Core guide

• Juhuasuan chose double 12 to launch 10 billion subsidies aimed at Pinduoduo.

• The strategic goals of the two e-commerce platforms are completely different.

• Why is it so difficult for Pinduoduo to solve the "one-shot sale problem"?

BABA restarted Jushuai to focus on sinking market customers to get customers, the strategic level is generally defensive positioning, to prevent the population without effective digital or semi-Internet traffic, too many upgrades into the Pinduoduo platform of the Internet consumer population.

However, the "10 billion subsidy" program launched before double 12 this year is entirely aimed at Pinduoduo's market operation strategy, an offensive move at the tactical level, and the goal of who can retain more new customers with the market mentality created by the 10 billion subsidy.

In less than two years from defense to attack, the sinking battle between Juhuasuan and Pinduoduo, the overall situation of the campaign was not very favorable to Pinduoduo.

Not one billion subsidies, not hundreds of billions of subsidies, or exactly the same brand slogan as Pinduoduo-tens of billions of subsidies. Even if the amount of money invested in the whole cost-effective marketing cycle may be more than 10 billion yuan. Chen Hao (nickname: Yunfu), general manager of Juhuashuasu, said: "the subsidy of Juhuashuangyuan will continue, and the subsidy will be further increased to increase the inventory of low-cost quality authentic products."

Must find a difference, can only be BABA's words to add an adjective: "really 10 billion subsidies", not "cut the order" this "catch the eye" rather than "grab material benefits" marketing gimmick.

When you say that the gathering of a cost-effective "10 billion subsidy" is entirely aimed at Pinduoduo?

Pinduoduo's huge "ambition" of 10 billion subsidies

Behind the "10 billion subsidy" put forward by Juhuasu, there are also self-branded goods from Tmall supermarket and Tmall International. During the double 12 promotion of Taobao a few days ago, the long-lost "50% discount" promotion appeared again. The operating results announced by the 10 billion subsidy, double 12 days, the subsidy attracted more than 5 million visitors. The third-tier and lower sinking market, the year-on-year transaction growth rate reached 41%.

There are also key goods from the "10 billion subsidy", including top consumer brands and categories such as Apple Inc iPhone, Dyson and SK2 Immortal Water.

This for Pinduoduo's current stage of the core strategic goal-to continue to attract new customers of the competitive pressure is still very obvious. Gathering tens of billions of subsidies is tantamount to poking Pinduoduo's core interest area.

Because Pinduoduo now regards the subsidy of 10 billion yuan as the overall driving force of the strategic construction goal of the phased platform. Ju cost-effective at this stage to fight Pinduoduo 10 billion subsidy effect, even if only diverted part of the "traffic, new customers, orders", it is also a very cost-effective input-output ratio.

Therefore, the gathering of tens of billions of dollars is to pry the high return of "small and broad" from the very beginning. Pinduoduo's ten billion yuan has so far landed on the core element of Pinduoduo's platform-- every penny you take out, you have to see every profit.

Pinduoduo, who went public at the end of June, 2018, is still a Pinduoduo with 300m people. Pinduoduo at the end of September 2019 is already a Pinduoduo with half a billion people fighting. The 200 million new customers added in 15 months do not come entirely from the "10 billion subsidy" program.

Because of the "10 billion subsidy" to be launched during the 618 period in 2019, Pinduoduo actually focuses on prying into the high-quality customer base of the mainstream e-commerce market, that is, the mature e-commerce consumers who are often called "within the five rings". This allows us to see from the beginning, a lot of tens of billions of subsidies and iPhone XR phones, the brand's high-end products with a very common target audience, are forcibly bound together. After the launch of iPhone 11 in September 2019, tens of billions of subsidies were strongly tied to the entire iPhone 11 series.

As mentioned above, 200 million new customers do not come entirely from the "10 billion subsidy" program. At least the launch time of this plan does not coincide with the quarterly reports of Pinduoduo corresponding to these 200 million new customers.

The expansion of Pinduoduo's user scale has essentially simplified the implementation model in the sinking market, which had previously been a serious shortage of e-commerce. With the fission effect of Wechat's underlying resources (both number of users, social relationships, payment tools) and the multiplication of APP downloads (newcomers) brought about by group buying, Pinduoduo proved that the sinking market can be fully ecommerized and has large-scale purchasing power.

Wechat helps Pinduoduo complete the ready-made conditions of digitization in the dimension of "people"-user membership, and provides a "simple, direct and rough" e-commerce shopping experience.

However, this year's 10 billion subsidy program, Pinduoduo's phased strategic goal is to create a Pinduoduo "is already a full-category, all-department brand, to serve all e-commerce customer base platform social mind." Some people call this meaning the so-called "washing white". In any case, this kind of meaning conveyed to the outside world is still obvious to Pinduoduo.

