2019 of PinDuoDuo: going to the 3,4 tier citys, battle with giants

Pinduoduo( PDD) is undoubtedly the most eye-catching and controversial Internet enterprise in recent years.

On the one hand, because it was founded just three years ago successfully landed in the United States, creating a miracle in the e-commerce industry, let people talk about its growth rate;

But in any case, no one denies that Pinduoduo is a few successful rise in recent years of emerging Internet companies.

Looking back on 2019, Pinduoduo is still a representative of the Internet industry.

In terms of share price growth, The market value of Pinduoduo has grown by as much as 70% in the past year, even surpassing Baidu and JD.com and even ranking among the fourth-largest Internet companies.

Judging from the development of users, the third quarter of 2019 financial results show that the size of the users reached 536 million, the monthly live users also reached 429 million.

What’s more, Pinduoduo has led a trend in the Internet industry, which is the market sinking. Under the leadership of the fight, Alibaba, JD.com, Vipshop and other Internet companies began to pay attention to the growth potential of low-tier cities and silver-haired people, have focused on sinking market.

Pinduoduo : Beneficiaries of the Economic Downturn Cycle

Why can Pinduoduo rise? In my opinion, on the one hand, because of its use of social e-commerce fission way, successfully captured the low-tier city market, explore the senior’s online shopping needs. On the other hand, there is a big reason because the product strategy of more than a lot of work conforms to the adjustment of this economic cycle.

We know that Pinduoduo was founded in 2015. That was the year china’s economy began to enter a new economic cycle, with GDP growth falling from 7.3% in 2014 to 6.91%, and over the next few years GDP growth remained low, 6.76% in 2016, 6.9% in 2017 and 6.57% in 2018. That was an average of 6.2% growth in the first three quarters of 2019.

In the new economic cycle, as people’s income growth slows, naturally they begin to pursue more value for money. This allows more users to congregate on PDD.

If the beginning of the establishment, more than the user group is mainly the fifth ring outside the crowd, then today, Pinduoduo has long been “into the city”, especially with the success of the success of the listing in the United States, the status of listed companies to help it in brand awareness and trust greatly improved, has made many people no longer exclude the use of Pinduoduo, This makes more and more people within the fifth ring road try to buy on multi-platform, not only to further expand the size of its users, but also because of the people within the fifth-ring more purchasing capacity, but also further pushed up the scale of multi-platform trading.

Therefore, if the internal reason for the rise of Pinduoduo is because of its social e-commerce fission effect, then the external reason is that the Pinduoduo is the pulse of China’s economic development, in the economic downturn cycle to meet the vast number of users of the demand for affordable goods. This, in fact, is also the nature of the e-commerce giants in recent times have focused on sinking the market.

Try more to eliminate prejudice

On the other hand, over the past year, PDD focused on the low-tier cities , while the market strategy has changed considerably.

Looking back at 2019, there are two biggest moves, the first is 10 billion subsidies, and the second is the new brand program.

Let’s start with a 10 billion subsidies. This is the first big move of 2019.

Whether it is grain liquor or iPhone 11, its core consumer groups are high-income people, and the reason why the reason for such a large degree of subsidized sales of such goods, in fact, an important starting point is to be able to win the trust and recognition of such high-income people, to eliminate their inherent prejudice against the fight more.

Of course, these users began to try to use PDD is just the beginning, once these users verify the quality of PDD goods can be trusted, out of wool or cheap mentality, will increase the purchase efforts. And will use its more spreading social influence, for the PDD name and endorsement.

It can be said that the tens of billion subsidies on the surface is a preferential subsidy strategy, in fact, more than one brand attack strategy, the ultimate goal is in fact to pry TMALL, JD.com and other e-commerce giants occupy the high-end market, which is why, Ali, JD.com these e-commerce giants have felt the threat of more than the fight, have also launched “10 billion subsidies”, to deal with the fight more attacks.

Then we’ll look at how many of them will start pushing the new brand plan from the beginning of 2019.

