The classically undersupplied consumer market is dominated by the famous Say's Law, which suggests that supply automatically creates demand.

However, in today's globally oversupplied world, demand has begun to automatically create supply.

Big data, algorithms, and large models have repeatedly iterated and accelerated this automation.

Brands have become the only scarce value in this era of excess. Products without brand recognition or influence on consumers' minds lack user stickiness and deterministic market demand, resulting in uncertain profit margins and growth space. They can only compete on price with the masses.

Choosing brands with stronger comprehensive competitiveness is also a quick way for consumers to avoid pitfalls in an era of excess.

Japanese home appliance companies once dominated the global market, but due to a lack of long-term cultivation in narrow and in-depth categories, despite their large market size, they lacked strong brand appeal and actually had slim gross margins. Today, China's electronics consumer industry and most global industries are similarly limited.

Apple alone has long accounted for 80% to 90% of global mobile phone profits and has ranked 11th on the list of America's retail giants for many years, illustrating the brand appeal in today's business world.

Building brand influence across various industries and product categories has become a historical task we must accomplish.

As the most important annual brand promotion and e-commerce festival, Double 11 has been the best window into observing China's business consumption trends and brand influence since its inception.

Young people, as a consumer group, are usually the most receptive to new things and have the keenest fashion sense. Their fashion choices, aesthetic trends, active scenes, and shopping habits often hide platform-level business opportunities and market potential, making them the best sample for observing consumption trends.

Judging from this year's large-scale brand shopping spree during Double 11, this generation of young people has shifted their workplace reforms to the e-commerce ecosystem, voting with their money for the business world they desire.

In today's generally sluggish market, brand promotions have accelerated growth. The strong growth data from this year's Double 11 brand sales provides a glimpse. On November 12, Taobao and Tmall announced robust growth in gross merchandise volume (GMV) during the 16th Tmall Double 11 Shopping Festival, with a record number of purchasing users. Although no official figures have been disclosed, insiders at Taobao and Tmall suggest that this audited statement implies at least high single-digit or even double-digit growth.

This judgment aligns with data from third-party institutions. According to a report by Analysys, Tmall's GMV during Double 11 grew by 10.2%, accounting for 50.1% of major domestic platforms' transaction volumes, marking a return to expansion.

This growth might not seem significant in an era of rapid growth, but in today's sluggish market with widespread offline retail losses, it is like a fire in the retail winter.

Moreover, many brands are still experiencing exponential growth, presenting numerous business opportunities.

For example, during this year's Tmall Double 11, the number of brands with transactions exceeding 100 million yuan reached 589, far surpassing last year's 402 and 2021's 382. The emergence of new categories and brands in young people's new consumption segments played a crucial role.

The number of Taobao live streams with transactions exceeding 100 million yuan also reached 119, far exceeding last year's 58 and 2021's 43.

The number of small and medium-sized merchants with doubled transactions was 2.7 million this year, compared to 2.2 million last year.

Even the daily peak volume of express packages exceeded what many considered a "consumption bonanza," with a high of 729 million packages this year compared to 696 million in 2021.

These counterintuitive data suggest that today's consumers, especially younger generations, prefer relatively low prices with certainty, guaranteed quality, and smoother shopping experiences over low prices that compromise quality, experience, and service.

This new generation has the potential to pull e-commerce and the entire consumer market out of the quagmire of vicious competition.

Driven by this new consumption concept and demand, many markets are still in a volcanic eruption state, though many people are unaware.

Double 11 has been around for 16 years, long enough for a new generation to grow up. Each generation has its own growth environment, shaping new consumption concepts, demands, and expectations. Each generation has its own Double 11 and e-commerce.

Water Brother believes that three powerful variables are changing the competitive landscape of China's e-commerce industry today.

First, with oversupply and the rise of brands, products without brands will increasingly struggle to survive in the business world.

Second, young consumers with consumption concepts vastly different from traditional ones are beginning to dominate China's consumption trends. This trend strongly resonates with the first variable, promising to fundamentally change the logic of future e-commerce competition, business growth, and the upgrade of China's overall business model.

Third, the large-scale interconnection in the era of traffic stock has created a historic business opportunity comparable to Pinduoduo's quiet rise within WeChat.

The logic of new-generation e-commerce competition or survival and development is already stirring among new-generation consumption needs.

