A few days ago, a source revealed that from the second half of 2023, Pinduoduo will begin to focus on promoting branding in the domestic market. In the first quarter of this year, the GMV (gross merchandise transaction) of its main brand increased by 48% year-on-year, accounting for 35% of the company's revenue, of which the GMV of large brands increased by 130% year-on-year. Although Pinduoduo has not yet responded to this, its increase in branding in recent years is obvious to all.
In fact, as early as 2018, Pinduoduo, which started from "outside the Fifth Ring Road", has begun to explore branding, and its representative work is its first "10 billion subsidy".
In fact, in the recent spring outing promotion launched by Pinduoduo, well-known brands such as Adidas and Baili have also appeared, and these brands are also opening flagship stores in Pinduoduo in various ways. In addition, in the recently launched trend channel clothing merchant investment, Pinduoduo also set up two registration entrances for brand merchants and non-brand merchants, and gave more priority to brand merchants in the gameplay of many channels. For example, in the "Trend Rush", compared with the 48-hour scheduling time of ordinary merchants, brand merchants can charter the venue 1 week in advance.
So the question is, in the case of competitors such as JD.com and Taobao rushing to introduce small and medium-sized merchants to enrich the product structure and support their low-price strategies, why does Pinduoduo want to "buck the trend" to promote branding?
In fact, in the early days, with the strategy of opening stores for free, a large number of small and medium-sized merchants and white-label merchants were attracted to settle in, and then brand upgrades were carried out, which was the usual way of many e-commerce platforms. You don't see, Taobao relied on the rapid rise of small and medium-sized businesses at the beginning, and then implemented the brand upgrade strategy. Douyin e-commerce and Kuaishou e-commerce have also actively supported brand merchants in recent years, and have successively put forward concepts such as "Douyin brand" and "fast brand", as well as promotional methods such as "big brand big supplement".
As for the reason why e-commerce platforms are inseparable from brand merchants, it is not difficult to understand. After all, for e-commerce platforms, there are only two core profit models, one is to sell traffic to merchants and collect advertising fees, and the other is to extract transaction commissions. But either way, it's clearly built on a massive user base.
Therefore, users are undoubtedly the decisive factor throughout the entire development process of e-commerce platforms. In the early stage, due to the relatively low cost of customer acquisition and high marginal benefits, coupled with the consideration of expanding their own scale and attracting more merchants to settle in, e-commerce platforms tend to pay more attention to the growth of user volume. However, in the later stage, with the slowdown in the growth of the number of users, as well as the increase in customer acquisition costs and the decline in marginal benefits, the pressure on e-commerce platforms to increase the ARPU value (revenue per user) of users has also come to the side.
And the rise of ARPU is nothing more than two ways, that is, to let users buy more often, or buy more expensive things. But as we all know, as the e-commerce industry enters the stock era, every platform is facing the problem of retaining users.
At present, content has become the unanimous direction of the head platform, and short videos and live broadcasts have become the traffic entrances to attract users, but how to truly improve the repurchase rate of users still needs to rely on the product itself and the private domain operation of the merchant. Compared with small and medium-sized merchants and white-label merchants who rely on low prices to grab traffic in the public domain, brand merchants not only have stronger control over the quality of goods, but are also often better at using tools such as brand culture to cultivate users' minds, so as to obtain a higher repurchase rate. In a way, brands are almost synonymous with higher repurchase rates.
In addition, if you want users to buy more expensive things, e-commerce platforms must first come up with more expensive products. Therefore, whether it is Pinduoduo's 10 billion subsidy or Kuaishou's big-name subsidy, in fact, it is hoped that through the branding of the supply side, the user circle will achieve an upward breakthrough.
Further, in the business of e-commerce, the platform, the merchant and the consumer each take what they need and are closely connected, thus forming an effective cycle. And one of the foundations of the benign operation of this cycle is that the business is profitable. After all, only the more profitable the merchant, the larger the profit pool of the platform, such a cycle has a snowball effect, and it is more in line with the platform's expectations for long-term sustainable operation.
Compared to white labels, branded products usually have a higher premium, and merchants can also get more profits, and at the same time, they will have a more ample marketing budget. So under this logic, after Pinduoduo gains a firm foothold with the help of low prices, branding has become a move that will be taken sooner or later.
And the data in the above rumors seems to indicate that Pinduoduo's branding has achieved some results. In addition, some reports cite relevant data that more than 50% of Pinduoduo's 900 million monthly active users are brand product users, which means that the platform's users' demand for brand goods is not low. Moreover, the current Pinduoduo can be described as "red", not only the performance continues to grow rapidly, but also once surpassed Ali and sat on the throne of the first domestic e-commerce platform, which naturally gave it more confidence to promote branding.
Of course, even so, Pinduoduo still faces many challenges on the road to branding, such as the debate about whether white labels and branded products are inherently mutually exclusive. For this reason, Taobao has launched Taote and Jingdong has brought Jingxi, both of which are aimed at building a "wall" that can isolate the brand from the white label. And to a certain extent, it was Taobao's brand upgrade that helped Pinduoduo grow as a competitor, after all, the latter was able to achieve the myth of rapid growth with low-price group buying as the core, and a considerable part of the reason was that Taobao became "expensive", and it caught Taobao's small and medium-sized merchants and white-label merchants who lost due to the promotion of branding.
Perhaps it is precisely in order to avoid taking the old road of Taobao, so while introducing existing brands, Pinduoduo is also actively promoting the "branding" of white-label merchants and industrial belt businesses. It is understood that in recent years, Pinduoduo has intensively launched the "Duoduo New National Tide", "Duoduo New Craftsman", "Duoduo Overseas Support Plan", etc., a number of special activities focusing on the manufacturing industry, and has successively penetrated into more than 100 manufacturing and rural handicraft industrial belts to help domestic brands and rural good things directly connect to domestic and foreign markets.
In the final analysis, although it is not easy to get out of the comfort zone of low prices, for Pinduoduo who wants to achieve sustainable development, such self-transformation obviously cannot be stopped.
[The picture in this article comes from the Internet]