Why Pinduoduo will launch a new brand plan, in my opinion, is largely due to the need to control the supply chain. JD.com firmly occupies the supply chain of 3C categories, almost all of the well-known digital home appliances have formed a close cooperative relationship with JD.com, Tmall firmly grasp the clothing category of the supply chain, will be the major brands under revenue.

The new brand plan is undoubtedly a successful strategy to achieve the multiple goals. First, the new brand plan helps Pinduoduo build more of their own control of the supply chain, enhance the industry voice, second, the new brand plan allows users to buy more controllable quality goods, help Pinduoduo enhance the brand reputation, and third, the new brand plan for the manufacturing enterprises in difficult times is undoubtedly life-saving, It is beneficial to transform China’s manufacturing enterprises.

At the moment, the plan is doing well. By the end of September this year, the “New Brand Program” had 85 full members, and more than 800 companies, including well-known brands, were involved in The Custom Production of C2M, according to the report. In the third quarter, the platform to daily necessities, smart home appliances-based new brand products, cumulative orders of more than 27 million single.

It cannot be seen that whether it is a billion subsidy scheme, or a new brand plan, can be regarded as the upgrade strategy of multi-sink market, is aimed at eliminating the inherent bias of users to its “fake goods” and “low-end brand”, so as to open up the channel of upward attack for themselves, to achieve the leap of their own brand, The ultimate ambition is to stand at the top of the pyramid.

E-commerce giants gather in low-end market, PDD face new challenges

In fact, looking at the e-commerce market in 2019, it’s not the brightest one of the past year. Overall, listed companies in the e-commerce sector have performed very well this year. So far this year, the stock price of Vipshop has risen by more than 160 per cent, and JD.com’s share price has risen by more than 70 per cent, both higher than the rise of PDD. In addition, Alibaba’s second listing in Hong Kong, the king of Hong Kong stocks, while the U.S. stock market share stake also rose more than 50%.

E-commerce companies as a whole in 2019, in fact, are closely related to the economic cycle. We know that 2019 is the most difficult year for China’s economy in the last decade, more and more people adopt a more conservative consumer attitude, whether it is first- and second-tier cities or low-tier cities, people buy goods when the same beginning to pursue more valued goods And e-commerce platforms just provide such a choice, especially the introduction of various subsidies and promotions, but also to meet the real and urgent needs of consumers. It’s no wonder that, even in such a downward economic cycle, Tmall and JD.com are able to create new trading volumes.

In the next few years, the economic situation is still unspeakably optimistic, the consumption potential of first-tier cities is far less than that of low-tier cities, so e-commerce giants are focusing on the low-end market.

As can be seen, Alibaba’s Juhuasuan and Jingdou have launched a “billion subsidy”, more than 10 billion subsidy program, in addition to JD.com also launched the social e-commerce platform Jingxi, also began to try ToC2M; Can not predict that in the next few years, Alibaba, JD.com, PDD, product will be the major e-commerce platform will meet narrowly, in the sinking market to launch more intense competition.

Although PDD started from the low-end market, but in the face of the siege of the major e-commerce giants, there is no full chance of winning. On the one hand, because of the shorter set-up time, in terms of the brand is not as popular as Taobao, JD.com, once people realize that in Taobao, JDshopping, as cheap as slicing, a considerable number of users may fall.

On the other hand, the magic weapon of the battle for low-tier cities is nothing more than to subsidize the market, compared to the long-term losses, Ali , JD has already achieved profitability, stronger profitability, so that they have more bottom-up into consumer subsidies, and PDD in the low-end market encountered resistance by e-commerce giants, which in turn will shake the confidence of the capital market This is a huge test for PDD.

Overall, with the follow-up of more e-commerce platforms, more in the sinking market can no longer be “monopoly”, but must face the giants of close competition.

Looking ahead, e-commerce giants, including PDD, JD.com and Alibaba, are bound to have plenty of room for growth because of the economic cycle that can meet the needs of a wider group of people for a better life. And based on their own in big data, artificial intelligence and other technology accumulation, these platforms will continue to supply chain upstream and downstream penetration, so in the future their development space will not be limited to retail, but to support the development of the national economy a new infrastructure service platform.

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