In the traditional sense of e-commerce, it seems that the so-called platform model and self-operated business are clearly separated, but at the moment, integration is a trend that is actually happening. Jingdong, which is mainly self-operated, relies more and more on platform business for its growth. At the same time, Douyin has also recently launched its self-operated business "Douyin Supermarket".
Platforms are increasingly relying on self-operation, the direct reason is that competition between platforms has intensified. If the self-operated business can be regarded as a "stabilizer" for Taobao and other e-commerce companies, it is undoubtedly a "ballast stone" for JD.com. Especially in the special period of the past three years, the self-operated business has played a very special role. With JD.com's jewels ahead, Douyin will spare no effort to enter self-employment at the beginning of the new year in 2023 and achieve remarkable results.
(The GMV of Douyin in 2022 will be around 1.5 trillion, self-operated is a must for Douyin’s soft landing)
At the moment when platform competition is intensifying, self-operated business is also one of the cores of platform competition. In a sense, self-operated platforms are the inevitable result of full competition among e-commerce platforms . As competition among platforms increases, merchants and consumers will have more choices. Self-employment is an inevitable strategy for platforms to improve their competitiveness and strive to retain merchants and attract consumers.
The integration of platform and self-operated business is not only the trend of the times, but also an established fact. Whether it is a self-operated e-commerce platform such as Amazon and JD.com, or a platform such as Douyin and Taobao that tries to do self-operated business, the market will always ask whether companies will use their own advantages and sacrifice the interests of small and medium sellers to achieve self-employment. Maximize the profit of the business? In fact, this issue is also one of the themes that has been questioned by the e-commerce giant Amazon on the other side of the ocean. Moreover, the domestic e-commerce giant JD.com did change some POP categories to self-operated in 2016 and 2017.
The platform is self-operated. For consumers, the most direct experience is the certainty of shopping, shopping is more secure, and the price may be more favorable. But what impact does self-operating have on platform merchants, the platform itself, and self-operated supply chain merchants? When the platforms end up doing self-employment, do they hurt each other or achieve each other?
To answer the above questions, we need to go back to the motivation and goal of self-employment in the end: what drives self-operated e-commerce platforms is the proposition of efficiency, and what drives platforms to do self-employment is the proposition of ecological security and stability. Of course, behind the integration of platforms and self-operation, what companies want to obtain is by no means a simple short-term increase in revenue and profits, but a long-term and sustainable prosperity of the ecology.
Behind the efficiency proposition of self-operated e-commerce is the "management radius". Any company is trapped by its own "management radius", Amazon is like this, and so is JD.com. The good side of the self-operated model is "economies of scale", but the other side is "diseconomies of scale". Amazon and JD.com's expansion from self-operated to platform is to break through the limitation of "management radius" and solve the problem of "diseconomies of scale"-because self-operated business cannot cover the entire retail category, and they must achieve trillions of GMV. Can't manage millions of employees. The ruler is long and the inch is short. For self-operated e-commerce, an open platform is more like a management lever, and behind the social division of labor is efficiency. Of course, for Amazon and JD.com, the more direct driving force is the pursuit of profit. It is also an obvious fact that the gross profit of advertising and commissions on the open platform is much higher than that of JD.com’s self-operated categories.
Since the platform model is more efficient at the social level, and the advertising and commissions of the platform model are actually higher than the gross profit of self-operated categories, then there is actually no need for the platform to end up doing self-operated products. What is the reason that is forcing Douyin to do self-employment?
The answer is the stability of the e-commerce ecosystem. Platforms are self-operated, focusing on the competitiveness of their respective platforms and the stability of the e-commerce ecosystem.
Taobao's self-operated business is centered on Tmall Supermarket, Hema, and RT-Mart. It mainly covers supermarket categories, and the same is true for Douyin Supermarket. Most of the supermarket categories covered by the platform’s self-operated business are high-frequency fast-moving consumer goods. The characteristic of this type of product is that they are easy to cultivate consumers' stickiness and loyalty to the platform, form consumption habits, and ultimately benefit other operators on the platform through cross-repurchase.
Self-operated business is becoming one of the core competitiveness of the platform and a lever to leverage the platform market at the moment when the platform competition is particularly fierce. For Taobao and Douyin, the self-operated business is a useful supplement to the platform, and it also provides some kind of implicit guarantee-this kind of guarantee is not only for the platform, but also for consumers.
The characteristic of self-operated business is "controllable". The platform does its best to match up transactions and earn advertisements or commissions by completing transactions. However, if merchants on the platform fail frequently, it will not only affect the reputation of the platform, but also lead to the loss of users. In addition to regulating the market and providing market service standards, the platform can also maintain the stability of the platform through more "controllable" self-operated businesses. For consumers, this kind of "controllability" means deterministic supply and deterministic performance.
In a sense, the self-operated business is more like the "front face" of the platform. Self-operated and platform merchants are by no means a zero-sum game in which one ebbs and flows, but a "platform community of interests." Self-operated, platform merchants and platforms, all prosper and all lose. At present, when the competition among e-commerce platforms is particularly fierce, self-operating is the "stormtrooper" of platform competition.
It should be very clear that the pressure of external competition is one of the core reasons for the platform to do its own business and to develop its business on its own . Therefore, the first thing that needs to be paid attention to should be the competition between brands on different platforms, and the second is the intra-brand competition within the same platform (that is, the relationship between the self-operated part of the platform and the third-party merchants on the platform). For the current regulatory level, if the inter-brand competition is sufficient, too much attention to the price-performance ratio and value of intra-brand competition may not be so high, and intra-brand competition should be handed over to the platform's own governance and market regulation. as appropriate.
At the same time, self-operated platforms provide consumers with hidden market benefits in addition to the "certainty" of shopping:
For example, the self-operated business of the platform is more willing to do price subsidies. The reason why the platform spares no effort in subsidizing the price of self-operated business is because after the user reaches a certain scale, the competition between platforms is particularly fierce, and these platforms replace the advertising budget on the market with the "investment" to activate existing consumers;
For another example, the retail price of the platform's self-operated product portfolio will also be lower. Economics has the proposition of the loss of economic efficiency caused by the "double marginalization effect". From the perspective of consumers, compared with two different companies in the upstream and downstream industrial chains, the price of a set of combined products provided by one entity is lower than the sum of the prices of two independent products. That is to say, it is cheaper for consumers to buy C and D on the platform themselves than to buy C and D from their platforms A and B respectively.
Self-operated business is beneficial to platforms, platform merchants and consumers, and its prosperity is also due to the active supply chain: for mature suppliers or brands, self-operated business is one of the "one-pack" sales channels, and they need to According to the needs of the channel customer groups, the supply of products of different series and prices is allocated. For them, selling goods on the platform is also selling goods on the self-operated platform; As far as brands are concerned, the attraction of self-operating to them is far more than the simple channel-self-operating can give brand endorsement, expand influence, and it is also a test area for business operation. In a sense, they have a stronger willingness to enter the platform for self-operation.
When self-operated e-commerce expands platform business, there are still doubts in the industry, worrying that companies "have to be referees and athletes at the same time". question.
In fact, for platform merchants, the end of the platform to self-operate actually releases a more positive market signal: there is full competition among e-commerce platforms, and the competition between platforms increases, and platform merchants have more choices. Self-operating is a strategy for the platform to improve its competitiveness, and what the platform should really consider is the overall interests of the platform. The development of the platform requires self-operation, and self-operation is also a part of the platform.