Promotions losing their meaning.

Author|Wen Changlong

Editor|Yang Zhou

Unlike the "low-price temptation" and Full of routines (full of tricks) of e-commerce platforms' Double 11, the cloud market's Double 11 is more like a buyer's market, where customers firmly hold the initiative, and vendors have to compete fiercely for every potential customer.

The essence of e-commerce platforms' "Double 11" initially appears to be a large-scale new customer acquisition event for all netizens. In 2014, the penetration rate of e-commerce was just over 50%, while last year, it reached 85%, meaning there are no new customers to attract, making it a chicken rib. So, what about the cloud computing market's Double 11?

Similar to the e-commerce market, routine price reductions in the cloud market have long become the "norm of norms". Among them, the most representative is undoubtedly Alibaba Cloud, which has almost become the "price butcher" of the Chinese cloud market. This year's cloud market price war was also initiated by Alibaba Cloud, with other vendors following suit.

In terms of cloud adoption, according to the Cloud Computing Development Survey Report by the China Academy of Information and Communications Technology, in 2019, 66.1% of enterprises in China had adopted cloud computing, an increase of 7.5% compared to 2018. It is believed that in recent years, the adoption rate of cloud computing by enterprises will be even higher.

Will cloud vendors' Double 11 gradually lose its appeal and even become a chicken rib? Senior industry insiders point out that such promotional activities are actually lowering the industry's reputation and are, at best, a farce. The driving force of Double 11 promotions for overall business growth has also diminished. It is more like a "marketing convention" rather than a genuine means to drive business growth.

01 Cloud vendors' Double 11: small customers and new acquisitions

Alibaba Cloud, Tencent Cloud, Huawei Cloud, and other major cloud vendors have launched various discount activities during Double 11. However, given that price reductions in the cloud computing market have become the norm, whether such promotional activities can truly drive substantial growth warrants deeper scrutiny.

Judging from the Double 11 promotional content of major vendors, acquiring new customers is clearly the main goal. Almost all cloud vendor activity pages feature the words "exclusive for new users" or "new user exclusive", with each offering quite attractive discounts for new users.

This strategy is not difficult to understand. Unlike fast-moving consumer goods, the use of cloud services is highly persistent. By attracting new users to try the service at a low price, some users may choose to stay even if they are not completely satisfied after the trial period due to the cost of migrating to another vendor.

The nature of these promotional products is mostly lightweight cloud hosts and cloud servers, with prices generally ranging from tens of yuan to thousands of yuan. Some cloud vendors have even recommended specific usage scenarios for these products, such as "startup website building" or "personal development testing".

In addition, cloud vendors have incorporated social elements into their promotional activities. Taking Tencent Cloud as an example, the "Double 11 Group Buying" game launched this year is a typical example.

Judging from these actions, the customer base for this Double 11 is mainly targeted at small and medium-sized enterprises and developers, focusing on promoting entry-level and low-cost cloud services rather than upgrades or expansions of large-scale enterprise-level applications.

Developers and small and medium-sized enterprises have also responded positively to these promotional activities. A developer told "Market Trends" that "vendors like Alibaba Cloud and Tencent Cloud have practically bombarded me with phone calls. My plan is to wait until 11.11 to make a purchase, as the discounts during this period often exceed those offered at other times."

According to "Market Trends", many small and medium-sized enterprises have adopted a similar strategy: they patiently wait for the cloud vendors' Double 11 promotions and then negotiate with account managers to secure the maximum discount.

Small and medium-sized enterprises and developers are highly price-sensitive, and low-price promotions can indeed quickly attract them to try cloud services. However, the customer loyalty and long-term benefits brought by such promotions are uncertain.

Many small and medium-sized enterprises often choose to terminate services or change suppliers after enjoying the discount period, even if migration costs are considered, due to limited budgets or changes in business needs. This makes it difficult for cloud vendors to convert these short-term customers into long-term users, and the short-term growth brought by promotions is difficult to translate into sustained commercial value.

