Source: Alphabet List
Many years ago, Wang Xing shared this case in the Battle of Britain, both Britain and Germany greatly overestimated the number of opposing planes they shot down. These figures were adjusted to a more realistic level after the war... A recent reliable estimate suggests that Britain lost 1,547 aircraft, while Nazi Germany lost 1,887 aircraft.
“It seems that in a high level of confrontation, no one is more clever than anyone, depending on who has a stronger family base and who is more hardhearted.”
The internet war of 2023 is mostly similar. They are implementing similar strategies: low prices, local living, and starting from both sides of the deal and content to reach each other's battlefields separately. Among them, companies with clear strategies and decisive execution received positive feedback from the market during the year.
This is a year of qualitative changes in the Internet landscape. In terms of revenue, bytes exceed$TENCENT (00700.HK)$, in terms of market value,$PDD Holdings (PDD.US)$At one point it was over$Alibaba (BABA.US)$. The AT battle pattern for supremacy has continued for many years, and it has completely loosened up.
The new giants are still going strong, and they are already going deeper and farther — closer to trading and a wider footprint overseas. For a short time, we still couldn't see their ceilings.
The new king is certainly fierce; the old king has deeper roots.
They have long been aware of the crisis and are adapting frequently to deal with a competitive advantage that is constantly being reduced. The most obvious phenomenon is that professional managers who once had a say abdicated, and the founders came back strong.
However, compared to the proper strategies of the new giants in the past few years, the strategies and tactics of the old giants are still in the air, and it remains to be seen whether the adjustments are appropriate and whether the implementation is firm.
Under competitive pressure, some companies are urgently making up classes this year. For super apps, the lack of any leg will be a fatal crisis, and trading platforms and content platforms still need to continue to make up for the missing part.
Trading platforms are more determined to try live streaming formats, such as Meituan and JD; content platforms are also more determined to trade, such as Douyin and Xiaohongshu.
If from transaction to content, and from content to transaction, is the horizontal axis of the Internet world this year; then the upgrading and decline of consumption is the vertical axis. Internet companies are sending several columns to each quadrant to find growth and opportunities.
At the end of the year and the beginning of the new year, we are standing at a point where the pattern is changing rapidly.
In 2023, trading platforms and content platforms invaded each other's territory deeper.
Before that, it wasn't that they hadn't seen their competitors' ferocious attacks, but they were always one step slower when it came to action. Faced with this year's more pronounced competitive pressure, they had to be more decisive.
For example$MEITUAN-W (03690.HK)$. Meituan tried the live streaming business many years ago, but it wasn't until this year that Meituan really entered the live streaming field. At the end of January, Meituan tested the live takeout channel on the app; in April, Meituan Takeaway officially launched the first live broadcast to sell takeout vouchers in the live broadcast room; in July, the live broadcast became the first-level entrance to the Meituan app.
The main scene of Meituan's live broadcast is takeout. To a certain extent, this can be seen as Meituan's response to Douyin's entry into the takeout battlefield. Judging from the results, Meituan has temporarily held its takeout base; on the other hand, Meituan Live GMV is rising. According to 36kr reports, in October of this year, Meituan Live's monthly GMV exceeded 2 billion yuan.
One side is the contraction of Douyin takeout. According to the Whipper, Douyin Takeout is shrinking. Some regional agents have reported that some regions where Douyin Takeout is no longer in renewal negotiations; it is likely that only the five cities of Chengdu, Shanghai, Changsha, Shenzhen, and Fuzhou will be retained; all other regions have stopped investing.
One uncertain factor in the takeout market, where the market pattern has been stable for many years, is Hungry's capital trend. Last week, there were media reports that Wu Yongming, CEO of Ali Group, has made a series of capital plans, and hungry may have new capital actions. However, Douyin has always had a close relationship with Hungry, and is clearly a potential buyer of Hungry.
Of course, the takeout industry's profits only account for a small portion of the local lifestyle market. At the same time as the live broadcast of Meituan's Remedial Course, Douyin is once again entering Meituan's hinterland — wine tourism. From e-commerce, to restaurant group purchases to wine travel group purchases, Douyin has already found its place everywhere on the trading floor.
