Question Pinduoduo, understand Pinduoduo, and rush to Pinduoduo.
On March 20, Pinduoduo's annual performance report for last year came out, and for the whole of 2023, Pinduoduo's revenue will be 247.6 billion yuan, a year-on-year increase of 90%, and its net profit will be 60 billion yuan, a year-on-year increase of 90%.
Ali watched the silence, and JD watched it with tears.
But perhaps the most panicked is the United States.
At the beginning of this year, Pinduoduo's overseas version of Temu surpassed many international apps such as TikTok, Google, and YouTube, and topped the U.S. app download list.
In fact, the reason why Pinduoduo's financial report is so bright this year is, to a large extent, also from overseas revenue.
If the rise of Pinduoduo in China is to eat up a huge sinking market, then what about the United States?
Why can Pinduoduo?
Back in 2016, Pinduoduo had just been founded.
Wish, the main cheap mobile e-commerce in the United States, has been in operation for 5 years, when Wish focused on cheap white label products, which were rolled out by algorithm recommendations, and the price was much cheaper than Amazon, and the first to realize the "$1 free shipping" of American e-commerce.
In 2018, Wish once surpassed Amazon in terms of downloads and was successfully listed.
But the listing was the high point of Wish, and since then, Wish's share price has shrunk by 99% from its high point and was acquired by a Singapore-based e-commerce company in February this year.
Obviously started earlier and has more experience, why did Temu fall before he made a move?
This involves the dead knot of low-cost e-commerce - cost.
From the day the operation went live, Wish has been making money at a loss.
Like Pinduoduo, Wish also burns investors' money, then acquires users, and finally uses the number of users and transactions to tell stories in the capital market and seek to go public.
Like Pinduoduo, Wish does not charge commissions for small and medium-sized sellers to open a store, and does not even require a deposit, and can sell goods by providing an ID card.
But the problem is that Pinduoduo made money later, while Wish lost every day, every year.
Investors' money is not easy to burn, you have been listed and you don't make money, can this story be told?
In addition, in the European and American markets, where laws are strict, Wish has also encountered a large number of user complaints, and 95% of the products in the spot check did not meet local legal standards, so that it was forcibly expelled by France.
Wish, who was desperate to catch fish, later even thought of generating profits by fining merchants.
At the end of 2022, Wish had only 20 million monthly active users, marketing expenses fell by 80%, overall revenue plummeted by 73%, and the annual loss was $384 million.
At this time, Temu touched the network cable and killed.
In September 2022, Pinduoduo landed in North America with Temu, and in just one year, the monthly active users exceeded 130 million, and it is currently ranked first in downloads in the United States and Canada.
Temu在欧美市场主打的宣传口号是：Shop like a Billionaire（像亿万富翁一样购物）。
Foreign media once interviewed a young housewife living in Washington State on the west coast of the United States.
She said that after Temu came in, she had a new shopping habit, as long as she shopped online, she would open the Temu App and search for it and compare prices with Amazon.
At the same time, she is also attracted by the various lightning promotions and shopping recommendations on Temu, and "chops" many household items, most of which are gadgets that cost less than $5 and can improve household efficiency.
Compared with Amazon, which is traditionally used by Americans, Temu is cheaper, has a wide range of products, and often gives out coupons.
In case of delayed delivery, Temu will also return the subsidy to the user.
This has greatly boosted her "happiness as a housewife".
With Temu, overseas consumers can bypass large local budget stores and buy directly from Chinese manufacturers.
And the price is so low, so low that many Americans are searching for "is Temu legit?"
In this regard, some U.S. software engineers and analysts pointed out that U.S. e-commerce underestimated the organizational efficiency of Chinese companies.
It's all low price, why does Wish lose money and Temu makes money?
This is from two aspects: supply chain and organizational strength.
In 2022, the world has entered an era of big inflation and big interest rate hikes, and China has also experienced the problem of overcapacity on the supply side.
