Pinduoduo snatches food.
Pinduoduo not only tore the big hole of "sinking market" in the mouth of Taobao JD.com, and continued to encroach on Taobao JD.com's market with low-price positioning, the revenue growth rate even exceeded that of ByteDance, and the market value also surpassed Alibaba, China's largest e-commerce company, at the end of November 2023, becoming the new king of market value of Chinese concept stocks: Pinduoduo's market value is 4.6 times that of JD.com.
Pinduoduo has simply eaten the trend dividend of consumption downgrade.
Pinduoduo has a clear goal, adheres to the low-price mentality in China, and the momentum is unabated, and Temu has rapidly developed to expand overseas markets, and the scale of Temu going overseas has reached the level of Shein for eight years.
In addition to marveling at Pinduoduo's clear positioning and decisive execution, ultra-low customer acquisition costs and strong financial strength, the gameplay under the new trend of consumption downgrade in the context of economic weakening represented by Pinduoduo is more worth exploring and playing: fakes question, does low-cost e-commerce excessively squeeze the development space of China's own brands?
Can Pinduoduo be proud of the rivers and lakes?
The second season of "Business Apocalypse", an exclusive production of Baidu App, focuses on the strategy and execution behind the high market value growth of Pinduoduo, and discusses the stuck points and ceilings of low-cost e-commerce. Yao Kaifei, a senior expert in the field of e-commerce, Zheng Litao, a secondary market investor and former investor of Matrix Partners, and Wu Chen, the manager of The Economist Business Review, had an online discussion.
Pinduoduo grabs market share from Taobao and JD.com
Wu Chen: Pinduoduo has unique features in terms of strategy, tactics, and management, where is its late-mover advantage?
Yao Kaifei: When Pinduoduo's main website business first started, it was generally seen as Tencent's investment and protection, but the subsequent grocery shopping and cross-border business proved that Pinduoduo has its own methodology.
We can look at his main station business. Huang Zheng has always emphasized "differentiation", such as:
1. In "how fast and good the province", Jingdong is in the "fast" and "good", Taobao is in the "more" and "good", and Pinduoduo will go to the "province", because this group of merchants fits the WeChat system, WeChat red envelopes, and the sinking market at that time, which can be particularly combined, and it can be differentiated from several others;
2. When Tmall consumption is upgraded, the differentiation of the latecomer, he is choosing the business and choosing the crowd, selecting the goods, and finally the e-commerce platform is still doing the matching of supply and demand, what kind of goods I choose, what kind of people to find to fight is very critical, there were also many people who did group fighting, and Pinduoduo also made differentiation with these players.
Wu Chen: Can it be understood that Pinduoduo has two advantages, the existing e-commerce giants have many concerns, once the adjustment of the style of play will inevitably hurt the existing people, the giants are reluctant to try, as a new force Pinduoduo can actually grow more savagely; Am I right?
Zheng Litao: Pinduoduo was only established in September 2015 and has grown rapidly. Ali and JD did it about ten years earlier, and Ali and JD have established a very mature infrastructure. For example, when JD.com started to do it, in order to make its products reach consumers faster, it had to invest a very large amount of money to build logistics. But when Pinduoduo got up, the socialized logistics providers were very mature, which meant that Pinduoduo did not need to build logistics facilities;Second, payment, there was WeChat payment at that time, and many people had been educated, unlike Ali who also needed to make an Alipay by himself;Third, it relied on Tencent, and there was a ready-made mature customer acquisition platform, that is, the WeChat system. But at that time, Ali needed to advertise on a very decentralized website to acquire customers, and these mature infrastructure enabled Pinduoduo to make a lot of upfront investment and develop rapidly.
In addition, in the mature era of e-commerce, the supply of goods is also more convenient. When Ali first started, many businesses had never been exposed to the Internet, and they didn't know what e-commerce was, so Ma Yun wanted to talk about "making it easy to do business in the world", and he had to do all kinds of publicity and speeches to mobilize more merchants to come online. JD.com has done even better, I purchase goods by myself and move them online to sell them myself.
Merchants have realized that e-commerce can make money, and Ali's traffic is getting more and more expensive, Ali is reluctant to sell cheap goods, wants to do Tmall, wants to do consumer upgrades, wants to sell more expensive goods, and is also clearing some low-cost merchants. Pinduoduo just undertook this batch of merchants. It's also a late-mover advantage.
Pinduoduo crosses the river by touching competitors, all strategies are differentiated, and they are attacking the points that opponents can't attack: Ali traffic is expensive, Pinduoduo focuses on low prices, you can't turn back and hit me; Jingdong logistics costs are very high, logistics timeliness is fast, but it can't cover the third and fourth tier cities, Pinduoduo just uses social logistics to sink the market. Therefore, I think Pinduoduo has taken advantage of both infrastructure and commodity supply, and has made differentiated operations in the market where the opponent has been cultivated for many years and has a strong advantage.
Yao Kaifei: Ali is a business that "makes it easy to do in the world", or is it positioned as a B. Ali prefers the concept of stores and merchants, while Pinduoduo has a stronger concept of goods, like Costco, which has made the ultimate optimization in products. Going back to the core reason for its market value rising sharply today, Pinduoduo is more efficient than Alibaba and JD.com in terms of customer acquisition efficiency. Their entire organizational form allows it to have a lot of ways to play with growth and fission, and a lot of innovative mechanisms.
We look at the characteristics of Pinduoduo is grouping, currency, sinking the market, and going to the shopping cart, which are combined to make differentiation. So it can run out again when the entire e-commerce market is already saturated.