In 2023, live streaming classes will be added as a matter of urgency$JD.com (JD.US)$. On the eve of Double 11, JD Live announced that it would invite top anchors and star anchors from 10 major industries, including Luo Yonghao, Prince Yu, and Jin Xing, but apparently this kind of regular live streaming event didn't stir up much water.
During Double 11, JD caught another target: Li Jiaqi. After JD purchased and shouted at Li Jiaqi in the air, they set up a live broadcast room at JD. The theme was “Price is lower than Li Jiaqi, spot stock starts at 50% off”, targeting topical figures and focusing on low prices, which has indeed brought topicality and sales to JD at the same time.
However, the problem is that this live broadcast room is the same as the live broadcast rooms of many brands that are booming with domestic products. As the hustle and bustle dissipates, the volume of the live broadcast room will also drop. On the way to content, JD also needs to launch its own brand symbol.
While trading platforms continue to add content attributes to themselves, content platforms are also getting closer to trading. As mentioned above, Douyin continues to attack the trading side, seize the stock market in e-commerce in the fields of apparel, beauty, etc., wage an all-out war with Meituan in the local lifestyle market, and continue to attack wine tourism in the hinterland of local life.
In addition to Douyin, there are also video accounts and Xiaohongshu that continue to trade.
At the beginning of March, Xiaohongshu adjusted the organizational structure and upgraded live streaming from a business group in a second-level department to an independent department to unify the management of live streaming content and live e-commerce sectors. Since then, the two benchmark cases of Dong Jie and Zhang Xiaohui have developed in Xiaohongshu's live e-commerce ecosystem.
The video channel's live streaming activity is also more intense than in previous years. According to a recent report by “Late LatePost”, the GMV for video e-commerce this year is about 100 billion yuan.
Another station that also tried live streaming delivery was station B. In the FY2022 conference call in early March this year, Station B COO Li Ni said that next, Station B will integrate video and live streaming delivery systems. However, compared to video numbers and Xiaohongshu, Station B's live streaming delivery practices are not yet a system.
It's not surprising that content platforms work in contrast to trading platforms. Super apps must not have weaknesses; the loss of any leg will be a fatal weakness. If content platforms do not move to trading in a timely manner, they will not be able to break the commercial ceiling; if they do not fill the content gap in a timely manner, they will also face a situation of exhaustion of traffic.
The flow of content platforms and trading platforms is horizontal, and the vertical focus of the Internet world this year is the dispute between consumption upgrade and consumption downgrade.
The war in the field of brand consumption and instant retail is representative of consumption upgrading. Internet giants have been fighting on the real-time retail battlefield for the past two years, and this year's war is still a continuation of the previous one.
In June, Taobao opened up various businesses such as Are You Hungry, Taobao, Tmall, and Taoxianda, and launched an “hourly delivery” service in 16 cities across the country; in August, JD set up a separate tab for “hourly delivery” on its homepage and set up an “hourly delivery” section.
In October, Douyin upgraded the weight of its e-commerce hourly delivery business. Previously, the hourly delivery portal was previously located within the Douyin supermarket interface. After the revision, users could directly access the hourly delivery interface by searching for “hourly delivery” on Douyin. According to Tech Planet, Douyin's instant retail sales, including “Hour Delivery,” are regarded as the core project of Douyin e-commerce. At the same time, Douyin is building product distribution capabilities, including rider operation platforms, commercial station operation platforms, basic logistics capabilities, and dispatch strategies.
At the beginning of this month, Meituan Grocery Shopping changed its name to “Little Elephant Supermarket”, which means that Meituan's ambition is not only in the fresh food sector, but also to expand into the larger instant retail market.
Although major Internet companies are quite active in the instant retail market, this war is mainly concentrated in Tier 1 and 2 cities. While instant retail is important, the market is far from sinking into the vast market.
There has been a dispute within JD over the route between instant retail and a sinking market. 36 Krypton Future Consumption has reported that after the dissolution of Jingxi, Xu Lei, then CEO of JD Group, and Xin Lijun, CEO of JD Retail, advocated abandoning the sinking market. They are more optimistic about JD's next incremental retail sales in the same city.
