There is still nearly a month left until Singles' Day, but various home appliance platforms have already launched various promotional activities in advance. If in the past, consumers in remote areas were not very enthusiastic about participation, then this year they can participate well in this big promotion.
Since September 9 of this year, Pinduoduo's "10 billion reduction" plan has launched a blockbuster welfare. All the transfer orders in remote areas generated by the plan, the merchants only need to send the orders to the transfer warehouse, and the logistics transfer fees for the second shipment from the transfer warehouse to remote areas such as Xinjiang, Xizang, Gansu, Ningxia, Inner Mongolia, etc. are borne by the platform. At present, the new exemption measure has covered all merchants on the platform. It can be foreseen that this measure will inevitably have a promoting effect on Double Eleven. Cao Lei, director of the E-commerce Research Center of NetEase, stated that the support policies introduced by e-commerce platforms in the early stage of Singles' Day are conducive to reducing the operating costs of merchants, attracting small and medium-sized merchants to settle in, and optimizing the platform ecosystem.
For merchants, especially at the logistics application level, the operational burden has been reduced, greatly improving service efficiency. In fact, public data shows that in 2023, the e-commerce transaction volume in Xinjiang exceeded 300 billion yuan for the first time, reaching 309.89 billion yuan, a year-on-year increase of 18.43%, which is 7.69 percentage points higher than the national level.
Behind these numbers, what is even more concerning is the new trend of the Xinjiang consumer market. The introduction of the new policy not only effectively reduces costs for businesses, but also takes a big step towards benefiting remote areas and eliminating regional disparities for the entire Chinese e-commerce industry.
Pinduoduo, a clothing merchant, admitted to 21st Century Business Herald reporters that although the order proportion in these areas is not yet high, there has been a significant improvement after the opening of free shipping.
From a narrow perspective, the introduction of the new policy is one of the initiatives of Pinduoduo's Journey to the West. Since its launch of Xinjiang free shipping two years ago, Pinduoduo has been playing a big game in inclusive e-commerce. With the increasing development of e-commerce, industry competition is no longer limited to traditional price wars. How to win high-quality development with new services and better experiences is a new era proposition.
Narrowing the distance 'gap'
In recent years, with the rapid development of e-commerce, more and more consumer scenarios have begun to penetrate into remote areas. However, due to geographical limitations, logistics costs in remote areas are often significantly higher than those in urban centers.
Taking Xinjiang as an example, local residents have been shopping online for a long time, and the most common logistics remarks of merchants are "free mail in our store, except in remote areas such as Xinjiang and Xizang". At that time, the popular joke in the local area was "Even if Dilraba and Gulina go back, if they want to buy things, they can only go to the bazaar (market)
How to eliminate regional imbalance and enable remote users to enjoy the convenience and benefits of e-commerce, the Pinduoduo team has begun to find ways to overcome the challenges.
In 2022, Pinduoduo pioneered the transit consolidation and free shipping model, adopting the "Silk Road E-commerce" train model of "mainline railway trains+two end consolidation and distribution". Through transit consolidation, it changed the direct shipping mode and reduced costs through large-scale consolidation.
The platform guides merchants to deliver packages from Xinjiang consumers to the Xi'an transit consolidation warehouse, and then the platform will ship them to Xinjiang through third-party logistics service operators. In this way, the high shipping cost (usually starting at 15 yuan for the first weight) under the direct shipping mode has been successfully reduced to the shipping cost from the shipping location to the consolidation warehouse plus a secondary shipping cost of 3-5 yuan per order.
A Anhui herbal tea merchant stated that before the opening of transit consolidation, the express delivery fee for direct shipments to Xinjiang was as high as 18 yuan/kg, due to high costs, thin profits, and generally low shipping enthusiasm. But after the transit warehouse lands, the first stage shipping cost to Xi'an drops to 2 yuan/kg, and the second stage shipping cost is 3 yuan/order. Although the centralized shipment from Xi'an may be a bit slower in terms of time, cost reduction is more important and has more advantages than direct shipment. Now it seems that there are also many more orders from the west in the store
The aforementioned clothing merchant also revealed to the reporter that in her opinion, in the past, due to shipping costs, sales of some low-priced clothes were not high. At present, these new orders are purely incremental and not easy in the industry. The competition in the clothing industry has always been very fierce, and the return rate is also high. Therefore, in the past, there were not many orders in remote areas of Xinjiang or Inner Mongolia, as returns were also very troublesome and required additional costs
After more than a month of trial operation, this clothing store has added over 200 new orders. For users in Xinjiang, it has truly changed their lives.
I have placed a lot more orders myself. Some stores offer free shipping for two items, while others charge 3 yuan for a single item, so I don't have to calculate the cost when placing an order like before. I bought about 50-60 items in a month, and only two items had some minor problems during transportation. Overall, the experience is still very good. Shipping takes two or three days longer than direct shipping, maybe a little slower, but the cost advantage is very obvious. "A user from Korla, Xinjiang admitted that this policy is absolutely beneficial for the sinking market.
