In the past, 'Double 11' was about flashy strategies and complex steps, but in recent years, mainstream platforms have shifted to 'simple marketing'—attracting consumers with straightforward 'low-price competition', igniting online frenzy. The most typical example is Pinduoduo's 'billion-dollar subsidies', which prompted imitation across platforms and normalized the 'low-price competition' model. However, behind the online 'low-price competition', offline tobacco and liquor stores are seeing their prosperity fade. This 'Double 11', Lao Han (pseudonym), a tobacco and liquor store owner in Xi'an dealing in several famous liquors, closed his shop and took his wife on a trip. In the context of shrinking competition in the baijiu market, tobacco and liquor stores and e-commerce platforms can no longer coexist peacefully. The 'low-price competition' on e-commerce platforms is tearing apart the trust between tobacco and liquor stores and their customers, putting their lifeline at risk. Lao Han said: 'The liquor business is no better than selling chewing gum.'

The 'Price Bloodbath' Triggered by Billion-Dollar Subsidies It's called a 'bloodbath' because the prices of benchmark baijiu products under the billion-dollar subsidies are far lower than the transaction prices at tobacco and liquor stores. In today's highly connected world, tobacco and liquor stores have no choice but to engage in a price war. In fact, the logic behind e-commerce 'billion-dollar subsidies' is to let consumers directly feel the platform's sincerity in price reduction. Among large consumer goods, baijiu, due to its few large-circulation standard products, strong brand influence, and noticeable price changes, has become an important tool for platforms to demonstrate 'price sincerity'. 'Before last year, e-commerce platforms also had 'billion-dollar subsidies', but they were less aggressive on famous liquors, with prices only slightly lower than those at tobacco and liquor stores. But starting this year, the baijiu section of 'billion-dollar subsidies' has changed dramatically.' Lao Han said: 'At the beginning of this year, the big single products of leading famous liquors have been occupying the homepage of Pinduoduo's 'billion-dollar subsidies', with prices far lower than the transaction prices at tobacco and liquor stores.' He recalled that around the Spring Festival this year, this feeling was particularly strong. Over time, consumers began to use the 'billion-dollar subsidy' prices as a reference for purchases at tobacco and liquor stores, and he even lost some old customers because of this. 'After the Spring Festival, a group-buying old customer came to me and showed me the price of a certain product in the 'billion-dollar subsidies', which was 15% lower than my usual transaction price.' Lao Han revealed that the profit margin for most famous liquors in tobacco and liquor stores is between 1% and 10%, and for products that don't make money, stores exchange stock with each other. If they were to sell at the prices of Pinduoduo's 'billion-dollar subsidies', not only would tobacco and liquor stores go out of business, but even distributors would suffer losses and exit. According to Lao Han's recollection, around March this year, the volume and price of mainstream baijiu big single products rebounded slightly, but on one hand, business consumption was weak, and on the other hand, online prices were suppressing, making the 'price war' increasingly fierce. Especially for tobacco and liquor stores, they not only had to fight a price war with e-commerce platforms but also with peers. The result was that e-commerce platforms gained traffic, while tobacco and liquor stores were left battered and bruised. What worries tobacco and liquor store owners even more is that this 'Double 11', the prices of benchmark baijiu products under 'billion-dollar subsidies' hit a new low in recent years. This means that the year-end 'price bloodbath' for baijiu will become even more intense.