More sinking advantage + 10 billion subsidy is actually a bit of a counterattack on BABA's stock member position.

However, the subsidy of 10 billion yuan has also brought about a serious platform operation problem for Pinduoduo: mature mainstream e-commerce users, that is, those "within the Fifth Ring" users who are "spoiled and delicate" by BABA's service, found that Pinduoduo's shopping experience is not very good. In the case of iPhone, which is strongly bound with 10 billion yuan in subsidies, consumers are not so sure whether they can deliver goods on time when they go to Pinduoduo to buy iPhone, or whether they can buy subsidized goods.

To put it simply, when consumers buy iPhone on Pinduoduo, they sometimes have the dissatisfaction of "second-class citizens". Many of the iPhone merchants on Pinduoduo's platform are operated by multiple e-commerce platforms. For the price of iPhone, the price of the upstream end is basically transparent. Therefore, other platforms are more able to sell the price of the case, in the Pinduoduo platform shipments, it is difficult to protect priority. And these merchants, who are also well aware of what delays in delivery or even cancellation of orders when opening a store in Pinduoduo, will not be subject to too many penalties and store weight downgrades by Pinduoduo platform rules.

At this point, Taobao and Tmall, as well as Juhuashuanping platform, have long been known in the industry for the stringent rules of punishing merchants. So famous that the user made a bad review, and the seller asked the user to change it.

It is difficult to optimize the platform rules. Because the effect of this matter is not how clever the rules can be solved, but the long-term precipitation of time. The rules of an e-commerce platform (business compliance & protection of members' rights and interests) are not designed out of thin air by a genius. It just takes a long time to refine a large number of specific cases in order to constantly repair and improve the accuracy and fairness of the platform rules.

Anyone who has a little knowledge of the national legislative process knows that "making mistakes in violation of regulations is always ahead of the law." No matter how strict the legal provisions are, they should be constantly amended and updated. This is an ironclad fact and BABA's first-mover advantage that cannot be challenged and imitated. It is totally impossible for any competitor to overtake by relying on industrial changes and technological revolution. The so-called people who beat you come across boundaries. This sentence, in front of the rules of e-commerce platform, is a piece of nonsense. At this point, BABA has the world's strongest core platform advantage.

On the other hand, consumers are naturally angry when they encounter Pinduoduo's less "modest" service attitude: "will I be willing to make my mood uncomfortable for your 300,500 yuan subsidy?" The Chinese people really have a deep sense of subversion and deception in their consumer belief that "the customer is the supreme emperor". For this kind of Pinduoduo merchants, they do have a deep sense of subversion and deception.

How strong is this feeling? To put it bluntly, this is like the "love integrity repair period after the affair was found". It is very difficult to make up for it later.

Juhuasuan and Pinduoduo "have a hard time" with each other.

The above Pinduoduo can not be deeply involved in the objective problems of platform business operation and service quality, so we can see the result performance in Pinduoduo's financial report of Q3 in 2019. This quarter's financial report, the loss caused by the marketing cost of Puduo is rising, and the overall data performance of the financial report is not very good.

However, Pinduoduo CEO Huang Zheng said at the analyst meeting that Pinduoduo wants to increase the "10 billion subsidy." And definitely think: "Pinduoduo 10 billion subsidy spent every penny, is worth it." Both the purchase frequency and the unit price have increased. It is believed that these users who have received subsidies will return to Pinduoduo.

With the subsidy of 10 billion yuan, Pinduoduo's unit price must have increased, but not necessarily the purchase frequency, otherwise Huang Zheng would not have said, "I believe users will return to Pinduoduo."

Yes, these words of Huang Zheng seem to have nothing to do with the results of the financial report, but in fact they make all the problems clear. Many of the new customers brought in by tens of billions of subsidies are bought and sold with one shot. And Pinduoduo new customers are valid for 365 days (one year), while the GMV (turnover) generated by orders is valid for 90 days (one quarter). In other words, the new customers and GMV in Pinduoduo's second-quarter financial report will continue to be counted in the new customer data in the third-quarter financial report, but not in the third-quarter GMV data.

This is why the number of Pinduoduo users is growing or unchanged, but the marketing cost and turnover are hanging upside down.

Pinduoduo's development model actually reverses the previous laws of the e-commerce industry. That is, Pinduoduo should first complete a huge user base, and then upgrade the comprehensiveness and diversity of the user base. Finally, we will solve the lagging platform governance and merchant service monitoring.

What Huang Zheng said in the analyst's financial report is actually telling the truth. At this stage, Pinduoduo is doing a large user base at all costs. Pinduoduo is likely to make the user's plate so large that it will not be challenged by the outside world in 10 years.