More crucially, these heavily discounted products actually contribute limitedly to cloud vendors' core revenue.

For cloud vendors, large customers are the core pillars of revenue and profit.

Cloud computing procurement decisions for medium and large enterprises are usually closely related to the company's long-term strategy. Although discounts during Double 11 can attract some customers to test the waters in the short term, service stability, data security, and technical support are their core concerns.

A corporate purchaser bluntly told "Market Trends": "Cloud servers are not like rice; you can't stock up on them just because they're on sale. I keep receiving marketing calls saying there are discounts on servers during Double 11. This doesn't seem like cloud computing; it feels more like selling daily necessities."

Senior industry insiders point out that such promotional activities are actually lowering the industry's reputation and are, at best, a farce, far from being a serious sales event targeting genuine customers.

After all, unlike e-commerce promotions, if cloud vendors rely solely on promotional activities at a specific point in time like Double 11 to drive growth, they may overlook the importance of building long-term growth strategies through refined customer service, product innovation, and other means on a daily basis.

From this perspective, the driving force of Double 11 promotions for overall business growth has diminished. It is more like a "marketing convention" rather than a genuine means to drive business growth.

02 Agents caught in the gap

Participants in Double 11 promotions include not only cloud vendors and cloud customers but also a special group - agents.

Agent distribution is a core means for major cloud computing vendors to expand their market. Taking Alibaba Cloud as an example, the grading criteria for agents include sales volume, the number of newly acquired cloud customers, technical certification personnel, and other standards. Other cloud vendors also have similar practices in agent grading and benefit settings.

Agents earn commissions by helping cloud vendors promote users and orders. Generally, the higher the agent level, the higher the commission rate, but the corresponding annual performance threshold is also higher.

The core weapon of agents selling cloud services is discounts. Generally, cloud vendors provide exclusive discounts to cloud agent channels. Discounts are incentives set by cloud vendors to motivate agents and are usually only available to customers through agent channels.

In the past, during Double 11, cloud agents often promised customers discounts of more than 30% off when purchasing cloud services through their channels, which, when combined with Double 11 discounts, could often attract many customers with price advantages.

However, this year's Double 11 was not easy for cloud agents.

A business owner who renewed their subscription during this year's Double 11 told "Market Trends": "Our company spent 300,000 to 400,000 yuan annually over the past two years, enjoying a 25% discount through agents. But when renewing this year, Alibaba Cloud's official sales team suddenly contacted me, offering an even lower discount of 49% off."

This phenomenon is not isolated. According to Lei Feng Wang, during this year's 618 promotion, Alibaba Cloud's telemarketing department also launched a half-month promotion, directly prompting some customers to abandon agents and cooperate directly with Alibaba Cloud.

,"This phenomenon has obviously continued into this year's Double 11 promotion, undoubtedly further compressing the living space of agents.

Xi'ao is a cloud agent mainly representing Alibaba Cloud and other cloud vendors. His company is relatively small, with only five or six people. He told "Market Trends" that to cope with this situation, "some agents compete fiercely, offering the highest rebates to attract customers. They are even willing to forgo profits during the initial transaction, gambling that once customers migrate, they will find it difficult to switch easily. In other words, they almost entirely pass on the rebates from cloud vendors to customers."

In the past, agents usually returned a portion of the rebates provided by cloud vendors to customers.

"Typically, agent rebates are paid in installments: a portion each month, each quarter, and each year, with the full commission collected only after a year. Now, to win customers, some agents choose to return all rebates to customers at once, essentially advancing part of the payment, which is undoubtedly risky."

Of course, besides the pressure from official sales, cloud agents are not as comfortable during Double 11 as they used to be.

"With Alibaba Cloud's 'three-pronged strategy' for its channel, most customers agents are now dealing with have budgets of less than one million yuan. Additionally, as everyone now knows that agents can offer higher discounts, many customers compare prices, with multiple agents competing for the same customer. The result is thinner and thinner profits."