Zheng Litao: There are also several key points on the merchant side. First, we observe that the gameplay of Taobao's entire platform is becoming more and more complex, and many factory-type or small-scale merchants are very cheap, but they don't understand Taobao's traffic system, and they don't know how to advertise on the platform to get traffic. They live a miserable life on Taobao. The game mechanics of Pinduoduo are very simple, as long as you are cheap enough, you can get enough traffic support on this platform. Unlike Taobao, it is necessary to operate stores, operate consumers, engage in various membership systems, etc., and its complexity will come down at once. Let these low-priced, close to the factory merchants can operate better on the platform.
Second, it has a very important point called "collecting orders", and Huang Zheng often says that his business model is actually "online Costco". Pinduoduo and Costco have a very important similarity: they focus on traffic to those merchants who have advantages in product price and cost. Merchants can exchange small profits for large enough profits.
Most of the consumers of Pinduoduo come to the picture to be cheap, but the Taobao platform is not this logic, users come to Taobao to have more diverse demands, some people may be looking for more abundant goods, this is the advantage of Taobao, we call it "universal Taobao". In order to maintain its richness, Taobao has no way to centrally instill traffic to low-priced goods, therefore, we will find that low-cost merchants are particularly comfortable in Pinduoduo, and when its volume is very large, they can also reverse optimize their supply chain, adapt to Pinduoduo's production, and then further reduce prices. So, we're going to see these merchants doing a very good job on Pinduoduo. Because it's cheap enough, it's appealing to consumers who are new to e-commerce.
Wu Chen: Can Pinduoduo achieve Online Costco? OSCO's selection is very limited, and it achieves small profits and quick sales with the support of huge sales. Compared with Costco, where has Pinduoduo gone?
Zheng Litao: I think its logic is a bit similar to Costco, compared to Taobao, Pinduoduo's supply of goods under the same category is relatively limited. But it has a difference from Costco, online is an "infinite shelf", unlike Costco, which only has one or two SKUs per SKU;
Can Pinduoduo tear off the label of a fake
Wu Chen: In the past few years, Pinduoduo's fakes have been very controversial, how to avoid this problem?
Yao Kaifei: I think it's okay to think that the problem of fakes mentioned by Mr. Wu Chen is good, in the logic of tens of billions of subsidies, there is "one fake pays ten", which itself has a strong guarantee mechanism; This is a great guarantee for users. We say more that Pinduoduo's goods are not good, the fundamental reason is that we, as users who are not so sinking, look at the goods bought by sinking users, and feel that this product does not meet our expectations, which is a problem that belongs to our buttocks, a problem of crowd positioning, not a problem of Pinduoduo.
Zheng Litao: In our comment area, many partners do say that Pinduoduo has a lot of fakes. I think we have to look at it dialectically. First, is there any fake goods on Taobao? Public opinion in Taobao's early years is similar to that of Pinduoduo today, but are there many fakes on Douyin? There are also many fakes on Douyin e-commerce. The reason is that all these e-commerce platforms are more or less gradual governance processes in the early stage, and the ecology of the platform's commodity supply needs to be changed. For Pinduoduo, the time since its establishment is too short, and many consumers still have the impression that there are many fakes. But judging by the platforming action, they have done a lot of attempted moves. If there is a dispute between consumers and merchants, we will find that the platform is very biased towards consumers, and will give a lot of refund strategies, and even refund without returning, which is to suppress the situation of counterfeit goods through fines and refunds. This is a gradual process of governance.
My parents are users of Pinduoduo, and when they go home for the Chinese New Year, they will find that they have a very good evaluation of Pinduoduo. There are several points, they buy fruits on the platform very cheaply, the logistics are fast, and the cost performance is also high, and they also buy a lot of other goods, such as napkins, the brand attributes of these things are not strong, and there is no concept of genuine or fake. For such consumers, their satisfaction with buying things is very high. However, consumers in first-tier cities or first- and second-tier cities, everyone will stay in the stereotypes of the past, and Pinduoduo must gradually change the perception in the minds of consumers, which has a process.
Wu Chen: There is indeed a question: what exactly is a fake? Pinduoduo does the polishing of the selection of products, and ensures that the price can be lowered after the quantity is large. Is it that there will be merchants who make counterfeit brands on the platform in the future, but more often than not, there will be unknown brands in each category, so that the quality is good and the price is low enough. Is this the logic of Pinduoduo?
Zheng Litao: Yes, I think Pinduoduo is in the process of changing in this direction, it is actually using algorithms to regulate this matter, for example, if a merchant reaches a certain level of return rate on the platform, the platform will default to your store if there is a problem, and will close your store, forcing the merchant to evolve to the ideal situation, rather than the platform is one-size-fits-all. The platform is fully connected to tens of thousands of merchants, and one by one merchants to detect genuine and fake goods, the cost is very high and it takes time. From the original intent of the strategy, Pinduoduo is moving in the right direction, but it may not necessarily be immediate.
Pinduoduo did something right
Wu Chen: There is a lot of discussion in the live broadcast room, and everyone is still very controversial about Pinduoduo. In the process of cutting into the sinking market, what is Pinduoduo doing right?
Discussion in the live broadcast room of "Business Apocalypse".
Yao Kaifei: Zhang Yiming participated in a CCTV program, and the host asked him why he saw a mess of content on Byte Today's headlines, but this kind of content is so popular? Yiming asked a rhetorical question at that time, which of the "China Story Club" or "Yicai" is popular? This question is similar to the question just discussed. I think similarly, compared with the sinking market and the non-sinking market, the sinking market is definitely a little bigger. Of course, the definition of the sinking market can be clarified again, and we will not discuss it first.
Second, Pinduoduo has also encountered favorable weather and location in breaking through the sinking market.
Like Ali and JD.com, they actually knew that the sinking market would be able to penetrate in the future, but they didn't expect it to penetrate so quickly, such as Xiaomi mobile phones, VIVO, OPPO terminals, 4G networks, 5G networks are fast, and WeChat red envelopes have opened up the payment all at once...... Back then, when placing an order on Alipay on Taobao, you had to tie a bank card and authenticate, and many users would not do such a thing. At that time, Mr. Ma also said that the WeChat red envelope was a surprise attack on Pearl Harbor: users who skipped Taobao and used Alipay to tie bank cards were very smoothly typed.