Therefore, no matter how big the loss is, no matter whether the user is buying and selling wool with or without a hammer. Anyway, in order to expand the number of users: Pinduoduo, spell it!

BABA's cost-effective logic is: since you spell more than the "tens of billions of subsidies", related to your phased strategic goals. Then I will also come up with tens of billions of subsidies to make your goal impossible.

This is also why, Ju cost-effective this time, not only came up with tens of billions of subsidies and iPhone mobile phones, these and Pinduoduo the same "solicitation weapon." Also out of Dyson, SK2 brainwashed these low-cost super-good goods. It is not simple good goods at low prices, but low prices and super good goods.

Who let Pinduoduo in the past year, also challenged BABA's core value area.

Group buying e-commerce has helped Pinduoduo complete the user base reserve before 2018. With Pinduoduo's business getting bigger and bigger, Pinduoduo's previous platform merchant supply capacity has been unable to meet such a large number of users.

Pinduoduo began to do supply chain resources for industrial belts and brand factories. On September 10th of this year (what an interesting date), Pinduoduo began to play with a new brand plan for C2M orders. At present, the number of members has reached 85, and more than 800 well-known brands have participated in the customized production of C2M in enterprises, with a total of 1800 customized products and more than 70 million orders. Pinduoduo also expects C2M orders to reach level 1 billion in the next five years.

At this point, it is cost-effective to see it in the eye, but angry in the heart. I want to supply directly from the upstream factory, which has been my skill for 20 years. Play brand factory? Play the industrial belt? Why don't you find it hard with me?

What's more, BABA has the largest number of top brands and well-known brand business relationships in the world. The head brands Adidas, L'Or é al, Hisense, Midea and Libai have harvested 100% year-on-year growth in the first eight months of this year. More than 80 brands, including Siemens, Lancome, Nikon, Haier and Whirlpool, have also achieved year-on-year growth of more than 50%. The theory of "value for money effect" is valid.

Of course, there is a long period of value dividend upgrading for the production and supply capacity of upstream brand factories and industrial belts. At present, the scale of processing and manufacturing capacity in China has entered a long-term transformation of domestic demand for decades, which requires B2B export port exploration and stable distribution and circulation links.

Which take the big trade exit? Which take domestic wholesale? Which take the cross-border exit? Which take the domestic e-commerce platform? It challenges the overall upgrading ability of China's processing and manufacturing industry. This is also the e-commerce platform involved in upstream manufacturing, mixed with the major task of upgrading China's manufacturing industry, as well as strong chips to help the current competition, the two are bound to each other. Just like no one can handle Apple Inc's production process without Foxconn, Foxconn can't do a lot of work without Apple Inc's order. Each other is the one for each other.

Pinduoduo should "live outside and settle inside first".

Combined with the above, in fact, it is easy to find that the rise of Pinduo is free to borrow the e-commerce business environment and industrial infrastructure resources created by Taobao. A large number of mature small and medium-sized sellers and supply-side sellers directly switched to Pinduoduo sellers with one click.

Pinduoduo is actually the product of growing up in the e-commerce industry environment created by BABA. Although Pinduoduo will never admit this in his mouth. This determines that Pinduoduo's ability to manage and control the merchants on the platform, as mentioned above, is still very weak compared to BABA. A large number of unpleasant service and implementation details have seriously dampened consumers' willingness to repurchase for the second time in Pinduoduo.

As the saying goes, "the outside must be settled first". At the present stage, Pinduoduo should actually strengthen the operation and service quality of the platform merchants. However, Pinduoduo stubbornly puts the expansion of the user base on the priority of the current strategy.

Therefore, the current results are actually very paradoxical. The reason why Juhuashuasu came up with tens of billions of subsidies and fought against Pinduoduo was in fact that Pinduoduo did not care about the upgrading of his internal operation, but persisted in soliciting customers to the end and inspired him to come out alive.

The battle that led to the sinking of the market has been about "people" (newcomers) from the very beginning.

BABA's achievements are also very good. In 2019, Q2 (that is, the three months of 7-8-9 of the natural year) reported that Taobao mobile active users reached 755 million, a quarter-on-quarter growth of 34 million, with an average user growth of more than 26 million for eight consecutive quarters. More than 70% of the more than 200 million new users come from the sinking market. In particular, during the whole year from Q2 in 2018 to Q2 in 2019, the number of "post-00s" users on Taobao increased by 31.8 million year on year, ranking first among the "post-00s" users. In the same period, the number of middle-aged and elderly users in Mobile Amoy increased by 6.77 million compared with the same period last year, ranking first in the shopping App, nearly 3 million more than the Playmore.

Everything is a war of "robbing people" at present. Pinduoduo and Ju are fighting against the clock to rob people.

The battle for population resources of e-commerce is becoming more and more popular.