However, Liu Qiangdong did not approve of this direction. “I still want to sink into the market.” The results of the line differences between the founder and professional manager have already been revealed. Xu Lei and Xin Lijun have resigned one after another, and JD is betting on the lower price route.
Looking at it now, the downgrade in consumption has taken the upper hand, and the market has given more valuation to companies that have downgraded consumption.
In the face of competitive pressure, Ali and JD all followed the low price strategy. This year, the two founders made a high-profile return. Earlier, Ma Yun proposed “three returns,” returning to Taobao, returning to the Internet, and returning to users; Liu Qiangdong clearly proposed “the low price is 1; the others are 0.”
However, the alphabet has previously pointed out that judging from JD's declaration of war with Li Jiaqi and Taobao's route of low prices and good goods, the low prices on the two platforms are still based on branded products, but there is a natural paradox between brands and low prices, and the space for the low price route is just white cards.
Only by collecting more white cards can JD and Ali achieve growth in Pinduoduo's style.
The degree of integration of transactions and content, and the degree of execution of the low-cost route are determining the ranking of seats for major Internet companies this year.
In the “alphabet list” of the Chinese Internet, BAT originally also stated,$Baidu (BIDU.US)$After being left behind, the pattern evolved into an AT battle for supremacy. As mobile internet dividends unfold, the three giants Byte, Meituan, and Didi received their own abbreviations. Over time, Byte has left Meituan and Didi far behind.
According to foreign media reports, ByteDance's sales in 2023 reached 110 billion US dollars, surpassing Tencent. In fact, it will be sooner for byte revenue to surpass Tencent's nodes.
According to an August report by The Information, ByteDance's total revenue reached 85 billion US dollars last year, up 38% year on year; in China, revenue was 69 billion US dollars, up 25% year on year. Last year, Tencent's revenue in 2022 was 554.552 billion yuan. At the time, it was already behind Byte, but the gap between the two was not that big.
And this year, Byte has further widened the competitive gap, which also means that its hegemonic position is more stable.
Another area where seat changes have been achieved is e-commerce. On the evening of November 29, Pinduoduo surpassed the market for the first time$Alibaba (BABA.US)$It became the largest mid-cap stock in the US stock market by market capitalization. However, in GMV, Pinduoduo still hasn't caught up with Ali.
This also means that in the fields of content and e-commerce, a two-legged situation has been formed, and the number of companies entering the first tier of the Internet world has multiplied.
The older generation of rulers also clearly saw the crisis and made frequent adjustments to seek a turning point. JD and Ali have successively changed the number one position in the e-commerce business. Wu Yongming, CEO of Ali and Chairman of Aotian Group, is also CEO of Taotian, and Xu Ran, CEO of JD, is also the CEO of JD Retail. Obviously, the two founders, Ma Yun and Liu Qiangdong, stand behind them.
The transformation also means that Ali and Jingdong want to reverse the original balance of interests. If they want to complete such a groundbreaking transformation, it is equivalent to a genetically-modified project. This is not easy. Whether the return of the founders will bring about a complete transformation or just an ordinary adjustment in their development history is still unknown.
Several trends in 2023 are still new highlights for 2024:
First, the degree of integration between content platforms and trading platforms. Among these, there will be several important wars. One is local life. As you can imagine, the war between Meituan and Douyin in the field of local life will continue. The rise of Douyin will obviously have an impact on Meituan's market share and profit margins. How Meituan defends the city is a problem it will still have to face in the future.
Also facing this kind of competitive pressure are Ali and JD. They have to face the low price war from Pinduoduo at the same time, and Douyin's erosion of their share.
As for other content platforms, although Xiaohongshu and Video have gained some momentum in the field of live streaming delivery this year, their commercial infrastructure still needs to be improved, and it remains to be seen whether their model can continue and bring in higher turnover.
Second, the low price war in the e-commerce sector. It has been almost a year since Ali and JD launched an impact on low prices. Obviously, their path is not effective enough.
Third, the growth of new giants. Entering the trading side has opened up Douyin's revenue ceiling; entering overseas has opened the ceiling for Pinduoduo GMV. Whether their growth can continue in 2024, how much they can grow, and whether they can surpass the boss in more dimensions is a new focus for next year.
Editor/Corrine