Online Counterfeits Trigger a Trust Crisis Authenticity is a major demand for famous liquor consumption. In many transactions, the importance of authenticity far exceeds price. Before 'Double 11', several leading liquor companies issued 'letters to consumers', stating that based on consumer feedback, some e-commerce platforms are selling counterfeit and shoddy goods, and urging consumers not to be tempted by low prices and to buy famous liquors through official channels. The reason famous liquor companies stepped forward is twofold: first, e-commerce platforms have harmed the price system of their products and disrupted market order; second, there are indeed counterfeit goods on e-commerce platforms, triggering a brand trust crisis. In fact, in addition to mainstream e-commerce platforms, famous liquor companies have also issued warnings to several major livestreaming e-commerce platforms. Are there many counterfeits online? Opinions vary both inside and outside the industry, with no definitive conclusion. 'As long as you understand the entry standards for brand flagship stores on certain platforms, you'll know that what they sell may not be genuine,' revealed a person from the anti-counterfeiting department of a famous liquor company. For example, on a leading e-commerce platform, a store can open a flagship store by registering a knockoff trademark, and then the flagship store can participate in 'billion-dollar subsidies' activities, with products labeled as 'genuine', 'fake one, compensate ten', 'underwritten by PICC', etc. He further revealed that platforms have different certification standards for 'counterfeits'. Some platforms may certify knockoffs, shoddy goods, substandard products, fakes, and passing off inferior goods as superior as 'counterfeits', while others only recognize 'counterfeits' as fakes, and other issues are not recognized, making it impossible to apply for 'fake one, compensate ten'. 'Counterfeits have always existed, but the low cost of selling fakes online and the difficulty of consumer rights protection have, to some extent, fueled the proliferation of counterfeits,' he said. In actual anti-counterfeiting efforts, they often encounter stores that frequently switch platforms, making it impossible to find the seller for rights protection. So, how do online counterfeits affect tobacco and liquor stores? He believes that online platforms are inherently social. Whether it's negative reviews on stores or consumers sharing their rights protection processes on social media, under the fermentation of the internet, they deepen consumers' cautious consumption psychology towards famous liquors, thereby affecting the sales of famous liquors in tobacco and liquor stores. Lao Han deeply agrees with the above statement. 'The popularization of knowledge about counterfeiting methods such as knockoffs, drilled caps, pulled heads, and blown boxes has made some customers stay away from famous liquors,' Lao Han said. Some counterfeiting methods he had never heard of are well-known to consumers, and the key is that many fakes are so convincing that only extremely professional people can distinguish them. As for the saying that 'online fakes pose risks, which is actually beneficial to offline tobacco and liquor stores', Lao Han disagrees. 'Some consumers, to avoid pitfalls, simply won't buy famous liquors. In the end, unless necessary, they won't buy liquor at all,' Lao Han said with emotion. 'If it weren't for fakes, buying liquor on online platforms would be cheaper than buying from distributors, so how could consumers get such bargains?'

The 'Sunk Cost Effect' on Tobacco and Liquor Stores From the market feedback in the fourth quarter, the most intuitive feelings in the industry are 'tobacco and liquor stores not paying', 'distributors unable to push goods', and 'manufacturers turning a blind eye to cross-regional sales'. But in reality, the situation may be worse than it appears. The reason the overall market sales are still passable is that the 'sunk cost effect' on tobacco and liquor stores is keeping many owners persisting in paying and stocking up. The so-called 'sunk cost effect' refers to the reluctance to abandon or change original decisions after investing significant resources, for fear that they will become useless costs. 'I've been relatively free this year, and I often attend gatherings of tobacco and liquor store owners, which are basically 'complaint sessions'. Everyone is always looking for new products and new ways out, but in the end, they are helpless,' Lao Han revealed. The state of not making money from selling famous liquors has lasted for about two years. What keeps everyone going is the hope that the market will improve, or that manufacturers will change their profit-sharing model to give tobacco and liquor stores a lifeline. In Lao Han's view, the so-called consumption stratification or structural upgrade is just a false 'prosperity'. Whether in prime locations or ordinary business districts, an unavoidable fact is that the foot traffic around is visibly decreasing, and the overall market consumption power is not what it used to be. The 'sunk cost effect' is causing severe mental exhaustion among tobacco and liquor store owners. In addition, in the context of shrinking competition, tobacco and liquor stores are relatively indifferent to channel incentives because they can obtain lower-priced goods from multiple channels, thus choosing to maintain flexibility and cash flow. This is also something that companies and distributors need to pay attention to. 'The main pressure on tobacco and liquor stores is not capital, but sales,' Lao Han said. Although some distributors are willing to offer credit, this does not fundamentally solve the problem. 'Now we see various information about controlling volume to maintain prices. Some of it is self-directed and self-acted by manufacturers and distributors, with the aim of saving face over price inversion and 'scaring' consumers who don't know the truth,' Lao Han believes. If terminals can't even sell goods, what's the difference between controlling volume or not? When it comes to the 'wave of closures' in the industry, Lao Han frankly said 'hard to say'. 'Maybe one day in the future, I'll really close my shop,' Lao Han said finally.