I. This year's Double 11 was exceptionally hot, a win-win for both supply and demand

In the months leading up to Double 11 2024, from July to September, the growth rate of total retail sales of consumer goods hovered around 2% to 3%, indicating an overall sluggish market. However, online brand promotions drove unexpectedly robust sales growth.

Many large international brands experienced negative double-digit growth in offline consumption during the National Day holiday. Yet, the same brands enjoyed positive growth online, particularly on Tmall. Every winter or the second half of the year generally sees higher average order values and consumer spending due to increased purchases of winter supplies. What sets this year apart is its role in stimulating consumption and boosting overall enthusiasm. Platforms, merchants, and governments offered unprecedented discounts and subsidies.

It's not hard to understand that in an environment of reduced income and weaker sales, both consumers and merchants had higher expectations for Double 11 this year. Consumers hoped to reduce the cost of quality living through this promotion, while merchants aimed to clear inventory and grow, striving to survive.

A significant trend observed this year during Tmall Double 11 was the notable growth of big-name products across industries, with international and domestic brands in categories like beauty, apparel, electronics, and appliances collectively returning to the forefront of rankings. This indicates a rise in the "ceiling" for high average order value consumption and enhanced consumption vitality across all price ranges.

Ahead of Double 11, Taobao officially supported WeChat Pay in addition to Alipay and bank cards, opening new growth potential for the e-commerce industry alongside interconnectivity initiatives with other major platforms. In the era of traffic stock, interconnectivity has become the primary traffic dividend for major platforms and merchants. A recent research report by China International Capital Corporation (CICC), citing QuestMobile data, stated that over 80 million frequent e-commerce users among WeChat's exclusive users are poised to become long-term users of Taobao, becoming a significant variable influencing the competitive landscape of today's e-commerce industry. Among them, Taobao and Tmall, which were nearly isolated from WeChat in the past, can be considered the biggest beneficiaries.

A report by QuestMobile revealed that in terms of monthly active users, Taobao gained 18.67 million new users in September, bringing its total monthly active users to a record high of 944 million.

However, compared to the scale opportunities brought by interconnectivity, the improved user experience may be more critical for e-commerce platforms. Liu Bo believes that interconnectivity primarily brings more convenience to consumers, not just for user scale and traffic, but more for consumer experience.

Consumer experience has become the most critical lever in reversing the competitive landscape of e-commerce. Merchants and platforms that can provide comprehensive advantages in price, quality, and service based on consumers' multi-dimensional needs are inherently the most efficient and are bound to go further.

Like this year's Double 11, true prosperity arises from deep and efficient matching between supply and demand.

II. Each generation has its own Double 11: Intergenerational changes in consumption trends

From this year's Double 11, particularly the consumption trends of young people who best represent consumption trends, we can see that the e-commerce ecosystem centered on branded and high-quality merchants has ushered in a new redistribution cycle.

88VIP is China's largest paid e-commerce membership program. As of the end of June 2024, the number of 88VIP members exceeded 42 million. 88VIP members are China's most sought-after and powerful consumers: 88VIP members browse the Taobao app for an average of 25 days each month, and their annual consumption is nine times that of non-members. As of midnight on November 11, the number of 88VIP members placing orders increased by over 50% year-on-year.

88VIP's significant new member acquisition has become a driver of rapid brand growth, with over half of head brand business contributed by 88VIP members.

Among the expanding membership of 88VIP, post-2000s individuals have played a crucial role. During Tmall's 618 shopping festival, the number of 88VIP members surged threefold, with a 533% increase in new post-2000s members. According to data shared at the Tmall Double 11 launch event, the growth rate of post-2000s 88VIP users far exceeded the overall market, increasing by 67% year-on-year.

Additionally, Questmobile's 2024 report on new middle-class demographics revealed that 39.8% of new middle-class individuals have a high willingness to spend. As of July 2024, the number of new middle-class users across the internet reached 257 million. Meanwhile, the age structure of users continued to change, with nearly 40% falling between the ages of 25 and 30, and those aged 31 to 35 exceeding 35.9%.

It is evident that young people aged 25 to 35 have become the main force in today's consumer demographic and influence the overall direction of consumption trends.