Looking back, after the company used the main station business to raise a team and grow bigger, the subsequent business soon verified that the company not only has time, but also people, and the rapid rise and scale of the grocery and Temu business proves that this company has its own sustainable methodology.
Wu Chen: Pinduoduo has gained a large number of new users by taking advantage of the time and place, how about the retention and stickiness of users?
Yao Kaifei: According to the data monitored by domestic Internet apps, user retention is indeed very high, including Pinduoduo's strategic conversion rate is 2-3 times that of other platforms, which is the number we can see.
The core logic of its ability to do this is the low-price mind. On the other hand, it is difficult for Ali and JD.com to do low-price mentality, when they did consumption upgrades to clear that wave of merchants, and the establishment of a very low customer acquisition cost under the WeChat system, such as 10 yuan or 20 yuan to get 2 people. Passing on to merchants is a lower cost: it can attract low-value merchants to come in. There is also low-cost free shipping, 4 yuan can also be free shipping, 5 yuan can be free shipping, and 3 yuan can be free shipping, 2 yuan can be free shipping, when quickly obtaining this wave of sinking users, the first shot is very accurate, continue to wash the sinking market in this way; According to the logic of the year, the core reason is that the cost of customer acquisition is extremely low, and the user who transfers to the merchant online is low.
Wu Chen: What about the results of Pinduoduo's upward fighting? Can it get customers from JD.com and Alibaba? Now is the era of consumption downgrading, Pinduoduo has more benefits, if it is the era of consumption upgrading, how to go when Pinduoduo goes up?
Yao Kaifei: Let me give you a few intuitive examples. First, Apple's mobile phone online e-commerce channel, Pinduoduo may be the first next year, and Apple's mobile phone is definitely plundering high-end users. According to the data we have learned, this wave of people who buy Apple mobile phones are also very good for repurchase. Here's its strategy.
Is Pinduoduo successful because there are more poor people?
Wu Chen: User Brother Dao said: Pinduoduo's success is because there are many poor people.
Zheng Litao: That's definitely not right. I just talked about tens of billions of subsidies, tens of billions of subsidies are the entrance to brand users, and GMV has accounted for 30% of the GMV of Pinduoduo's main station, which is not low, and it is gradually going up. I'll just ask you a question, even if you are a rich man, if you can save one or two hundred when you buy an Apple mobile phone, will you be willing? I believe that no one will say no, of course, the premise is to ensure that it is genuine. No one can refuse the cost performance, the same goods can be cheaper on this platform 1000 yuan and go to other platforms to buy. Therefore, Pinduoduo's ability to pull consumers in first-tier cities is also very strong. Especially in the past two years, the overall economic development rate is declining, and everyone's expectations for future income are also declining. Even without this big environment, cheap is still the last word in the retail industry. Pinduoduo is in line with the logic of retail e-commerce.
Yao Kaifei: I think it's not about the "poor" or the "rich", it's about meeting the different needs of different people. If you have strong spending power, buy more expensive ones, good quality ones, and those with brand premiums. Those with lower incomes should pay attention to cost performance, and do not pay so much attention to branding and white-labeling. Indeed, in China's consumption power and per capita income, the former prime minister is actually not so high. Therefore, the proportion of low-income people will be a little higher. Pinduoduo takes the greatest common divisor.
Wu Chen: So is the subsidy of 10 billion yuan a strategy or a tactic? Can there be such a continuous sales volume without subsidies? In addition, for large brands, the pricing of Pinduoduo is the lowest in the whole network, which is lower than many other fixed and mature channels, is the brand willing to bear it for a long time? How do the brands, Pinduoduo and the channels play the game?
Yao Kaifei: Tens of billions of subsidies are a means in the long run, to establish a mind, and today it is still cost-effective logic, which is to allow users to buy more cost-effective goods and stand on the user's side.
Can the brand owners that Mr. Wu Chen talked about afford it? Pinduoduo's driving factors for these merchants, and even forcing them to do some low-price actions, do they hinder the smile curve from going to both ends, because there is less redundant money. I think the case that can be referred to is today's Xiaomi model and Apple model, today Xiaomi is also controlling the supply chain to the extreme, giving profits to users, Xiaomi brings more innovation investment than Apple. The development of innovation itself is also phased.
Second, the platform has its own positioning, so it will find the greatest common divisor of users to meet the needs of these people. In fact, it is the same as our part-time job, there are gold-collar workers, white-collar workers, and blue-collar workers, everyone earns money in their own social positioning, I may sell my labor, I may just do design, I may sell my cognition and way of thinking.
Wu Chen: Kaifei's point of view is that diversified channels are also valuable for brands, what do you think? Will big brands participating in tens of billions of subsidies mess up their own price system?
Zheng Litao: The 10 billion subsidy is essentially a tactic. Pinduoduo's strategy is to provide good goods that are cost-effective enough. For Pinduoduo, the 10 billion subsidy directly pulls the first-line consumers who don't know so much about Pinduoduo. In terms of data, after these people come to the platform, it is actually good to retain data.
I think that in two dimensions, taking Apple as an example, the Apple on Pinduoduo is not given by Apple's official body, but more by Apple's distributors. Dealers are very motivated to do this: even if I earn a little less, I have a larger shipment on this platform, and if I ship a large amount, I can also get a subsidy from the brand, and the dealer will definitely be willing.
