From "price war" to "subsidy war", from "aphrodisiac" to "poison"

　　The rise of price wars:

　　The reason why "price war" emerged is that the market was in a weak state and the industry was generally declining. Platforms and merchants wanted to stimulate users and open up the market. Especially in terms of home appliances, offline stores have more advantages.

　　On August 14, 2012, two Weibo posts by JD.com CEO Liu Qiangdong set off a fuse for e-commerce. Later, senior e-commerce executives including Suning and Gome responded to Liu Qiangdong on Weibo. For a time, the e-commerce industry was filled with smoke, and a new round of e-commerce war began. With the "random entry" of Dangdang and Yixun, it is evolving into a melee in the entire domestic e-commerce industry. In September 2012, the National Development and Reform Commission determined that e-commerce price war fraud and needed severe punishment.

　　Although the National Development and Reform Commission and the Ministry of Commerce have both come forward to resolve the vicious competition problems caused by the "price war", it seems that it has not been fundamentally resolved. Moreover, it is becoming more and more intense in some areas, especially in the field of taxi-hailing software travel, price wars also exist in the disguised form of "subsidy war".

　　Cash subsidies allow users to form user dependence. The purpose is to attract more consumer groups, increase the market share of their own products, and achieve a win-win situation through competition. User usage rate decreases after the suspension of compensation.

　　Price wars can only play a temporary role and it is difficult to cultivate user loyalty. As long as subsidies are stopped, the number of users will be significantly reduced. If this is not the case, the company will not repeatedly subsidize. Many companies are on the verge of collapse because they burn a lot of money after financing.

　　The essential purpose of price war:

　　To stimulate consumption;

　　Improve the company's market position and maintain the company's market share;

　　Start with sub-categorized categories to increase the scale of corporate transactions;

　　From the perspective of industry competition, maintain the corporate image.

　　In addition, there are many merchants who use price wars to achieve the goal of eliminating inventory, and even have the problem of "rise first and then fall". Some home appliances have increased their prices first and then lowered their prices.

　　What impact will the price war have:

　　Regarding the consequences of the price war, brand manufacturers may believe that price reduction will help promote sales, but this will have a huge impact on product sales in their offline retail channels, and even have a negative impact on the brand image of mid-to-high-end brand manufacturers. Because you can get a 40% discount on one product, other products may face the pressure of discount. For example, for a well-known sports product manufacturer, many online products are priced very low for promotion, which gives consumers a bad impression that the product does not retain its value and will reduce the price when it is bought. Without loyal users, there will be no brand appeal, and real brands will become "fake brands".

　　However, one advantage is that the e-commerce price war is a touchstone to test whether traditional enterprises are adapted to market development - it can accelerate the transformation of offline enterprises.

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