A survey on consumption trends among young people in 2024 by The Beijing News' Shell Finance summarized that young consumers are "intelligent" and enthusiastic about price comparisons, prefer affordable alternatives, value others' evaluations and recommendations, and are fond of "fine health preservation," travel, pets, etc. Old domestic brands, emotional value, and smart home appliances have become popular among young people, indicating that pickiness, quality focus, experience, and interest-driven consumption are becoming the mainstream for this generation of consumers.

Today's young consumers want it all. Only platforms that meet their multi-dimensional needs have the potential to succeed in fierce competition.

The core needs of this generation of young people have long surpassed the basic survival stage and entered the upper levels of the pyramid of needs, encompassing respect, cognition, aesthetics, and even self-realization.

Understanding and meeting the changing needs of the main force in the incremental market has become the key to growth and profit for many branded merchants across categories this year.

Demand has begun to automatically create supply. Double 11 is now in its 16th year, and a new generation of young people has grown up to become the main force in consumption and a critical driver of brand growth. Those who understand and satisfy young people better will attract them.

All these changes will bring significant shifts at the business level, especially in retail. During this year's Double 11, many sectors driven by young people's interests and emotional value, such as photography, musical instruments, and pop culture toys, saw 88VIP purchases 3.5 times higher than those of ordinary users.

To cater to this new generation of young people, Taobao and Tmall began their "youth-oriented" design early on. In terms of user experience, Taobao introduced playful skins and free shipping for returns with unlimited times, further enhancing 88VIP member benefits. On this basis, Taobao users have a high coverage rate among young consumer groups. According to the "Taobao Post-95s Concentration Report," 90% of young internet users are Taobao users, with post-95s becoming Taobao's largest user group, making Taobao the first national-level app dominated by post-95s. This also makes Taobao the most popular shopping app among the new middle class.

Young consumers are also Taobao's most active shoppers, driving strong growth in Taobao's traditional core business and emerging consumption.

During this year's Double 11, Taobao and Tmall's core categories and emerging consumption trends grew robustly. As of midnight on November 11, transactions for 66 apparel brands and 79 beauty brands exceeded 100 million yuan. Transactions for 34 3C and digital brands also surpassed 100 million yuan.

A report by data agency 9Chian indicates that sales data from the first phase of Double 11 showed that Taobao and Tmall maintained their dominant positions in traditional strength categories such as beauty and apparel, accounting for 50.9% and 50.7% of the market, respectively.

Additionally, changes in the lifestyles of millennial and Gen Z consumers have fueled significant growth in emerging categories. As of 4 PM on November 11, transactions for four toy and pop culture brands exceeded 100 million yuan. As of midnight on November 11, transactions for 34 sports and outdoor brands also surpassed 100 million yuan.

The 9Chian report also points out that categories such as pets, outdoors, and pop culture toys generally exhibited higher explosion coefficients than traditional categories, reaching 367%, 401%, and 543%, respectively, reflecting the diversification of consumption preferences.

This concept of engaging with young people has allowed Taobao and its merchants to identify these business opportunities earlier.

In emerging categories such as pop culture toys, pets, and outdoors, Taobao has demonstrated stronger sales leadership, with market shares of 69.7%, 66.0%, and 56.5%, respectively.

Driven by young people's counterintuitive and astonishing brand consumption desires and abilities, the commercial market for quality life and interest-driven demand has entered an explosive phase.

III. What kind of platforms, merchants, and user relationships do we need? What kind of industry do we need?

The pickiness and influence of young consumers are reminding all platforms that it is time to return to consumer needs.

This year, a crucial optimization direction for Taobao and Tmall has been to return to users and optimize the entire app experience with users at the core.

This year, Taobao also upgraded its PC end with the launch of the Vision Pro version, and comprehensively upgraded its one-hour delivery service. Collaborations with WeChat Pay and JD Logistics are also measures to enhance user experience.

Simultaneously, to optimize the business environment for merchants, Taobao was the first to ease restrictions on "only refund" for high-quality service merchants and introduced a store experience scoring system, with the platform not proactively intervening in refunds for merchants with scores above 4.8. In September, Taobao upgraded its shipping insurance and launched "Refund Assurance," further reducing merchants' return costs in collaboration with logistics companies and insurance companies.

Recently, Taobao also launched an AI-driven marketing tool for the entire platform, "Omni-channel Promotion." Wu Jia, President of Taobao's User Platform Business Department, summarized Taobao's Omni-channel Promotion strategy, stating, "Our Omni-channel Promotion also offers a compensation plan to ensure ROI delivery. In other words, we want to ensure that merchants can see the ROI corresponding to their investment. Therefore, we select products and offer consumers a good price."