Pinduoduo's product supply is very special, unlike on Tmall, Apple directly opens a store, in this case, discounts, price reductions will be subject to a lot of restrictions from the brand's official, "you can't be so cheap", you can't help it, and you still expect Apple to advertise on the platform? For Pinduoduo, it treats Apple as a drainage, and does not expect Apple to advertise on the platform, and subsidize consumers in a real way, so things are cheap, consumers are satisfied, and many high-quality users are attributed. I think that as long as there are dealers in this brand system, there will always be dealers who are willing to sell on this platform at a relatively low price.
On the other hand, today we observe that in the era of serious oversupply in China, it means that many brands sell on Taobao or Jingdong or Douyin e-commerce, especially live e-commerce, and the peaks and troughs of sales are particularly large. Therefore, you will find that Pinduoduo will continue to have inventory and tail goods supply, and the natural cost of these things is relatively low, because for merchants, I can dispose of these goods at a low price, and I am actually satisfied if I can return to the cost. This is a very special commodity supply structure of Pinduoduo. In my opinion, this thing must be sustainable, because as long as there is commerce, there will be inventory and tail goods.
Do merchants hate Pinduoduo?
Wu Chen: Some netizens in the live broadcast room have a negative evaluation of Pinduoduo, in reality, will there be any conflict between merchants and Pinduoduo?
Discussion in the live broadcast room of "Business Apocalypse".
Zheng Litao: First of all, I answered this audience positively, you said that you want to ask the evaluation of the business, why not ask the evaluation of the consumer first, the consumer is not satisfied with Pinduoduo, Pinduoduo takes care of the interests of consumers, isn't this not the thing that the platform that operates the business should ensure that it is? Second, let's take a look at the merchants, I think there are several categories: the first type of merchants have a large amount of inventory, The tail goods can not be cleared, in the case of no sales channel sales, Pinduoduo is a very good shipping channel, for merchants as long as they recover the capital, this is an indispensable channel for merchants. Thirdly, back to the general background, today's China is in an era of serious oversupply, we have a lot of factories, a lot of production capacity, there is no good enough sales, these businesses are facing very real problems.
Kaifei and I went to Yiwu to talk about a lot of factories, Pinduoduo does not make much money, why are you willing to do it? The factory feedback is very realistic, he told me that we must feed these teams, we must feed these skilled workers, for example, it may be the off-season, I am willing to earn a little less, as long as the break-even, but these skilled workers, skilled workers must be supported.
For example, traders need to maintain relationships with upstream factories, otherwise they will no longer have the ability to organize production when the peak season arrives. Other merchants will feel that they need to reduce their production costs through large-scale production and shipment booths, in this case, even if the price is lower, they are willing to sell it at a lower price.
Does the merchant have a lot of complaints about Pinduoduo? Yes, indeed, but it depends on the merchant's actions, whether he is still on the platform, whether he is willing to continue to supply to the platform, and if he is still willing, there must be a reason behind it.
Yao Kaifei: There were similar controversies on Taobao back then: offline retail was hit by online retail, and the counterfeit goods turmoil was besieged in October, from no commission to commission...... Merchants have been against it. But later it was found that the penetration of Ali e-commerce was growing very fast. Everyone has walked a similar path.
I think it's still a matter of channel positioning. It's true that brands are also difficult to accept. Although it is predicted that Apple's online channel will account for the highest proportion in Pinduoduo next year, Apple still has not opened a flagship store in Pinduoduo. Why don't you open a flagship store? I let the dealers earn this money, and I can monopolize it through a single channel, and Adidas will not open an outlet store. This is also the disadvantage of Pinduoduo's mentality or positioning of "province".
There is another one, Taobao and Jingdong will not be completely hanging, when everyone buys things, the situation is different, and the demand is different. I'm going to live broadcast with Mr. Wu Chen tomorrow, maybe I place an order for a headset today, and I have to deliver it tomorrow, so I have to be able to ensure the timeliness.
Today, Pinduoduo found the greatest common divisor and performed better in all aspects of financial data. There is also a user comment in front of it, maybe Pinduoduo finds the greatest common divisor, and the proportion of the crowd is relatively higher. This is the reason why Pinduoduo is developing overseas today, there are close to 6 billion or 7 billion people overseas, and then find the greatest common divisor, rather than doing rapid upgrades at home. When the economy is in a downturn, it does not eat the market of consumption upgrades. In my opinion, Pinduoduo thinks very clearly about which direction it is positioned.
For merchants, choosing on this platform and facing consumers will indeed be a little uncomfortable, and of course, it will be combined with oversupply.
Is Pinduoduo an opponent of Taobao JD.com?
Wu Chen: So when will it clash head-on with e-commerce giants such as Taobao and JD.com?
Zheng Litao: I don't think Pinduoduo is a direct opponent of Alibaba and JD.com. In the process of gradual development, Pinduoduo will divert some non-core customers of Alibaba and JD.com.
Some consumers just want to place an order in the morning and arrive at night, and place an order today and arrive tomorrow, in which case he will only spend on JD.com. Jingdong has such a basic disk, mainly middle-aged male consumers with strong spending power, and Jingdong has been able to repeatedly operate on this group of people.
Ali also has its core group of users, but in the process of growing up in Pinduoduo, it will divert some of it, for example, in the past, I may have bought a mobile phone on Jingdong, and today I found that Pinduoduo is cheaper than 1000 yuan, I must buy a mobile phone in Pinduoduo, because the mobile phone does not need to be ordered today and delivered tomorrow, I am willing to surrender the timeliness of delivery, in exchange for a lower price. Some Taobao consumers who care about cost performance will gradually be shunted to Pinduoduo. So, there will be an impact, but it's not a very direct impact at the moment.
Wu Chen: Is this a cannibalization strategy?
Zheng Litao: Yes, cannibalization.
