Written by | She Zongming

In the book "Cycles", investment master Howard Marks once said: Trends create reasons for reversing the direction of cycles.

Reality confirms this point: Take the involution phenomenon, which affects many pain points, as an example. Involution seems like a dead end, but the anti-involution sentiment gathered in the saying "The world has suffered from involution for a long time" has already answered the question of "when will involution end?".

The new atmosphere presented by this year's Double 11 - the withdrawal of "lowest price, only refund, and all-out brawl" prevalent in the past few years, and the improvement of the business environment and the acceleration of interconnection have become keywords, are the best footnotes.

In the context of high-intensity involution leading to the dire situation of "rolling low prices is a dead end; not rolling low prices, no way out", it is inevitable that some people will doubt: Can we really do without "the lowest price"?

The just-concluded Double 11 provided a positive answer. Data shows that Double 11, which bid farewell to low-level price wars, "unexpectedly" achieved above-expectation growth. The significant increase in sales for many brand merchants and small and medium-sized merchants all indicate one point: Shifting from low-quality price wars to value competition can lead to healthy and steady growth in the e-commerce industry.

Alibaba Group's fiscal Q2 2025 earnings report released on November 15 mentioned that during this year's Double 11, Taobao and Tmall achieved robust GMV growth, with the number of buyers hitting a record high.

The turning point of Double 11 corresponds to a new cycle for e-commerce: Double 11 has always been a consumption benchmark. This year's Double 11 marks a watershed moment from price involution to value competition, signifying an orderly transition in the e-commerce ecosystem and an important signal for the industry to return to the right track of development.

Subtle clues foreshadow major events. The foreshadowing of e-commerce entering a new cycle of "returning to value competition" was laid when Alibaba fired the first shot against involution in August this year.

01

The four words "value competition" may sound abstract, but the direction of "value" is essentially about three points: good products, good prices, and good services.

Over the past 20+ years, the evolution of e-commerce in China has been a history of upward value competition and positive development of the e-commerce ecosystem.

Platforms compete on products and services, striving to enhance infrastructure and e-commerce ecosystems; merchants compete on empowerment and efficiency, continuously upgrading the supply side to better meet user needs; consumers pay for quality and good prices, indirectly pushing platforms and merchants to improve quality and innovate.

Relying on China's booming consumer market and leveraging the peak consumption during Double 11 to drive business flow, logistics, capital flow, and other facilities, the e-commerce industry has developed rapidly, ranking at the forefront globally.

However, in recent years, the e-commerce industry seems to have fallen into the trap of "the mantra of involution". "Consumer downtrading" has become a high-frequency term, and price involution has intensified. There has been more talk about white-label products and less about brands; more about price competitiveness and less about product capabilities. Accompanying this trend is the discussion of whether "rolling low prices is a detour in the history of e-commerce development".

Low prices are not the problem; the problem arises when low prices become the incentive for "bad money driving out good" in an adverse selection situation. When the price mechanism for efficiently allocating resources is distorted by competitive patterns, price comparisons for lower prices emerge, and the abuse of "only refunds" proliferates. This is followed by frequent distortions in habitual price-cutting chaos and frequent occurrences of wool-gathering behavior by consumers. Some merchants say, "How much sorrow can you ask? It's like being constantly cut by a dull knife from endless price comparisons, like losing both money and goods with no end in sight."

The price war that has lasted for nearly two years has shown that unlimited low-price involution is a "summoning charm" for vicious competition. High-quality merchants find themselves in a dilemma, and countless merchants exchange price for volume, only to incur losses; consumers may seem to enjoy the benefits of low prices, but the law of value is eventually reflected in product and service quality; platform reputation and loyalty decline, dragging down GMV; and the innovation momentum of the manufacturing and service industries is hindered, with upgrade incentives stifled...

In the end, endless involution only delays the clearing of low-quality production capacity, at the cost of a declining e-commerce ecosystem.

When merchants are dragged into the quagmire of involution, even white-label products are ensnared by the curse of low prices. When consumer confidence is dampened by the perception of being "easy prey," the pace of boosting consumption is also hindered. It is inevitable that the trend will evolve towards the direction of "the way of reversal."

According to the Juglar cycle, cycle switches often occur every 8-10 years. This year marks the 16th year of Double 11, and it is not coincidental that the e-commerce industry is nurturing new trends.

02

A cycle represents a "trend." Trends do not emerge out of thin air; they need to be created, leveraged, and followed.

If the old "trend" in the e-commerce industry was a prisoner's dilemma caused by price involution, vicious competition, and a lose-lose situation for all parties, creating a new "trend" requires breaking away from the old mindset of "solving the problem of involution by creating more involution" and finding a new Nash equilibrium.

Specifically, this means rebalancing consumer and merchant rights and interests in the new stage, guiding their relationship towards a sustainable and mutually beneficial win-win ecosystem; correcting the competitive path of blindly pursuing the "lowest price" and guiding industry competition towards healthy competition.

This requires tearing away the "error book" that leads to disorderly operations and resetting the logic of e-commerce development based on market and industry rules to improve the "optimal strategy" for competition in the e-commerce industry.