In fact, helping merchants reduce costs and increase efficiency through platforms, incentivizing merchants to reward users through operational mechanisms, and driving supply through market orientation are not only Taobao's thoughts on Omni-channel Promotion but also necessary for Taobao to regain its leading position in the e-commerce industry.

Assisting merchants in building private traffic and establishing brands is the least costly option for merchants and consumers in the long run but may not be the case for platforms, potentially even eroding profits for centralized e-commerce platforms.

Therefore, adhering to this model is not easy, but it is a necessary path for the upgrade of China's commerce and the emergence of more brands. Jialuo, President of Tmall Business, mentioned at the Tmall Double 11 launch event that he was still meeting with the CEO of a super conglomerate's China region in Hangzhou on the day of the event. The CEO's words moved him deeply and further solidified his resolve regarding Tmall's direction. The CEO said, "Jialuo, do you know? In China's market environment, there's no logic for brand official websites. Consumers rarely visit brand official websites. Tmall flagship stores are our official websites. So you must firmly develop flagship stores and firmly operate Tmall flagship stores as our official websites."

European and American consumers visit brand.com, but Chinese consumers rarely have this habit, so brands need Tmall as an outlet. Is the core purpose of brand development only to sell goods? Is the core purpose of brand development only GMV? Of course not. This CEO's company has invested a lot of energy and resources in building the brand, communicating with consumers, and launching new products.

Different platforms have their unique characteristics, and merchants still focus on long-term operations. The system and products provided by Taobao and Tmall meet their long-term needs. The core of Taobao is stores, and the core of Tmall is flagship stores. Stores are like merchants' homes, like renting a storefront offline, allowing continuous operation. Other methods, such as live streaming and low-price competition, are more like street stalls, which is a completely unstable business and is subject to regulation. These are two different business models, and ultimately, merchants will return to the first model.

To provide long-term development space for products, the boundaries of the platform are crucial. Merchants' stores and flagship stores are their private domains, which should be private property that merchants can access but others cannot. Every product launch by merchants, price adjustments in merchants' stores, and backend operations should not be interfered with by the platform.

It is essential to give full autonomy to brands. After all, those with permanent assets have perseverance. Without store assets, merchants don't even have a home, so how can they include customers in their long-term plans?

Delegating merchant affairs to merchants and even entrusting more customers to them inherently liberates platform productivity to serve all platform users.

The platform itself is a tool for production, continuously developing tools such as discount tools, membership tools, store tools, and data tools for merchants to use to operate with consumers.

This open, market-oriented store logic has made Taobao and Tmall the base for merchants to launch new products and build brands. According to research by the Yicai Business School, over 60% of merchants still consider Taobao and Tmall as their main platforms for launching new products and building brands.

Data shows that the number of new brands joining Tmall in September this year increased by 239% month-on-month. 300,000 Tmall brand merchants participated in this year's Double 11. The proportion of Taobao stores with a score of 4.8 or above has rapidly increased from 30% to 36%, indicating a continuous improvement in merchant service levels.

The resulting vast and diverse supply ecosystem has also attracted a steady stream of users to Taobao and Tmall, and the number of Tmall Double 11 buyers is expected to reach an all-time high this year.

It should be said that under the competitive pressure of merchants generally beginning to operate through multiple internet channels, Taobao and Tmall's return to user-orientation and the strategy of aligning supply and demand based on user needs has had a very obvious effect. The strong growth of Double 11 this year is undoubtedly a result of this transformation.

From the emergence of new brands and new growth under the new consumption trends of young people, we can see that the explosion of brand growth is itself the best implementation of demand-driven automated supply. It is the result of brand merchants deeply understanding user needs over the long term, leading to the lowest market transaction costs for matching supply and demand.

After being weeded out by more demanding young consumers, only the strongest brands survive.

An active natural ecosystem will see the emergence of various species that evolve through natural selection. Similarly, a strong business ecosystem has various similar species, categories, and brands that continuously integrate and differentiate through market selection, growing a more dynamic and diverse market ecosystem, thereby driving the development of a country's commercial competitiveness.

Market changes are profound and drastic. From both survival and development perspectives, today's retail industry, represented by e-commerce, should transition to comprehensive branding.