Yao Kaifei: I have a similar view to Litao, JD.com, Taobao and Pinduoduo themselves have a certain overlap, this part first looks at the crowd, and the second looks at the category. For example, tens of billions of subsidies are fake and pay ten, I may buy the lowest, it is easy to verify the truth, and it is indeed the lowest on the whole network, and it is easy to compare prices. There are also some products like Blue Moon laundry detergent or functional products like screws, which do not say that I must go to Taobao or Jingdong to buy them, or the timeliness is not so high, mentally I do feel that Pinduoduo will buy it on Jingdong if it is lower, and in terms of categories, this part will definitely overlap.
Second, in terms of operation, efficiency and GMV pursuit, Pinduoduo will definitely try to grab a kind of user, such as a user with stronger spending power leveraged through tens of billions of subsidies. Therefore, Pinduoduo may be able to grab 30%-50%.
For JD.com, the crisis is indeed a little bigger, because he is mainly self-employed, and his self-operated commodity SKU (minimum stock keeping unit) is limited, and many of the tens of billions of subsidies are 3C (three types of digital products), partial standard products, relatively comparable, and there is enough money in Pinduoduo's pocket. Therefore, Jingdong may be robbed a little more, and Taobao will still be robbed a little less. Pinduoduo goes overseas, there are 5.5-6.5 billion overseas, at least 3 billion people can be reached, and the "province" is still the greatest common divisor. If you want to eat this market share, you should still be dominated by people who eat "provinces" within five years.
Management of Pinduoduo
Wu Chen: Is it true that there are three toilets on one floor of Pinduoduo? Can you share some gossip with us? From this point of view, what is the difference between Pinduoduo's management culture and other e-commerce?
Zheng Litao: That's probably true.
Wu Chen: Why?
Zheng Litao: In fact, the purpose is to shorten the time that employees spend in the toilet and ensure that more time is spent at the workstation. Some companies find that when there are a lot of toilets, employees will be paid to fish, and Pinduoduo wants to avoid such a thing. Of course, this matter will also be controversial. But let's see why these employees want to stay in this company, and whether it is too harsh to go to the toilet and restrict them. But Pinduoduo's (employee) salaries are actually very high. So it still depends on how the employees themselves choose.
Wu Chen: My overall feeling is that Pinduoduo's logic for employees, merchants and customers is the same: let you focus on one thing, constantly PK with others, but don't have internal friction, the main thing is to be external, is this kind of feeling, everyone should be simple but direct.
Yao Kaifei: Pinduoduo's turnover rate is indeed not the highest in the Internet. In addition, the body is really tired, but their turnover rate is low because they do a lot of screening when recruiting, including interview questions, your own family background, lifestyle choices, thirst for money, etc.
Wu Chen: What kind of employees do Pinduoduo want to join?
Yao Kaifei: Those who have a desire for money or have financial pressure in the short term, such as those who come out of the countryside, or who have bought a house, and are eager to work hard and stay in big cities, have 985 education;
Wu Chen: Pinduoduo's first round of success has its reasons, and the subsequent success is in a sense related to its management, strategic determination, and strategic foresight.
Yao Kaifei: Judging from the results, there are still people who can fight. Zhang Yiming rebuilt his team in 2015. Pinduoduo Nabo people may have followed Huang Zheng around 2010. Why are these people here to stay? I think there are a couple of core reasons.
First, this company does continue to do bigger things, from Ouku.com, to Leqi, to Dream Seeking Games, to Pinhao, to Pinduoduo, to grocery shopping, and so on. Su Yu and Lin Biao are Changsheng generals, I accept whatever he says, this is Changsheng, often give me the direction but the wrong one doesn't work, you often show me the direction, the more you do it, the bigger it gets, there is positive feedback, and then you can handle bigger things. Today's core decision-making is only those few people, people like Huang Zheng and Abu are very critical, and his centralized decision-making mechanism is derived to ensure that there will be no big problems in the general direction, especially focused. You see, Pinduoduo hasn't touched anything other than retail. In contrast, Ali and Tencent still extend a lot of business. There was a choice for the year, and there was enough money to do such a layout. This is Pinduoduo's centralized decision-making.
Second, focus, whether they can think more clearly about the vitality of the organization, or whether they can rationalize the core logic more clearly in terms of strategy.
Under the logic of "province", it must be a matter of picking out details: white label is the mainstay, and the brand is weakened. In the case of brand-based, it is more of a platform as a channel, Pinduoduo is a brand, and everyone establishes the mentality of "province" on Pinduoduo. "Provincial" must be picked, how to pick? It is the ultimate efficiency-oriented. In the past, Kazuo Inamori talked about a lot of management things, the amoeba PK mechanism we often talked about, the design of the brain in the macro direction, and the redundancy in the form of amoeba below, giving them enough money to innovate.
Therefore, we will talk about "grouping", "chopping" and "Duoduo orchard", why can Pinduoduo come out? Very core people, using amoeba model to design good KPIs for them, this is very important. If you use money to motivate, you can run out of innovation. Boundaries must be set. We understand that big innovation and small innovation are still different, e-commerce is still the standard, and small innovation is done in it; big innovation is like Douyin and WeChat, with an innovation mechanism, it will become a more distributed personnel and organizational mode, and this is also a very core point in the organization.
Finally, it's a simple execution. For the upper level, it is similar to Jobs's macro design ability, while the middle level is Kazuo Inamori's amoeba model, and the bottom layer is the "271 general management system". It is this kind of three-tier organization, combined with his PK logic, that everyone innovates the mechanism, finds some key points in the small innovation, and then uses the organization in place.
What is the relationship between Pinduoduo and live e-commerce?
Wu Chen: Now there are many innovative forms of domestic e-commerce, what kind of competition and cooperation relationship is between live broadcast e-commerce and Pinduoduo's "province"?
Yao Kaifei: Pinduoduo is also looking at Douyin or Kuaishou video number e-commerce internally, and they are also differentiated, which is what Huang Zheng has been saying that only by differentiation and dislocation can we grow fast and plunder a large number of users.
