🛑 Discounted extravaganza, such as 11.11 / 12.12

🛑 discount extravaganza such as 11.11 / 12.12

"When consumers are hypnotized, stores are tired for free, and platforms are the real winners."

Every time the day and month numbers meet, such as 3.3, 6.6, 9.9, 11.11 or 12.12, our smartphone screen is immediately taken over by a red banner, a countdown clock, and the words "Flash Sale" or "Mega Campaign."

In the eyes of ordinary consumers, this is a shopping festival full of great value deals, but if you take off the shopper's glasses and put on the glasses of economists and business strategists, what is really happening is an ingeniously designed behavioral experiment.

The platform proudly announces year-on-year growth in GMV numbers, but the more important structural question is,

"Who exactly is the real profit in this game, and who is unconsciously losing economic power? Looking at the eCommerce ecosystem, we see three major players: consumers, stores, and platforms, and each playing an unequal game?"

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🛒 consumers are victims of "behavioral economics."

Many consumers believe themselves to be winners, because they can press discount codes or shop cheaper than usual, but in reality, the platform has designed several layers of psychological mechanisms to trigger buying decisions.

1.Cognitive Overload, or the complexity that causes the brain to stop thinking

* Many people may have wondered why discounts don't reduce directly, but they have to become complex calculating formulas, such as buying two reduced pieces, using code from the store, using code from the platform, and requiring a bank-specific credit card.

* This kind of promotion structure is not accidental, but the creation of Cognitive Overload. When the brain has to calculate multiple layers, logic begins to weaken, and decisions change from reason to emotion.

2.Sunk Cost Fallacy or the trap of time cost

* In-app games, such as coin collecting, tree watering, or daily missions, seem like small fun activities, but in behavioral science, these create "sinking costs" for users.

* Once the user has spent time playing games in the app, the brain will feel sorry if the code is not used or eventually purchased.

* Purchase occurs not because of necessity, but because they do not want to lose what they have already invested.

3. Artificial Urgency or urgency being created

* Flash Sale with a countdown time of a few minutes, puts the buyer's brain into rush mode and reduces the ability to think carefully.

* This is why more consumers shop than necessary on campaign day.

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🏪 store is the illusion of sales.

For Mega Campaign stores often seem like a golden opportunity. The order peaks quickly, but by the end of the campaign and back looking at the profit and loss statements, many stores find a completely different reality.

1. Auction war for advertising

* On campaign day, traffic in the platform will be very high, but an enormous number of stores are competing for the same space.

* The result is that advertising costs are auctioned severely higher. Many stores therefore have to pay more just to have their goods appear in front of customers.

2. Margin that gets thinner and thinner

* Many stores must share discounts with the platform and pay GP fees, payment fees and advertising fees.

* When all costs are included, the remaining actual profit may be lower than the sales figures make sense of.

* This is why many entrepreneurs are starting to question that "high sales" doesn't always mean "strong business."

3.Demand Vacuum after the campaign

* Another phenomenon many stores encounter is that after-campaign sales often clearly agree.

* The reason is not because the market is gone, but because many consumers postpone their purchases until the discounted day, and shop at once.

* The increase in sales therefore came not from the new demand, but simply to pull sales from the future ahead of time.

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🏦 Today's platforms have a "casino owner" business model?

While consumers and stores are competing fiercely, the platform is instead in the most advantageous position because no matter how the outcome of the competition comes out, the platform continues to earn revenue from multiple channels simultaneously.

1. Multi-layer fee collection

* Platform revenue does not come from the GP alone, but also advertising fees, payment fees, and in many cases logistics charges.

* This kind of business model makes the platform the center of the value chain.

2. Information is the most important resource.

* Every search, click, or even scroll through a product is stored as consumer behavior information.

* These data enable the platform to develop more and more accurate algorithms and create a long-term systemic advantage.

3. Dependency trap

* The more stores rely on sales from Mega Campaign, the more stores lose the power to build their own brands.

* In the long run, many entrepreneurs may find that their business depends on the rules of the platform rather than their own strategy.

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🔎 Looking through the discount game?

It is not wrong to shop during a discount festival if the consumer is conscious and knows what they are really buying.

But a structural understanding of the platform economy will help us take a clearer look at this game.

* For consumers, buy a product because it creates value for life, not because the promotion system creates a craving for it.

* For entrepreneurs, be careful not to let beautiful sales numbers overshadow the truth of net profit and cash flow, because in the business world there is one truth that never changes.

"Every penny discount costs money, and in a complex economy like this, someone will always pay for it."

# Two stories a day

# eCommerceStrategy

# PlatformEconomy

# BehavioralEconomics

# ConsumerPsychology

# BusinessStrategy