Borrowing the words of @ noise reduction NoNoise, this correction related to the transition is not just a single-point reflection but a continuously upgraded systematic project.

Alibaba was the first to find a breakthrough. Its approach is to invest in enhancing the consumer experience and building a merchant ecosystem, adhering to the principle of "user first" while also supporting merchants' deterministic growth.

The two main manifestations of "user first" are: enhancing the supply of "good products, good prices, and good services"; and leading the "interconnection" between platforms. This year's Tmall Double 11 featured the largest number and value of coupons in history: an official 15% discount or a cross-store full reduction of "50 yuan off every 300 yuan," coupled with an additional investment of 30 billion yuan in consumer vouchers and red envelopes. Additionally, the national subsidy for home appliances' "trade-in" was used for the first time in conjunction with Double 11 discounts, bringing users a plethora of "good products at low prices."

Alibaba was the first to promote the dismantling of walls between platforms, adding new payment channels for Taobao consumers and providing more diverse logistics service options, matching Taobao's rich supply base and high-quality service capabilities to offer users more diverse and convenient choices.

"User priority" garners more support from more users. Alibaba's fiscal Q2 2025 earnings report shows that from July to September this year, the number of Taobao and Tmall orders increased by double digits year-on-year, driving online GMV growth, and the number of 88VIP members continued to grow by double digits to 46 million.

Supporting merchant development is reflected in optimizing the business environment and reducing the burden on merchants. Since August this year, Taobao has introduced a store experience score, loosened the "only refund" policy, and upgraded shipping insurance. Before Double 11, it also announced the launch of a "10 billion yuan reduction" plan and introduced policies such as return service, fast refunds, and commission-free promotions. With multiple measures such as natural traffic allocation and reduced after-sales costs, merchant costs have been reduced, and operational efficiency has been improved.

Double 11 is a concentrated display of structural adjustments in the e-commerce industry. A noticeable change this year is that, compared to previous years when platform merchants were obsessed with "the lowest price across the entire network," leading to fierce competition and a closed, disordered, and chaotic situation, this year they placed more emphasis on ecosystem building, quality improvement, and service upgrades.

03

Whether the path of anti-price involution can be sustainable requires the assistance of "positive feedback." Only by establishing a link from anti-involution to true win-win scenarios can the industry forge a consensus for concerted progress.

This year's Double 11 is the most intuitive validation of the effectiveness of these changes. The results show that things did not evolve as predicted - "not rolling means waiting to die" - but rather demonstrated a positive cycle.

During this year's Double 11, Alibaba's GMV grew robustly, with monthly active buyers on Taobao and Tmall hitting a record high. A total of 589 brands surpassed 100 million yuan in transactions, a year-on-year increase of 46.4%, setting a new record. The number of 88VIP members continued to grow by double digits; the number of live streaming rooms with transactions exceeding 100 million yuan also set a record of 119.

Deterministic growth is just the result; the deeper change is that this year's Double 11 has become the best in terms of the business environment, where users' expectations for good products at low prices have become commonplace, and it has achieved interconnection between various platforms. These new scenarios unleash value far beyond Double 11.

Merchants need high-quality, profitable, and sustainable business growth, which requires platform concessions and reasonable rules and mechanisms to ensure. By loosening the "only refund" policy, upgrading shipping insurance, and reshaping price competitiveness to address the "three major ills" plaguing the industry, Alibaba is targeting efforts to improve the business environment for merchants by reducing burdens and increasing efficiency.

Data provides evidence: Since the beginning of this year, Taobao has seen the opening of over 6 million new stores, with the number of new Tmall brands joining in September surging by 239% month-on-month. The "return treasure" service launched in September has served 1 million merchants, reducing return logistics costs by 23%. The penetration rate of merchants using "site-wide promotion" is also steadily increasing.

04

Investor Jesse Livermore said, "As long as the pursued goal is appropriate, everything will come to you, rewarding your correctness."

Ultimately, out-involutioning through more involution is not the endgame for the e-commerce industry. What is needed is to create a virtuous cycle that enhances user experience, safeguards merchant interests, and ensures the healthy and sustainable growth of platforms, driving win-win outcomes for all parties.

Now, looking back, this year's Double 11 marks a turning point and a new beginning.

At present, more and more platforms are restructuring their development logic: Alibaba, which led Double 11 back to value competition, has made it clear that in the future, it will continue to optimize the business environment through measures such as increasing the coverage of return vouchers, upgrading multiple after-sales tools, and closing the full refund evaluation entry for only refunds. JD.com emphasizes "being both good and cheap," while in previous speeches, senior executives from Pinduoduo emphasized a "healthy and sustainable platform ecosystem" and "ecosystem construction"... all are targeted efforts.

Everything indicates that the domestic e-commerce industry is gradually emerging from the quagmire of ineffective involution and entering a new cycle of "returning to value competition." This new cycle corresponds to new competitive models, new development spaces, and new growth opportunities.

In short, under the leadership of Taobao and Tmall, a new chapter in China's e-commerce industry is unfolding: After passing the turning point, the road ahead, as indicated by the signpost, bears four words - the era of "good money".