In the future pattern, compared with shelf and content e-commerce, I personally think that shelf e-commerce still accounts for the majority. There isn't enough data to back this up. My speculation is that people will not search for products in such a strong entertainment place when buying things, which is why it is difficult for Douyin to hit Xiaohongshu and Station B today. Therefore, shelf e-commerce and content e-commerce must maintain a certain proportion, and shelf e-commerce accounts for the majority.
For Pinduoduo, it found the logic to acquire more users: what is my positioning, I do my best on the shelf. It will not die, at least it will survive in the shelves, and the shelves will take up the majority.
Third, domestic e-commerce and overseas e-commerce, especially overseas shelf e-commerce and content e-commerce pallets are still very different. Why? The cost of logistics overseas is actually extremely high, and it is impossible to sell cheap goods after the logistics cost is extremely high. Therefore, the competition between Temu and TikTok overseas will be even more misaligned. There will be more overlap in China, because the cost of domestic logistics is still low.
When Mr. Wu Chen buys something in the live broadcast, it is impossible to see a thing in the "1-2-3, on the shelf" to grab the goods and buy other orders, but if you don't make up the order, the overseas logistics cost will be 10 US dollars, and you will definitely buy more expensive things. If you can't make up the order, you must buy the expensive one. Temu is playing the "province" of "how fast and good it is", so this wave of goods will be more differentiated. It's better overseas, but it's also at home. A very good friend of mine made an analogy, it turns out that shelf e-commerce is more orderly, content e-commerce is disorderly, content e-commerce is when I was a child, others carried the burden to sell popsicles, I can buy it when I see it, and I can buy it when I see a short video.
Wu Chen: Is content e-commerce more exciting and impulsive?
Yao Kaifei: Yes, and it's disorderly. Many people will not wait for the live broadcast room to broadcast that product before buying, but today they have to buy it and go directly to Taobao to search for it, which is the logic of order and disorder. Therefore, the mental impact of live broadcast e-commerce on shelves is still not so strong.
In orderly and disorderly content and shelf e-commerce, in the long run, everyone's mind is still looking for it in order, and there is a certain amount of content when Douyin traffic is large enough, which is the same as it does local life.
Combined, Pinduoduo occupies the shelf, does a good job on the shelf, and holds enough share in the shelf, this company is still good enough. It's the same overseas, and the difference with TikTok is even greater, so I'll just stand on that logic and do it, this company's plate will still be stable enough.
Zheng Litao: Let me briefly add two points. First, for consumers, his scenes, purposes, and needs are different when he buys things on Douyin and on Pinduoduo. For example, if I know what to buy, I will definitely search on Pinduoduo, because I do not have the Xi of searching on Douyin, is it possible to brush on Douyin and suddenly see selling me a pen or the like, particularly cheap, will I impulsively place an order? Yes, this is the difference between our consumer demands.
Second, today we will find that the sales pulse of live broadcast e-commerce is particularly large, which means that many merchants have to prepare a lot of goods in order to go on this live broadcast. For example, a model suddenly exploded, selling 100,000 pieces at a time, in order to be able to continue selling, I needed to make up another 100,000 pieces of goods, and finally the traffic attenuated, sold 150,000 pieces, and made up 200,000 pieces of goods. What to do with the rest of the goods? Or do they flow to Pinduoduo? We found that Pinduoduo and other platforms complement each other very well. Even the stronger the other platforms, the more Pinduoduo benefits. Therefore, we always feel that they are companions.
Temu goes to sea, how strong is it
Wu Chen: Let's talk about Pinduoduo's cross-border e-commerce: why does Pinduoduo do so much in a year in terms of capturing the minds of overseas users? Second, in terms of providing goods, how strong is the advantage of the supply chain that has been operating in China for a long time?
Yao Kaifei: Pinduoduo is growing so fast, and what cannot be avoided is the loss, which is not like the domestic mechanism and high profits. Temu's loss is above the level of $1 billion, which is a lot of money for startups, and even for many e-commerce platforms, even for Alibaba, $1 billion is a lot of money, and this is a loss. The business grew rapidly in the face of losses, and Shein almost never lost money in 8 years. Second, Pinduoduo's overseas business does still need to be verified, because in terms of comparability, it is an exaggeration to say that I have caught up with Shein in eight years, and I did not mention that one makes money and the other loses, and the long-term test is still whether it can make money.
The core logic is that today's Chinese e-commerce is the most slippery and mature in the world's e-commerce, and today Pinduoduo is indeed running relatively well in China, and the last two or three projects are not bad, at least they have the ability to do this. Why can you plunder the mind? Looking at the intuitive data, the user repurchase process is good in the e-commerce platform. Some secondary market friends, they did a survey in the United States in January this year, and a second survey in November this year, and they did show on the user side that they originally thought it was similar to Shein, but now it is better than Shein, or much better than eBay, and Amazon can't be compared, because the price segment is not the same. At least it has been reflected on the user side. But the sample size is not that much, it is sampling.
Wu Chen: Pinduoduo has also done a lot of research on overseas users, found a segmented market, and quickly gained customers by spending a lot of money?
Yao Kaifei: Yes, Temu is the first overseas market to go overseas in the United States, taking the American market as an example, Pinduoduo has found the market for Amazon and Xiyin. Shein is women's clothing, it is a standard product or other category, and the Amazon price segment is lower. The range of people in this range is numerous. The state of the global economic downturn, which is also the direction of increment. There is an internal saying that the best time to do cross-border e-commerce is in 2020, in advance, followed by now, because everyone has this demand.