In such a situation, many domestic enterprises would rather not make money, or even lose money, but also want to digest inventory, maintain production capacity, and maintain cash flow.
At this time, Temu gave these merchants a channel to sell their goods.
Compared with the U.S. supply chain, China's supply chain has fewer intermediate links and thus lower costs.
With the cooperation of a large group of suppliers, the price and type of SKUs of Temu products are very competitive in the US market.
And unlike Pinduoduo's C2C and B2C mix and match model, Temu adopts a self-operated model, that is, merchants only need to stock up and arrive at the warehouse as a supplier, and Temu is responsible for product pricing, marketing, service and other links.
In order to reduce operating costs, Temu changed the postage fee to be borne by the platform and the merchant in half.
In addition, Temu also controls the power to verify prices, prevents suppliers from raising prices, and even takes the initiative to help American consumers bring prices down.
In the fast-rising Temu, there is the shadow of Pinduoduo everywhere.
By "inviting 5 new users to place an order and get a $20 reward", "new users can get a 30% discount on the first three orders", Temu has achieved social fission in the United States.
Based on distributed artificial intelligence and social sharing methods, Temu has created a new "goods to people" model, which gathers a large number of American consumers' needs and forms a huge explosive sales.
In addition, Temu invested a huge amount of 100 million yuan to advertise at the "Super Bowl" in the United States.
According to NFL official data, the total audience of the "Super Bowl" in 2022 is 208 million, close to two-thirds of the total population of the United States, and the advertising exposure is extremely high.
How to deal with the strict market supervision in the United States?
Temu's approach is to increase the punishment of merchants.
For example, if the mailed goods are mildew or damaged, a single fine of 500 yuan will be imposed, and if the description is different from the goods, a single fine of 1,000 yuan will be imposed.
Items that have not been sold for a month will also be returned to the merchant by mail, and the postage will be borne by the merchant.
In this way, Temu has pushed the profit of the merchant to the extreme, and at the same time, it has also greatly increased the profit risk of the merchant.
However, this is not a big deal for consumers.
After all, Pinduoduo is currently the most consumer-oriented platform for e-commerce after-sales service, and there is no one.
At the same time, Pinduoduo is also called "Somali Duoduo" by merchants, as long as the consumer complaint reason is good, it can almost achieve "0 yuan purchase".
Today, when the global information gap is smoothed out and product homogenization is so serious, if enterprises want to catch up, they must restrain their short-term desire for profit and pick up the core weapon of cost performance.
Because in the era of low economic growth, low prices are already a must, and no matter which price band you are in, you must consider the issue of price.
Under the premise of the same quality, low prices will inevitably defeat high prices.
The case of Pinduoduo shows us that there is never a so-called low-price strategy, only a low-cost strategy.
Why is Pinduoduo cheap?
It is the low cost that determines the low price.
Generally speaking, there are two traps of price reduction, one is not to reduce costs, only to reduce prices.
The other is to sacrifice their own profits to reduce the price, which is tantamount to looking for death!
Why did Wish fail?
Because it can't be done at the same time, the price is reduced.
Doing low prices is not a simple discount, but a kind of ability, if you want to reduce the price, you must reduce the cost, and it is possible to achieve the real price reduction through low-cost structural adjustment.
Why did Pinduoduo win?
It is because he has carried out in-depth control of the supply chain and highly optimized the organizational strength under the premise that the essence of sales remains unchanged.
The United States does not have this.
Secondly, Pinduoduo does not care about the interests of merchants, but is consumer-centric, why do merchants lose money and put on the shelves on Pinduoduo?
Because a large number of customers recognize Pinduoduo, as long as the first customer firmly follows, other ecosystems will naturally follow Pinduoduo, so Pinduoduo has bargaining power.
And the more demanding Pinduoduo is to merchants, the more users will not leave, which is another closed loop......
From the same step to the last, from "imitator" to "innovator", this lesson of Pinduoduo is not only for Ali and JD.com, but also for Wall Street.