3.3 PRICE COMPARISON RULES – RULE PORTRAIT (3/3)

Price comparison rules are conducive to quickly identifying efficient merchants and their products, but the platform should guarantee merchants a reasonable profit margin, thereby enhancing merchants’ willingness to continue operating and differentiated innovation, so as to prevent platform merchants from falling into the path dependence dilemma of low-quality development. This is conducive to forming a virtuous cycle of merchant value chain advancement and consumer sense of gain continuously enhanced.

Consumer Advantages:

• Improvement of Shopping Efficiency: Price comparison rules help reduce the time spent on price comparison and hesitation due to concerns about price reductions. This enhances the shopping experience by allowing consumers to make purchases more confidently.

Merchant Advantages:

• Increase Product Exposure and Reduce Operating Costs: Merchants can rapidly increase product exposure through low-price competitiveness, leading to improved sales conversion rates. The automatic price-following rules reduce decision-making costs, as the platform can automatically adjust prices and represent merchants in marketing activities, thereby reducing their decision-making costs.
• Hidden Dangers: Low-price competition can squeeze merchants’ profit margins, potentially affecting their willingness to continue operating. This could lead to a cycle of reduced product quality and increased return rates, which may not be sustainable in the long term.

Platform Advantages:

• Improvement of Platform Revenue and Voice: The platform benefits from increased exposure and transaction volume due to low prices, leading to higher revenue. The platform’s voice in marketing activities is enhanced as it can replace merchants in decision-making, further strengthening its control over product pricing.
• Hidden Dangers: The platform may undermine a good business environment by potentially encouraging merchants to lower product quality to maintain profit margins. This could lead to a vicious cycle of non-conformity and high return rates, which is detrimental to the platform’s reputation and long-term health.

3.4 TRAFFIC RULES – RULE PORTRAIT (1/2)

Under the overarching context where cost-effectiveness dominates consumer demand, how to strengthen low-price orientation in traffic allocation has become a critical point of competition for various platforms.

Comparison of traffic rules of major e-commerce platforms in 2024