And we heard that after Pinduoduo finished the account, we found that the cost of customer acquisition must be increasing in the long run, and in China, it is more and more expensive to obtain an installation customer. Of course, they have also taken over, and some unofficial data says that the core group of people under $60,000 is actually very large. This is enough for me to eat all-you-can-eat, how to raise my team, including doing this business, if the United States does it, other countries, from developed countries to developing countries will be a little smoother. Here are some of the messages we heard.
Zheng Litao: Let me add a little more. In terms of user growth, you will find that Pinduoduo was very good at growth in China back then, for example, he used "fission" and "chopping" to let users pull users. This strategy has also been continued overseas, proving that such a strategy actually works. Second, it dares to do more than other businesses, because the accounting is detailed, and it can more clearly understand how much it costs to obtain a user, as long as it can ensure that the user is profitable, I dare to spend a lot of money, and no e-commerce company dares to make such a big investment overseas. Therefore, Pinduoduo dares to launch, is good at growth, and dares to do advertising, so its customer acquisition effect is particularly high.
For example, when we investigated merchants, some merchants told me that there is a product that sells very well on Amazon, such as swimming pool supplies, many American consumers have swimming pools at home, and he sells swimming pool supplies very well on Amazon, and they can't sell them when they are put on Pinduoduo, because many users of Pinduoduo do not have swimming pools at home, which is the difference between people. We see that Pinduoduo is capturing a group of consumers outside of Amazon or with lower spending power than Amazon's core users. It's cheap enough, why is it cheap enough? Because it's closer to the supply chain, they're really going deep into a lot of industrial belts to find factory-based sellers and let them supply at a low enough price. Most merchants on Amazon also purchase from factories, so the link in the middle is more complex and more, so the price of goods is different.
In conclusion, we will see that the price of Pinduoduo's products is about 1/3 cheaper than Amazon's on average, which is a big price difference.
Wu Chen: How strong is Temu's ability to connect merchants with overseas users? Whether to directly reuse Pinduoduo's supply chain, or to find another group of manufacturers that design and produce overseas?
Zheng Litao: Pinduoduo didn't know which goods would sell well in the early stage, so it used the logic of massive screening. Once he finds that some goods are selling well overseas, he will make a move, that is, to continuously optimize the supply at a lower cost. Therefore, it actually continuously optimizes its selection and supply by iterating while monitoring data while running.
Yao Kaifei: Today, Temu has done a good job in infrastructure capacity, allowing more sellers to contact overseas users, at least allowing everyone to take the first step. There are many sellers who do not have the ability to do logistics, customer service, operation, and delivery by themselves, and today Temu will help you do it all, and you will invest in the first step, which is good for these factories.
In addition, although we say that there is overcapacity and oversupply, but when China hits the overseas market, the supply is undersupply, you need to know what the overseas demand is? Temu is helping you make this connection, at least connect the goods with users in the United States, the United States, Europe, and the United Kingdom, and then do upgrades. Not a single product has been sold, and it is impossible to say that it is impossible to make a brand in the UK.
Temu is completing such a link, there may be a second Pinduoduo, and the third Pinduoduo will do the branding thing. As Mr. Ma said, a generation does a generation's thing, and Temu's generation is completing the C-end connection between China and the world.
Wu Chen: In the process of its explosive growth, is it good for the entire cross-border e-commerce ecology? Even at one time, Amazon was under pressure to crack down on counterfeiting.
Zheng Litao: In fact, Temu is equivalent to helping the original factory-type and foreign trade-type businesses to find a way out of sales, in the past few years, foreign trade sales have actually shrunk significantly, many manufacturers on the one hand found that his production capacity can not be digested; on the other hand, he even hoarded a lot of tail goods, originally those customers and he agreed with him how many goods I want to pick up on your side, and the deposit was also issued, and then the epidemic came, offline supermarkets could not open, they did not take these goods, nor did they pay the final payment, for merchants these goods smashed in their hands. Temu actually helps these merchants have a good channel for clearing the goods, this is the conclusion they told me after I really researched the merchants, the goods that could not be cleared in the past three years have been sold on Temu in the last six months, which is a very good thing. Recently, Temu has attracted more merchants who were originally unable to do cross-border business. But I think it will definitely intersect more and more with Amazon in the long run, and gradually affect Amazon. At this stage, this trend is not obvious.
Yao Kaifei: I think step by step. Today's positioning of Temu is the logic of "province". In fact, Huang Zheng himself said that opening a restaurant may wash dishes first, become a chef later, and then open a restaurant later. Where is your own positioning today, the platform has its own positioning, the seller also has its own positioning, the seller wants to be a brand, and feels that Temu is not suitable, or Temu's positioning at this stage is to do "saving", there are more white labels, and you can't hold out the brand with full custody, so you put your energy on Amazon, on TikTok, and on other channels. The seller himself should also do a good job of positioning, not Temu in the volume or whatever. Temu is doing its own thing at this stage and choosing its own positioning.
Wu Chen: How to solve the problem of high overseas logistics costs?
Zheng Litao: For example, if a merchant sells goods overseas, he may open a store, and the consumer buys a product here, and I send this product overseas to the consumer, and there is a fixed logistics cost of 12 yuan. Today, for Temu, consumers have placed several orders, and multiple goods in China are packaged into a package and sent overseas, which is equivalent to the logistics cost of each product is reduced. In other words, it has reused the advantage of "fighting" overseas.
Wu Chen: What markets will Pinduoduo enter in the future?
Zheng Litao: Today, I see that Pinduoduo is doing very well in Europe, in the Middle East, and even in Latin America, which proves one thing, the logic of cheap is universal in the world, and there is a more important point, many of these regions like Europe The supply of goods was not sufficient in the past, because the light industry is not so developed, and in the past it could only go through foreign trade, which means that many goods may not be covered by you. Pinduoduo has actually opened a channel for everyone to make China's more abundant and richer supply of goods fully exposed to consumers in these regions of the Middle East, Europe and South America for the first time. So, it's growing and acquiring customers in these places very smoothly and very well.
