Edited from GF Securities: “China's Internet Sinks to the Third and Fourth Line: Taking Pinduoduo and Quirky Headlines as Examples”
No one has yet become a “BAT” for third- and fourth-tier cities. In this huge new market, mobile users account for more than 50%.
1. Pinduoduo and Quheadlines that have broken through
The myth of Pinduoduo's growth rate
Pinduoduo innovatively used the new social e-commerce model of acquaintance to break through from Taobao+Jingdong's dual oligarchy. From its launch in September 2015 to June 2018, Pinduoduo achieved mass breakthroughs in user size and GMV in 3 years: it has more than 300 million users, millions of merchants, and a monthly GMV of more than 40 billion yuan.
Laxin: “bargain and get free” activities. Acquiring new and active users through WeChat's fission effect is a key point for Pinduoduo to use the WeChat ecosystem to attract new users. The average customer acquisition cost per unit is 10 yuan, which is far lower than traditional e-commerce customer acquisition costs.
Retention: “Selling at a low price” fosters consumption habits. The core function of Pinduoduo is for users to select products through limited-time flash sales, search, etc., and make individual purchases, bundles, or snap up purchases. Preferential prices have cultivated the spending habits of Pinduoduo users and formed a huge number of active users.
Monetization: “Brand entry” monetizes the user base. Currently, three major features have been launched: “Premium Discounts,” “Overseas Shopping,” and “Mobile Recharge.” The price of these registered brand products is almost the same as the average price on Taobao, and there is also less difference in price between bundling and purchasing separately.
The dark horse road with interesting headlines
QuHeadline was founded in 2016, and by the end of June 2018, the number of installed users had exceeded 133 million. According to Cheetah Big Data, in 2018, H1 Quheadline ranked 4th among news apps with a weekly active penetration rate of 3.9%, with 133.6 hits per week. It's a veritable dark horse.
The core logic of Funny Headlines is that users don't need to pay for knowledge and reading, but instead get platform subsidies through reading. Reading rebates encouraged users to stay longer. According to its prospectus, the average DAU spent 47.3 minutes per day in the 2018Q2 quarter; the tolerance for advertisements was also higher. According to GF Securities statistics, the advertising density of QuHeadline is about twice that of today's headlines.
2. The logic of huge energy in third- and fourth-tier cities?
Large space and underdeveloped
Urbanization construction was recommended, and the “Internet access” of the new urban population became a breakthrough in the sinking of the third and fourth line of the Internet. Third-tier and fourth-tier cities account for 54.4% of mobile internet users, and the market space is huge.
According to the stage of penetration of mobile internet, it can be divided into three waves of demographic dividends:
Among them, mainstream small towns (third- and fourth-tier middle-aged and elderly people) have been ignored for a long time, and they need content and products that are more in line with their tastes.
The popularity of 1,000 yuan smartphones
The market share of 1,000 yuan mobile phones is huge, meeting the smartphone needs of third- and fourth-tier cities. More than 98% of internet users in these regions use mobile phones to access the Internet.
Perfect operator coverage
As of 2017 Q3, the total number of mobile communication base stations in China reached 6.041 million, which has basically achieved comprehensive coverage of cities and rural areas. Furthermore, the popularity of 4G has increased the speed of the Internet, while the reduction in data costs has also boosted the enthusiasm of netizens (especially third- and fourth-tier netizens).
The popularity and penetration of superpayment apps
The popularity and penetration of WeChat Pay and Alipay Pay have become the foundation for the monetization of third- and fourth-tier traffic.
3. Beach robbers from all walks of life are flocking to it. What is the winning strategy?
Comprehensive e-commerce industry
Ali joined the “Taobao Special Edition” and “Alipay Group” teams.
Short video field
“Civilized” Kuaishou vs. Douyin to “Record a Beautiful Life” in rural areas and move to the 3rd and 4th tier
Internet giants sink
Low-cost mobile phone tariff plans cultivate user habits and harvest traffic.
Summary: What is the winning strategy for sinking three or four lines?
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