order to avoid users from taking advantage of the free gifts, you can follow the following rules:

After the product is returned, whether other products under the user's order still meet the gift threshold, if they do, no return is required; if not, a return is required.

What should I do if the user cannot return the gift? There are several options:

If the user's return is refused, the user will be required to replenish the gift. However, this option is not recommended as it may easily anger users and result in users not returning the gift and not getting a full refund.

If the remaining items in the order do not reach the gift threshold, the gift amount will be deducted from the items.

For example, if a user buys product A (10 yuan) and B (90 yuan), and gets C (priced at 5 yuan) for free when the purchase reaches 100 yuan, then the user has purchased product A, and the refund amount is 10-5=5 yuan.

However, this method is likely to cause customer complaints on buy-one-get-one-free deals.

In addition, the selling price of the gift can be allocated to the product as a discount amount. If the user returns the product, the refund amount needs to be reduced by this amount.
For example: you purchased product A (10 yuan), B (90 yuan), and received product C (priced at 5 yuan) for free.

The price of commodity A is 10-10/(10+90)*5=9.5 yuan.

The price of commodity A is 90-90/(10+90)*5=85.5 yuan

If the user returns the product without returning the gift, a portion of the gift amount will be deducted. This may easily lead to the risk of gift-giving scams, so sellers need to pay attention.

VI. Risk Management of Promotions

In addition to the usual risk control strategies regarding users, promotions also require increased risk control over prices before and after the event to avoid price gates.

1. Before the event: discount rate, protection rate, etc.

When creating a promotion, it is necessary to provide prompts and restrictions on the discount rate, protection rate, etc. of the product to avoid excessively low prices due to human operational errors.

2. Afterwards: calculate the final price + order monitoring.

(1) After a promotion is successfully created, changes in product prices and other promotions will affect the promotion's final price. At this time, it is necessary to calculate the price within a certain period and then see if there is a breakdown protection rate. If the protection rate is broken, the business needs to be notified to see if it needs to be withdrawn from the promotion.

(2) After an order is successfully placed, if an abnormal order occurs, such as a 0-yuan order, the business department needs to be notified to see whether the product promotion needs to be processed.

VII. Conclusion

This article is an overall overview of the promotion system. Later, we will break down the modules in more detail and discuss them with everyone.