Wu Chen: Originally, foreign trade relied on traditional channels, and there were many inefficient and uneconomical processes. Now that China has huge production capacity, there is still a lot of demand overseas, and Pinduoduo still has great potential?
Yao Kaifei: In May, I just went shopping in the United States for offline retail, $19.9 data cables, mobile phone cases are still a lot, today's wave of user demand, buy $1.99 or $2.99 is a cost-effective product for them, really help these users solve the problem of saving money, which is very core. In the long run, in European and American countries, everyone's consumption power and level can be considered above a certain level. When this wave of users goes to play, combined with the window of economic downturn, it is still OK, and I am still more optimistic.
Wu Chen: Netizen Guo Dashuai said that Pinduoduo wants to be the world's Amazon. I think his ambition is not just to do Amazon. Does Amazon feel threatened?
Zheng Litao: I think there will be a threat, but slowly.
Yao Kaifei: The core depends on the market size, Pinduoduo is more than 10 billion US dollars, Amazon is still 100 billion US dollars, or a small proportion. But Amazon has been making adjustments, for example, the commission for clothing products below $15 has been reduced from 17% to 5%, which is a drop of more than 10%, which is a big increase, and the clothing of $15-20 has dropped from 17% to 10%, and his FBA (logistics and distribution services) and warehouse distribution, the collection per cubic meter is all declining. This is definitely Amazon's defense, and it will definitely have some impact on Temu, but everyone is still in a more misplaced state, and there are still opportunities for different groups of people.
Wu Chen: Shein also seems to feel a certain threat.
Zheng Litao: Yes, we found that Shein also wants to do all categories, we know that it is doing very well in women's clothing, and also wants to do other department stores and groceries, and this year we found that it emphasizes that its competitiveness is weaker than Temu in these categories, but it still has a very big advantage in women's clothing, because the supply chain of many styles of clothing is still very scarce.
This year, I saw that Shein still has a 50% growth overseas, which is actually a very fast growth rate. What is the reason? Or is China's supply, especially through e-commerce, overseas sales much more advanced than the United States' offline retail formats, so Shein still maintains a relatively fast growth trend overseas, but the Temu trend will cause potential pressure on it. That's what we're seeing so far.
Yao Kaifei: Let me add. It is natural for Shein to feel threatened, because for the platform e-commerce, he must make clothing products, because clothing must be frequent enough, for users, pull a user, hope that he will place more orders, Shein said that you have to make clothing, you will eat more or less my amount, this is where Shein feels threatened.
Second, there are also challenges when watching Temu do it, because Temu does the mentality of "saving", "saving" for girls to buy clothes is definitely a point, and "good" and "beautiful" are also very important points. So there is differentiation.
After Shein made a platform, its recent moves have been very beautiful, that is, to increment, such as the acquisition of Forever21 and so on. Strategically, everyone is starting to look for it, if you grab my Overlap users, the GMV part, I will go to the offline incremental part. Both companies will run well. Domestic Pinduoduo and Taobao women's clothing, Pinduoduo women's clothing is still average, and Taobao women's clothing is still very good. Therefore, Shein must still be able to eat the amount or be able to develop in the long run. Is everyone developing positively, or is the cake big enough.
Does low-cost e-commerce erode the space for offline retail formats?
Wu Chen: When the domestic economic environment is not good, the pressure on the offline retail industry is also very great, how do we see the relationship between the explosive growth of e-commerce and the relative decline of the retail industry?
Yao Kaifei: In the whole process of survival of the fittest and ecological development, whoever can create higher value and have higher efficiency can get more market shares. In the process of changing the entire market era, its value is higher, and there will definitely be changes to offline retail, just like Ali did back then. For the development of the entire national economic level, there is no trade-off, it is a game, but the whole is positive, so that users and consumers can get more benefits.
Zheng Litao: It is the survival of the fittest, because there is no reason to say that a backward, less efficient format, we have to protect him, business competition and user choice is a natural process, and in the end consumers are voting with their feet. Is there no opportunity offline? Not necessarily. For example, there will still be many products that have timely demand and will still need to be completed offline, such as Costco, Sam's Department Store in the United States, offline "good sale" and snack discount stores have done very well, and they are still growing well this year because it has differentiated value. In my opinion, this problem is not more about the confrontation between online and offline, but how to find their own differentiated positioning between different formats and bring their own differentiated value to consumers.
Wu Chen: Yes. Today, I am very happy to have a deep analysis of Pinduoduo, a very young, but fast-growing winner, and a winner whose market value once surpassed Alibaba, in the exclusive release of Baidu App, is particularly respectable. Three important keywords:
First, the development of Pinduoduo is actually the result of differentiated development and continuous innovation. This differentiation is to grasp the "province" in the province of e-commerce, not only in the case of domestic consumption downgrade can tap more sinking markets, but also in overseas provinces of cost-effective products actually have a lot of space.
Second, in the development process of Pinduoduo, it has also made good use of the many challenges faced by Chinese enterprises: the challenge of overcapacity, the production enterprises have simpler and more straightforward channels and platforms for platform rules and the needs of overseas markets, and show China's fast, cost-effective and cost-effective products to more audiences at home and abroad. From this perspective, its strategic positioning is particularly appropriate at a time when the global economy is facing challenges.
Third, throughout the development process, Pinduoduo also has its own corporate culture and corporate centralization and decentralization, which combine different levels of strategic focus, which also helps this young company grow. Everyone also discussed the doubts about Pinduoduo, there are some bad experiences in the past, especially in the development process of a leading e-commerce, may encounter such and such problems, if we look at this company from the perspective of continuous iteration and evolution, we will still feel that this is a very interesting company, and it is also worth continuing to pay attention to.