Core Insights - The e-commerce industry in China is undergoing a significant adjustment period due to rising traffic costs, compressed profit margins, and a deteriorating competitive environment, as illustrated by the experiences of various practitioners [1][2][4] Industry Trends - The number of e-commerce practitioners in China is projected to decrease by 12.5% by June 2025, with active merchants on the Taobao platform declining by 18.3% [1] - The average customer acquisition cost on Taobao has increased by 47%, reaching 78 yuan per new customer [1] - The average gross margin for e-commerce platform goods has dropped by 8.3 percentage points over the past five years, with most merchants' net profit margins falling below 5% [2] Competitive Landscape - The number of newly registered online stores increased by 8.7% in the first half of 2025, while the growth of online shopping users was only 1.2%, indicating intensified competition [2] - The entry of brand official flagship stores has heightened competition, posing challenges for traditional distributors [2] Platform Dynamics - Taobao implemented over 30 rule updates in the first half of 2025, affecting core aspects such as store ratings and product rankings, leading to increased operational uncertainty for merchants [2] Emerging Opportunities - New e-commerce platforms like Douyin are reshaping the industry, with its GMV growing by 78.5% year-on-year in Q2 2025, reflecting a shift in consumer shopping habits towards social commerce and live streaming [4] - Merchants are finding success through differentiated competition and multi-platform strategies, with examples of businesses maintaining high gross margins by focusing on niche markets and providing specialized services [4][5] Service Transformation - The shift from product sales to service offerings is emerging as a new profit growth point, with some merchants reporting service revenue constituting up to 40% of their income, highlighting the importance of service capabilities in a saturated market [5]

Core Insights - The e-commerce industry is undergoing a significant adjustment period due to rising traffic costs, shrinking profit margins, and a deteriorating competitive environment, as illustrated by the experiences of entrepreneurs like Zhang Qiang [1] Industry Overview - As of June 2025, the number of e-commerce practitioners in China is projected to decrease by 12.5% year-on-year, with active merchants on the Taobao platform declining by 18.3%, contrasting sharply with the "profitability upon opening a store" era a decade ago [3] - E-commerce operations have shifted from a "traffic dividend" model to a "stock game," indicating fundamental changes in platform rules, consumer behavior, and market structure [3] Cost and Profitability Challenges - The average customer acquisition cost on Taobao has increased by 47% year-on-year, reaching 78 yuan per new customer, while the return on advertising investment has drastically decreased from 500 yuan to 200 yuan for the same advertising spend [3] - The average gross profit margin for e-commerce platforms has dropped by 8.3 percentage points over the past five years, with most merchants reporting net profit margins of less than 5% after accounting for commissions, logistics, and promotional costs [3] Competitive Landscape - The number of newly registered online stores increased by 8.7% in the first half of 2025, while the growth in online shopping users was only 1.2%, indicating intense competition [4] - The entry of brand flagship stores has intensified competition, as these "regular troops" leverage resource advantages to challenge traditional distributors [4] Regulatory Environment - Frequent adjustments to platform rules have created operational challenges for merchants, with over 30 rule updates on Taobao in the first half of 2025 affecting core aspects like store ratings and product rankings [6] - The unpredictability of these changes has increased operational risks and complicated long-term planning for businesses [6] Emerging Trends - New e-commerce platforms are reshaping the industry landscape, with Douyin's GMV growing by 78.5% year-on-year in Q2 2025, reflecting a shift in consumer shopping habits towards social commerce and live-streaming sales [6] - Merchants are finding success through differentiated competition, such as focusing on niche markets or expanding into multiple platforms, which is becoming crucial for survival [6] Value of Private Traffic - The importance of private traffic operations is increasing, with merchants using direct consumer engagement strategies to reduce reliance on platform traffic [7] - Service transformation is emerging as a new profit growth point, with businesses shifting from product sales to service offerings, which can yield higher profit margins [7] Conclusion - The current challenges in the e-commerce sector are seen as a necessary transition from extensive growth to quality competition, where adaptability and continuous innovation will determine which businesses thrive in the evolving landscape [7]