As another year is coming to an end, it is fitting to look back and observe what has happened this past year. In the case of e-commerce, it is especially important as we saw a lot of dramatic changes in 2024, including reversals of past trends. We will take a look at some of the most notable changes.
The end of “absolute” low prices
The first big reversal is the race to the bottom with low prices from last year. Low prices have been key to recovery since 2023. Taobao and Tmall Group of Alibaba went as far as adding “Pricing Power” to its 5 strategies. Rival JD.com also leveraged its “10 billion subsidies” to rally merchants in a low-price competition. However, the platforms did not seem to benefit from the price war, Taobao and Tmall Group even saw its revenue drop 1% year-on-year (YoY) in Q2 2024. Since then, a focus on GMV has been established by Taobao and Tmall Group, as well as other platforms such as Douyin.
The rise and fall of “refund only” and shipping insurance
Another reversal of the “neijuan” (内卷, lit. involution) is underway. Since last year, many platforms introduced refunds without the need for return, sometimes called “refund only”. Early this year, many platforms like Douyin started mandatory “shipping insurance” which (fully or partially) reimburses the buyer’s shipping cost if a return is needed. However, both policies strained merchants while providing loopholes for unscrupulous people. The return rate has risen to over 50% to 60% for some merchants, especially in clothing. Ahead of Double 11, platforms like Kuaishou called off or adjusted its return policies.
More regulations in e-commerce
With the price war and the abuse of terms, authorities are now watching e-commerce platforms even more closely. In August, JD.com, Taobao, PDD, Douyin and Kuaishou signed an agreement regarding compliance, under the guidance of authorities from Beijing, Shanghai and Zhejiang. The 22-article agreement will serve as a blueprint for the future of e-commerce competition.
As we enter 2025, against the backdrop of more economic and trade uncertainties, new trends and quick reversals may be even more common. What will happen to other trends such as social commerce and shopping festivals like 618, Double 11 and Double 12 which just began, are also of interest.