Starting from July 2023, Pinduoduo will take the lead in promoting free shipping to villages in Xinjiang, and collaborate with third-party logistics service operators to launch express delivery services to villages in Kashgar and then in 60 counties in Xinjiang. This will shorten the distance between the end delivery points and consumers from tens of kilometers to within 2 kilometers, and compress the delivery time to within 24 hours.
From more than ten categories including shoes and clothing, beauty, general merchandise, digital, maternal and child care, home textiles and home decoration, food, etc., daily necessities as low as a few yuan and mobile phones and appliances as high as thousands of yuan all support free shipping and delivery to the village. Enable both northern Xinjiang herders living in high mountain grasslands and southern Xinjiang residents living in deserts and Gobi to enjoy the convenient lifestyle brought by e-commerce.
Significant cost reduction
Recently, official information from the Xinjiang Postal Administration revealed that this year, the postal industry in Xinjiang has made breakthrough progress in solving the problem of "no free shipping, no delivery" for online shopping. Through efficient collaboration across platforms and regions, and adopting a transit consolidation and shipping model, it has successfully joined the "free shipping area".
Nowadays, the daily delivery volume in Xinjiang has increased by over 30%, with an annual average of over 48 parcels per person. By deepening the "Express Delivery to Villages" and other projects, the coverage rate of village level express delivery services has successfully exceeded 96%. Deeply promoting the integrated development of rural passenger, freight and postal services, 232 passenger, freight and postal integration stations have been built, effectively promoting the joint construction and sharing of grassroots postal enterprises with passenger and freight transport enterprises.
Industry analysts have pointed out that Xinjiang's achievement of historic free shipping is not only due to the gradual improvement of infrastructure, but also the result of institutional cost reduction and efficiency improvement.
Pinduoduo's previous policies have greatly improved the e-commerce bottleneck in remote areas, but products shipped to remote areas still incur additional transit fees of 3-5 yuan per order compared to other areas. Nowadays, Pinduoduo's new policy further focuses on transit fees. The provision in the new policy that "platforms will exempt merchants from logistics transfer fees in remote areas" greatly helps merchants expand their customer base in remote areas and significantly increases profits.
Previously, when we received orders from Xinjiang, we would measure the logistics costs. Now we can choose a transit warehouse. For example, if the goods are shipped on the 25th, they can arrive at the transit warehouse on the afternoon of the 26th, and then we can choose to transit to Xinjiang. Since then, we have been tracking the logistics information and saw that the goods can arrive in Shihezi, Xinjiang in two days. Finally, we let go of our worries. "A home furnishing industry merchant told 21st Century Business Herald reporters that in the past, the overall express delivery cost to Xinjiang was about 3-5 times that of other regions, but now it has significantly decreased, with a cost of less than 5 yuan per kilogram, after all, the platform bears all the transit costs.
In the past, due to the high logistics costs, many businesses generally stated that "Xizang, Xizang and other remote areas do not ship/do not include mail". After the introduction of this policy, more businesses' products will cover these remote areas, and e-commerce in Xinjiang, Tibet and other places will be further developed.
It is worth noting that not only has the logistics cost of e-commerce platforms selling to Xinjiang significantly decreased, but with the improvement of logistics infrastructure, the cost of express delivery orders from Xinjiang to other provinces has also significantly decreased.
21st Century Business Herald reporters learned from a large wholesale market in Korla, Xinjiang that the shipping cost per kilogram of dried fruits and vegetables to Shanghai has also dropped to 5 yuan, opening up new markets for local businesses.
Previously, sending express delivery here was very expensive, costing around 15 yuan per kilogram, so we could only do offline business. Now, due to the development of e-commerce platforms like Pinduoduo, many logistics companies have also increased their distribution points here. With more orders coming and going, the cost will definitely decrease. "A young shop owner admitted that since logistics costs are decreasing, he is also considering selling hundreds of dried fruits and nuts in the store on the Pinduoduo platform.
Not only Xinjiang, but also Gansu, Qinghai, and Ningxia are covered by this preferential business policy. "This also means that more businesses can distribute goods to Xinjiang, Xizang and other regions, so that consumers in remote areas can gain a greater sense of gain and satisfaction." An analyst pointed out that "in the long run, with the development of e-commerce markets in these regions, Pinduoduo's current investment and layout will eventually reap commercial returns."
Entering October, the annual Double Eleven e-commerce promotion is coming again. Before and after the National Day holiday, multiple e-commerce platforms announced plans to upgrade and increase logistics investment, expand logistics coverage, especially the free shipping policy for remote areas, which will fundamentally change people's consumption behavior and lifestyle.