12.12 online shopping holiday strikes China with consumerist drama

Every year, we think we save money when making purchases during the insane online sales on December 12th, but we really end up overspending on products we’re never going to use again. This is a common, arguably even inevitable, phenomenon for the participants of the December 12th online shopping holiday because of all the psychological traps and pricing techniques the online businesses use, and it wasn’t any different this year.

According to Baidu’s Internet Operation Research Organization, “ratio favoritism”, “price contrast”,  and “sink the boat” are three online shopping sales techniques that have been proven throughout the years to yield great profits. “Ratio favoritism” teaches the online businesses to emphasize the ratio of the discount, not the numerical value purchasers can save. According to this principle, sales slogans and strategies such as “buy one, get five free” are better than the numerical discount in prices. Even though it is obvious that you are merely buying an extra expensive item to gain more items, it doesn’t matter; it still works. The reason behind this is simple––imagine two discounts: 140 to 100, and 1050 to 1000. Which sale has more monetary value? Based on simple math, it should be the latter. Which sale seems more appealing? You would probably say the former. This shows how humans intuitively favor ratio over number.

Next up, “price contrast”—it’s an old trick. You’ve probably already heard of it, even learned the mechanics behind it. Nevertheless, it still works on us: when businesses add a very pricey product next to the real one to contrast and promote it, it proves great efficiency.

Last but not least, “sink the boat” is a sales strategy that was developed quite recently. A good comparison is when you would still sit through a movie even if you realized that it would be horrible within the first ten minutes; if you had known the truth beforehand, you wouldn’t have wasted your ticket money. But the truth is you already spent your money on a movie so you might as well stick with it. The same applies to the “sink the boat” sales technique. First, they coax customers into buying a prepayment, a small portion of the actual amount to “secure their purchase”. Then, as the days come, unravel the real price step by step. By then, even if customers felt that it’s too expensive, they would most likely pay their way through, otherwise they would think their previous time or money (some prepayments actually won’t return the bill if customers withdraw from the purchase) are wasted. Thus, this shows the figurative iceberg bill, where the helpless ships see only a segment of the real price.

Yet the 12.12 online shopping holiday still reaps great success, earning 912 million in 2015 (the one year Taobao publicized their December 12th profit). Could it be that the entire nation of China falls for those pricing traps? Or is there something other than the sales that attract the customers? “It’s exhilarating,” said Joyce Ben (9C). Indeed, even after knowing that there’s not a drastic discount, at least not compared to the extremity on 11.11, customers still can’t help but fall for the thematic and festive air of December 12th. Other than giving away red packets to a certain percentage of lucky participants, each year’s December 12th also has a theme. This year’s theme is “掌握消费，掌握生活” (manage your purchases to manage a better life), where Taobao promotes their online service orders rather than just shopping items. Services include reserving Ayis, renting cars, buying medical care, lessons, and food. The variety of activities truly fulfills the theme. “We are no longer a traditional online shopping platform. We transformed into an online service platform. To many, Taobao is a lifestyle,” claims JianFeng Zhang, Taobao’s manager.

Are you involved in this crazy online shopping drama? If so, do you participate for the discounts or the festivity?

Featured Image – Courtesy of Atze W. Hold, from Flickr