Low prices have been the core capability emphasized by e-commerce platforms since last year, and this focus has been accelerating. Until about two months ago, Taobao, Douyin, and Pinduoduo successively shifted their primary goal to achieving GMV growth. But value for money is the general trend. The shift from focusing on low prices to emphasizing GMV does not mean platforms no longer value low prices; rather, absolute low prices have completed their stage-specific mission on some platforms—price wars have always been the most direct and effective competitive tool. Also accelerating this shift away from low-price competition is the freezing of the supplier-retailer relationship. When platforms use aggressive tactics to flatten prices to a point where there is almost no difference—essentially leveling the price advantage weapon in addition to traffic advantages—competition inevitably enters a hand-to-hand phase. Moreover, as more suppliers become clearly disadvantaged parties in the entire transaction chain, such low-price competition naturally becomes unsustainable. Looking at a longer cycle, the competitive focus of e-commerce platforms may revolve cyclically around several core factors: supply, traffic, price, and efficiency. Platforms still at the table must enter the next round of more intense competition with the capabilities honed in previous rounds. Our observation of this shift from low prices to GMV as the core goal is to see what core capabilities the previous low-price competition left among platforms, where the next development focus might be, and how the core capabilities in supply, products, and marketing, tempered by low prices, will help platforms advance to the next stage. Of course, low prices are like a storm. Like any transformation, when the storm sweeps through, besides achieving its intended goals to varying degrees, it also brings collateral effects. Low prices are no exception. They not only directly affect platforms but also sweep up downstream merchants, industrial belts, and consumers, ultimately bringing changes to the entire e-commerce industry's penetration rate and cost control capabilities. Low Prices Have Completed Their Stage-Specific Mission This round of low-price competition began in 2023. The original intention of Taotian (and JD.com) in pursuing low prices was to boost order volume and activity through low prices. At that time, Pinduoduo firmly occupied the "savings" mindset in e-commerce's "more, faster, better, cheaper," and through "savings" formed traffic appeal, ultimately converting it into continuously rising GMV. Douyin e-commerce also attracted traffic through content, grabbing a share of the market. Therefore, for Taotian and JD.com, achieving DAU, especially DAC growth, through low prices was a key action. And judging from Q2 financial reports, Taotian has already achieved phased improvements in user activity and order volume. Alibaba Group CEO and Taotian Group Chairman and CEO Wu Yongming mentioned at the most recent earnings call, "Our live streaming and 100 billion subsidies have brought higher user return rates and repurchase rates." Douyin e-commerce enriched its product assortment through low prices (mainly supplementing industrial belt supply beyond brands), achieving basic growth in the shelf field and increasing mall daily active users. Whether in terms of product form, traffic allocation, or operational thresholds, the shelf field is more low-price friendly and can drive initial development through low prices. A brand told us, "Previously, Douyin e-commerce was widely considered expensive. Low prices helped establish awareness of Douyin's price band richness and product assortment breadth." In the development of Douyin e-commerce, early emphasis was on attracting major brands, last year on low prices, and this year on GMV, which aligns with the rhythm of its e-commerce development stage. "After the top 1000 Tmall merchants were largely introduced, the platform needs to find ways to retain consumers. So low prices and the mall are a good way to (increase repurchase frequency and raise average order value)," said the aforementioned brand executive. Currently, the shelf field accounts for about 30% of their entire Douyin e-commerce transactions. As for the defender Pinduoduo making GMV its primary indicator, it does not mean reducing its leading edge in low prices; rather, it continues to strengthen low prices—evidenced by the launch of price comparison tools like "automatic price matching" and merchant policies like "100 billion reductions." As is well known, Pinduoduo's low price is a systematic capability, achieved through traffic mechanisms and activity mechanisms that prompt brands to proactively offer low prices. Other platforms have various limitations in implementing Pinduoduo-style systematic low prices. A merchant told us that Taotian, due to its huge user base and order volume, and because its initial subsidy scope was too broad, failed to focus subsidies on big-brand standard products where users have strong low-price perception, making it difficult to achieve or convey the same subsidy intensity as other platforms. Only later, through strategies like mobilizing 88VIP and focusing on standard product subsidies, did it find a differentiated competitive advantage. JD.com's self-operated model is inherently more costly, so low prices can only be concentrated in a few categories with supply chain advantages. Douyin e-commerce either has intermediate links related to content such as influencers and agencies, or relies on the explosive power of the content field to create single-product hits, thereby forming scale group buying and low-price effects. Even so, real money price subsidies still slowed Pinduoduo's development. Some brokerages predict that Pinduoduo's domestic e-commerce GMV growth for the full year 2024 will remain around 24%—a number that is slowing in absolute terms but still far ahead of competitors and social retail growth. Pinduoduo management's aggressive