Image source: Weibo

Be meticulous in your calculations and "cut" out good prices

How much do cheap leggings cost? It costs around twenty or thirty yuan to get one on Doudou, but in Yiwu, it only costs three yuan. In Yiwu Market, a pen refill for a signature pen only costs 0.07 yuan, a pair of exquisite women's winter socks can be bought for less than 2 yuan, and 110 cotton pads only cost a few cents... There are countless such examples.

Winter socks priced at less than 2 yuan in Yiwu market exceed consumers' expectations

Image source: Yiwu Index

Low prices are one of the competitive strategies in the Yiwu market. A common trait among Yiwu business owners is that they are constantly thinking about how to reduce costs while ensuring product quality, earn an extra penny, and find the best balance point.

A supplier from a multi-store in the International Trade City said, "Nowadays, many small commodities in the Yiwu market are factory-sourced goods, and their prices are basically the lowest in the country. But this is still not enough. For those Yiwu business operators who have factories, only by minimizing the cost of every link in production and sales can the lowest price be called the lowest in the country."

On the one hand, Yiwu is capable of mobilizing a wide variety of raw materials from all over the country and has already formed a very close and solid supply chain. Many factories can ensure an adequate and cost-effective supply of raw materials by establishing in-depth cooperative relationships with raw material suppliers. On the other hand, the supply chain of small commodities in Yiwu has the ability to respond quickly to production and sales. Behind each link of the supply chain, there are often the support of thousands upon thousands of cooperative manufacturers, which enables the rapid delivery of products and timely response to market demands. In addition, some factories are also actively exploring diverse and innovative applications of leftover materials, pursuing the maximization of material utilization. Take a certain luggage manufacturer that is well-versed in the principle of "making the best use of everything" as an example. It ingeniously designs the high-quality Song brocade fabric left over from the luggage production process and turns it into a series of cost-effective small items such as dolls.

Image source: A certain bag manufacturer. Song Jin bags and dolls in Zone 2 of the International Trade City

Business operators without factories actively pursue factory source goods to enhance the price competitiveness of their products. Business operators with factories, on the other hand, enhance their marketing capabilities by directly opening factory direct-sale stores, allowing goods to reach customers directly from the factory. This eliminates the cumbersome intermediate links such as tiered wholesalers and tiered agents, enabling them to leave the factory at the lowest price and offer benefits to end consumers.

Image source: Yiwu Index. Exhibition hall of a factory store in Zone 5 of International Trade City

Take packaging bags as an example. Some business operators will conduct detailed pricing based on the precise distance from the sealing tape to the opening, minimizing the cost of product packaging. As for the daily high-usage express delivery cartons, Yiwu has also demonstrated a significant price advantage compared to other places. The commonly used No. 8 and No. 9 three-layer extra-hard cardboard boxes usually cost only about 20 cents in Yiwu, while in other places it is 30 cents. One box can save 10 cents in the cost of express packaging.

Small-scale and multi-variety small commodity consolidated export is a characteristic of Yiwu's foreign trade order transportation. Yiwu merchants seized the key logistics link of "cargo assemblers" and innovatively adopted the operation mode of consolidated shipping overseas. LCL not only reduces the cost of international logistics transportation, but also enhances the flexibility of transportation.

In terms of domestic express delivery transportation, Yiwu, known as the "No. 1 Express Delivery City in China", is expected to handle 12.6 billion parcels in 2024. Major express delivery companies are also competing fiercely on express delivery prices. According to the visit and understanding of Yiwu Index, in the current Yiwu express delivery market, for merchants sending 3,000 to 5,000 parcels at a time with an average weight of less than 300 grams, YTO Express can deliver nationwide for 1.2 yuan. It only costs 1.5 yuan for delivery to Xinjiang and Xizang. Fashentong costs 1.25 yuan, while Best is 1.3 yuan. If the quantity is large, the price can even be as low as around 1 yuan.

What has been mentioned above is merely the tip of the iceberg of the cost-cutting methods adopted by the Yiwu market. From the small details to the big picture, it is not difficult to find that merchants in Yiwu are meticulous in every link, truly achieving a perfect balance between quality and price.

Set standards and "forge" quality excellence

Pursuing the ultimate low price and cutting costs to the extreme does not mean that product quality will decline. On the contrary, factors such as the decline in the cost of goods in Yiwu due to the agglomeration of industrial belts and consumers' pursuit of high-quality and low-priced goods are forcing the continuous upgrading of Yiwu's supply chain. More business operators will co-create and co-build with customers, continuously iterate and upgrade, and provide consumers with more high-quality and reasonably priced products. During this process, all parties involved in the Yiwu market have made joint efforts:

The operator of Yiwu Market: As early as 2016, Yiwu issued an initiative to build the "Yiwu Good Goods"; alliance, encouraging the upgrading of the product supply chain. The former business operators who used to operate in a "front store and back factory" model have successively established companies, created their own brands, and embarked on the path of large-scale operation. In 2019, Yiwu City launched the "Standards into the Market" initiative, expanding the system of self-declaration and public disclosure of enterprise standards from the production field to the sales and circulation fields, and making bold explorations in the implementation and application of standards. During this period, Yiwu Market eliminated a large number of small workshops with unstable quality control. Small commodities gradually upgraded from "uneven quality" to "a good array of affordable goods" with excellent quality and leading fashion trends.

2. Yiwu Industry Association: Industry associations, in collaboration with commercial firms, take the lead in drafting standards. By conducting market research in the industry, collecting information on relevant enterprise standards, and referring to national recommended standards, they jointly formulate scientific quality standards to guide the overall quality improvement of the industry.

3. Yiwu Merchants: In the Yiwu market, merchants generally follow the business logic of doing long-term business and attach great importance to long-term cooperation with regular customers. Among them, product quality is of vital importance. High-quality products can attract repeat purchases from customers, foster word-of-mouth promotion, and drive the steady growth of orders and revenue. It is precisely for this reason that merchants in Yiwu attach great importance to product quality.

While ensuring quality, an increasing number of enterprises in Yiwu are focusing on upgrading their products, refining designs in aspects such as the size, materials, craftsmanship, and color of small commodities to enhance the competitiveness of their products. At the same time, enterprises closely follow the current consumption trends, continuously incubate and introduce high-quality ips, and create best-selling products that combine the quality of ips with the characteristics of Yiwu.

The product created by the high-quality IP "Teddy" introduced by Yiwu IP Industry Association. Image source: Yiwu Index

The demand for "9.9 yuan" is unceasing and will last for a long time

"Consumption is allowed but not spending, spending money is permitted but not burning it." This is the sentiment of many consumers nowadays. The rise of low-priced quality products is the result of a dynamic balance between market supply and demand.

Judging from the development trajectories of markets such as the United States and Japan, since the discount store model emerged in the middle and late 20th century, it has not only fully developed in its home country but also actively expanded into overseas markets. MUJI is a typical representative among them. With the further development of the market, various forms such as two-yuan stores, five-yuan stores, and ten-yuan stores have emerged, collectively known as diversified stores.

The multi-channel stores in China are also going through a similar process. At present, domestic brands such as KKV and MINISO are developing rapidly both at home and abroad thanks to their "9.9 yuan" business. In just over a decade since its establishment, MINISO has expanded to have more than 7,000 stores worldwide.

Image source of MINISO: Baidu

The affordable consumption represented by "9.9 yuan" has long been "underestimated" by everyone. As long as consumers' demand for high-quality and cost-effective products remains, the business model of multi-channel stores will always exist. Just look at the United States or Japan.