"I tried linking up and selling an item that costs 5 yuan for only 1.5 yuan within ten minutes." In the early stages of this year's 618 shopping festival, an e-commerce platform introduced an automatic price-matching feature, and a seller quickly shut it down after trying it for a while.

Another 618 shopping festival has arrived, bringing joy to platforms, merchants, and consumers alike. However, unlike previous years, this year's 618 was less gimmicky and more "wild" – whether in external promotions or perceived by merchants, low prices became the absolute focal point.

Pinduoduo once emerged victorious through misaligned competition. However, in recent years, with changes in the economic and consumer landscape, coupled with fierce competition among e-commerce platforms, almost all major e-commerce platforms have been trapped in a single dimension of competition: "low prices," even those that once emphasized quality and experience.

To achieve low prices, e-commerce platforms have revived the "price comparison" tactic used a decade ago, monitoring competitors' price changes through technological means to adjust their own pricing strategies. After rounds of "slashing prices" back and forth, the industry is left exhausted after each major e-commerce promotion.

"The price war is too fierce, it's like a mad race in China." A Chinese executive of a small home appliance brand told the media that even emerging categories like coffee makers have fallen into the price war.

This year's 618 shopping festival saw both the aggressiveness of platforms and growing dissatisfaction among merchants, especially small and medium-sized merchants. Of course, a sustained price war will have no winners. In the long run, competition based solely on prices sacrifices product quality and sustainable corporate growth, ultimately leading to the驱逐 of good products by inferior ones.

So, does the current e-commerce market really have no room for misaligned competition? The answer is no. There is another possibility in China's e-commerce market.

01

Another Possibility

Price wars are a normal competitive tool in the business world, with strong killing power that can achieve quick results. In the 1930s, during the Great Depression in the United States, PepsiCo launched the slogan "Twice the Taste, Half the Price" and launched its first price war against Coca-Cola. They have since become two giants in the global beverage industry.

From this, we can draw two conclusions: first, economic slowdowns are indeed a good time for price wars; second, price wars can be temporary and intermittent, but they cannot be sustained indefinitely or breakthrough cost lines. Currently, Pepsi and Coca-Cola have similar prices, and with rising costs, news of their price increases even trended on social media this year.

With the current slowdown in China's market economy, it is also a good time for products and brands that follow a low-price strategy to develop rapidly. However, there is another possibility in this business landscape: the path of quality still has fertile soil.

First, the market is experiencing a K-shaped divergence, with consumers' demand for quality and experience still existing and growing at the upper end.

According to the "2023 McKinsey China Consumer Report: The Age of Resilience," although consumer confidence has been somewhat affected, China's economy still shows strong resilience. Four major trends will reshape the Chinese market in the future: the continuation of high-end consumption, more informed consumer choices, local enterprises gaining market share, and product quality being king.

Taking beauty and skincare as an example, while big-brand alternatives are gaining popularity, more and more people on Xiaohongshu are concerned about medical aesthetics projects. Under the recommendation of big-brand skincare products, voices like "regular medical aesthetics is more effective than minimal skincare" are becoming louder, perfectly combining people's pursuit of high-end consumption with rational consumption restraint and the concept of product quality being king.

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