management of market value expectations at the Q2 earnings call is roughly related to this. What Low Prices Left Behind for Platforms A simple underlying understanding in the retail industry is: the fundamental driving force for business model innovation is low-cost market entry. The same applies to e-commerce. Therefore, we pay special attention to the products, tools, mechanisms, and organizational thinking that platforms have actively or passively, intentionally or unintentionally accumulated during the low-price process, which can improve traffic operation capabilities, price control, and supply screening capabilities with long-term value. For Douyin e-commerce, low prices drove the first-stage growth of the shelf field, promoting the improvement of the shelf field (i.e., the mall) in terms of products, tools, and gameplay, such as the exploration and mindset accumulation of "super value purchases" and "flash sales" in the mall. Especially "super value purchases," which is said to be very aggressive, with some product prices able to reach 1/2 or 1/3 of competitor platforms. A brand said that if Douyin e-commerce can "further promote standard products through this mechanism, the potential for sales growth is still huge." Of course, next, under the premise of GMV as the primary goal, Douyin e-commerce needs to continue thinking about how to make the shelf field contribute more to GMV beyond low-price promotions and low-price supply, that is, to find the next growth engine for the shelf field. Some merchants predict that Douyin Mall's extreme low-price strategy will continue; but the content field will not do extreme low prices, but rather achieve perceptible price power, that is, letting consumers perceive cheapness while ensuring product quality. In any case, next, the integration of Douyin e-commerce's full-domain traffic pool may be a key action. Only by connecting full-domain traffic can users who bought products in live rooms and Feed streams gradually develop the habit of transacting in the mall. After traffic flows smoothly, path guidance and tool updates based on full-domain traffic will be more logical and not become castles in the air. Douyin e-commerce's recently launched CORE explosive product operation methodology is based on traffic integration. Under the new traffic structure, products can automatically attract traffic from Douyin e-commerce's traffic pool based on any basic capability of product, content, marketing, or service. Traffic sources are diverse, and paths are diverse; it doesn't have to be low price or big brands, nor does it have to rely on big influencers. And some consumers have already experienced that after swiping related product content on Douyin multiple times, the platform will push large discount coupons targeted at them, "with prices cheaper than other platforms." Taotian attracted some small and medium merchants back through low prices, and introduced some industrial belt supply through 1688 and Taogongchang in a quasi-self-operated manner. In terms of marketing capabilities and tools, Alimama is also becoming more refined, finding new traffic across the internet through more methods, while shifting from simply making money from merchants through traffic to doing business better together with merchants. Whether the full-site promotion combined with Alibaba's AI capabilities can solve Taotian's current difficulties is key—several merchants believe that Taotian's current traffic is relatively scattered, and there is still a gap with peers in the ability to focus traffic on single-product explosive items. JD.com explored the form of procurement and sales live rooms through low prices, which is essentially a marketing-style low price, but it also conforms to and can fully leverage JD.com's retail channel gene positioning. More systematic capabilities await the re-effectiveness of projects under the "private brand logic" in the retail context, such as Jingxi and Jingzao. Collateral Effects Platforms' low-price actions also have collateral effects on upstream merchants and even further upstream industrial belts, and these effects are double-edged. First, low prices will change the supply structure of platforms in terms of white-label and brand products. A FMCG industry merchant said that in the past, the top 100 Taobao stores were all brand stores, but now the top 100 also include many industrial belt merchants and Taotian's self-operated brands (Taogongchang). But this is a certain trend that brands need to accept. Through the endorsement of e-commerce platform content, algorithms, and channels, a batch of consumers will shift from brand consumption (and trust) to product consumption (and trust), directly reflected in the increasing prominence of channel private brands and high-quality white-label products from industrial belts. Under the environment where cost pressure and platform traffic rules have not changed, some leading brands with brand power, supply chain capabilities, and willingness to participate in low-price competition will further strengthen their head effect. Some merchants with limited supply chain capabilities, insufficient brand power, and difficulty resisting low prices will either be forced to abandon low prices or shift their core business to other platforms where they can make more money and have higher ROI. Of course, for different merchants, the direction of flow is different. The aforementioned FMCG brand said that they now put more brand budget on JD.com and Douyin e-commerce. JD.com's traffic pool is small, but there is more manually controllable traffic, and it can make money; Douyin's ROI is relatively certain, with input leading to output, and also earns exposure. Another collateral effect of platforms' low-price actions is accelerating and influencing the stratification of industrial belts. Objectively, low-price-oriented competition will screen out a batch of low-cost, fast-response advanced supply, thereby achieving cost reduction for merchants. For example, for some