Xi'ao added that when multiple agents compete for the same customer, they sometimes have to apply for additional discounts. "For some large orders, especially those exceeding 200,000 yuan, regular discounts can no longer meet customer demand. At this point, only internal willingness to subsidize an additional 3-5% can help us close the deal."

Regarding this year's Double 11 promotions, Xi'ao said, "I expect this month's performance to reach around 2 million yuan, compared to the usual monthly performance of around 1 million yuan. While there is some help, the effect is not significant."

03 The "annual show" losing its training significance

Undoubtedly, e-commerce Double 11 is Alibaba's most successful promotional concept.

The "Double 11" in the cloud computing field was also created by Alibaba. According to public information, Alibaba Cloud typically sets its first cloud computing version of "Double 11" in 2015.

In reality, however, the Double 11 in the cloud computing field originated in 2014.

On December 18, 2014, Alibaba Cloud launched the "12·18 Programmer Carnival" for cloud computing procurement by enterprise customers. At that time, Alibaba Cloud offered substantial discounts on its main cloud computing products.

To expand the influence of this event, the media at the time characterized it as Alibaba Cloud aiming to create a "Double 11" for the cloud computing field.

As the price discounts offered during the event were highly attractive to small and medium-sized enterprises and mid-sized developers, it can be said that Alibaba Cloud sold cloud servers almost at cost. This led some netizens to joke, "Did Alibaba have a surplus of servers after Double 11 and is now clearing them out?"

Behind this joke lies a deeper reality - the initial e-commerce Double 11 frenzy relied on cloud computing to support its massive operation.

Xuan Yu, the general manager of Alibaba's merchant business for Double 11 in 2014, once mentioned in an offline exchange, "Business is forcing cloud computing to mature."

This is why Alibaba managers often use the term "big training exercise" to describe Double 11 - in a way, Double 11 is an extreme peak challenge that significantly boosts core capabilities such as payment and logistics. Through this extreme load training, Alibaba can continuously "squeeze" technology, thereby forcing the development of Alibaba Cloud.

From this perspective, it is not difficult to understand why, for a long time, the annual e-commerce Double 11 has sparked a wave of marketing campaigns where cloud computing provides underlying support for e-commerce, especially prominent among major players like Alibaba Cloud and JD Cloud.

So, does this logic still hold today? How much grinding does the e-commerce Double 11 training ground still offer?

At this stage, with the gradual maturing of cloud computing technology and the stabilization of the market landscape, cloud vendors should theoretically no longer rely on annual e-commerce promotions to showcase their technical prowess.

After all, the traffic load of e-commerce promotions has long been incorporated into these vendors' regular service systems, with technology having become a "basic configuration" rather than a competitive advantage that needs to be highlighted.

Some evidence to support this includes:

The timing of cloud vendors' Double 11 promotions has long been fully synchronized with e-commerce platforms, indicating that they can not only fully support e-commerce platform promotions but also smoothly accommodate the substantial cloud service demands of other enterprises, with technical support having reached a level of normalization and comprehensiveness;

In the past, Baidu Cloud, Huawei Cloud, Tencent Cloud, and others also used e-commerce Double 11 as a marketing node to showcase their technical capabilities. However, today, this reliance on e-commerce promotions to market technology has almost disappeared;

Those who still continue this strategy are mainly Alibaba Cloud and JD Cloud, closely related to the support of their respective e-commerce businesses. However, although Volcano Engine also has an e-commerce business, it has rarely hyped its technical capabilities during Double 11 this year, instead focusing more on other dimensions.

Frankly, after all these years, "technology war"-style marketing should gradually shift to a long-term strategy centered on service quality and stability. After all, cloud computing vendors should emphasize "sustainable operational support" rather than one-time "traffic bursts".

Double 11 is gradually losing its significance as the "annual show" for cloud vendors.