enterprises, factory startup costs money; doing low prices may be meager profit or no profit, but not doing it means losing money. For example, if it is truly low-priced, there can be stable orders on Pinduoduo, which is equivalent to reducing warehousing costs. "Indeed, some enterprises have squeezed out the water from their supply chain by doing low prices on Pinduoduo. After squeezing it out, they may not make money on Pinduoduo, but they can make money on Tmall, JD.com, and Douyin," said a brand. A batch of originally toB industrial belts may also turn to e-commerce channels because of this, such as JD.com's Jingxi and Jingdong Jingzao, Taotian's 1688 and Taogongchang. Those with capability can even become relatively well-known factory brands among C-end consumers. The characteristics of this batch of industrial belts are strong supply chain capabilities, diverse supply, and adaptability to e-commerce tactics. At a recent 1688 press conference, it was also mentioned that more and more small B and C-end buyers directly purchase goods from source factories, and the supply chain needs to provide stronger flexible production capabilities. The pearl industrial belt merchant "Angel's Tears" was able to adapt to the low-price trend in time because of such supply chain capabilities. Originally they only sold products at 1299, but after Douyin e-commerce's algorithm tilted toward low-priced goods, they listed products at 399. This also helped them stand out among many competitors, "(under the low-price trend) a large batch of competitors went bankrupt." Inevitably, some supply chains with good craftsmanship but high prices will be screened out or even go bankrupt, while some industrial belts that produce low-quality products to cater to the low-price trend will survive. This is the so-called bad money driving out good. He Yudi, general manager of Dongyang Shangdao Fishing Tackle, mentioned that many fishing lines priced at 5.9 with free shipping have appeared on the market. They tried many ways to reduce costs, but ultimately found that only by reducing raw material costs could they achieve that pricing. Recently, many people have noticed that industrial belt merchants in places like Hebei are snatching business from merchants in Yiwu. But an industry insider close to a Hebei industrial belt merchant told us that in fact, these Hebei industrial belt merchants sell so cheaply because they don't know how to calculate accounts. Some "only do a total accounting at the end of the year, and find they lost 300,000." In short, in front of platforms that dominate the rules of the game, merchants relying only on traffic operation capabilities or advantages that conform to stage-specific traffic rules will find it difficult to gain long-term dividends. Long-term dividends belong only to platforms or brands. True brand power is a more comprehensive capability, such as having multiple channels, especially offline channels, or having differentiated products and brand recognition. As a Chenghai toy industrial belt merchant said, long-term price wars must be loss-making because all costs in the factory are rising. They also want to establish differentiated advantages through exclusive products, or even enter the brand track. A More Intense New Stage Overall, the common low-price behavior of several platforms has brought about an increase in e-commerce penetration in the entire consumer market. Next, low prices remain a rigid demand, competition continues, and e-commerce penetration in frequency and average order value will continue to rise. For platforms, when low prices can no longer create differentiation, and the only-low-price approach may harm GMV, it means competition has entered a more comprehensive and brutal new stage. Everyone not only competes on low prices, but low prices serve as a basic capability for the new stage's competitive focus—the focus of the new stage, in overall goals, is GMV; in specific goals, we believe it may be high-quality supply. Before proposing a return to GMV, platforms had already been adjusting and optimizing low-price-related actions through varying degrees of strategy adjustments. Taotian reduced and clarified the scope of low prices, focusing on standard products. A merchant told us that after this year's 618, Taotian gradually tilted activity subsidies toward standard product categories more suitable for price comparison, while narrowing subsidy scope for categories where price comparison is optional and non-standard categories unsuitable for price comparison. Douyin e-commerce, in March and April this year, canceled the price comparison mechanism for the clothing industry. The core of non-standard categories is product diversity and richness; once they fall into price comparison, they fall into same-style involution, damaging the industry ecosystem and user experience. A merchant told us, "The fastest cancellation was in clothing, because they found that the price comparison mechanism would lead everyone to chase hot styles through low prices, causing clothing quality to deteriorate." Non-standard industries such as accessories and toys are also gradually canceling price comparison. Pinduoduo, as always, when other platforms negotiate subsidies with merchants, directly spends money during the 618 promotion, and silently subsidizes users who browsed links but did not place orders. A merchant told us that Pinduoduo is using some operational means to increase per-item and per-order values, such as multi-item discounts and full reduction activities; on the supply side, Pinduoduo also wants to attract more high-ticket brands. Value-for-money consumption remains a rigid demand, but the next competition will be a competition that combines multiple factors such as price, supply, traffic, and service, and may also include deeper factors such as organizational structure and organizational management. The upcoming Double 11, which has already begun preparations, may see another round of covert warfare in e-commerce surface.