Welcome to the WeChat subscription account of “Sina Technology”: techsina
Text / Yi Sheng
Source/ValuePlanet (ID: ValuePlanet)
Compared with the continuous decline of Tmall and Taobao’s GMV, Taote, whose GMV has increased by more than 60% year-on-year, has become a rare bright spot in Alibaba’s financial report for the third quarter of 2022.
Even so, the word “Taote” only appeared three times in the transcript of the financial report conference, and the three times were all emphasizing that Alibaba’s various cost reduction and efficiency enhancement measures have received preliminary results this quarter, and the scale of Taote’s losses has been confirmed. Significantly narrowed.
And just a year ago, in the transcript of Alibaba’s financial report conference for the third quarter of 2021, “Taote” was repeatedly mentioned 17 times. The user scale of 240 million and the order growth rate of 400% all been repeatedly emphasized.
From 17 times to 3 times, in just one year, Taote’s position in Ali seems to have declined sharply, and the high marketing investment that maintained its rapid user growth in the past no longer exists, reducing costs and increasing efficiency, and narrowing the scale of losses It became Tao Te’s current mission.
Almost at the same time, Pinduoduo, the target of Taote’s sniping, also announced its financial report for the third quarter of 2022. While its single-quarter profit exceeded 10 billion for the first time, its sales and marketing expenses still maintained a year-on-year growth of 40%.
Under the ebb and flow, Taote’s fate in the sinking market is full of unknowns.
Twists and turns, passive response
Time goes back to 2015, three years before Taote appeared.
In September of this year, a public account called Pinduoduo was officially launched. It used the magic spell to attract people and buy low-priced goods. The number of fans exceeded one million within two weeks. At this time, Ali, which occupies an absolute dominant position in the domestic e-commerce platform, is looking forward to the infinite possibility of consumption upgrade under the leadership of its founder Jack Ma.
In October of that year, when Jack Ma was in the UK, he faced a high-profile statement from the leaders of the London business community that China would have a middle class of 500 million in the next 10 to 20 years, accounting for one-third of the country’s population. Such a huge consumer market would It will serve as a powerful engine to drive the economic development of the world. In his view, “In the past two decades, China has been dominated by export trade, but in the next 10 to 20 years, China will be dominated by imports.” Western companies should see “huge business opportunities” in China.
Over the next few years, the two eventually rival companies went in completely different directions. Pinduoduo enriches the entrance construction in product design, distributes through WeChat, QQ and other social platforms, relies on social platforms, closely focuses on the fission between acquaintances, and makes every effort to attack the sinking market through single-product explosions.
Source: Tmall Global official website
Alibaba has successively launched Tmall International and Tmall Luxury Channel, and created the Taobao Creation Festival. While making great efforts to attract international big names and well-known offline brands to enter Tmall, it will also promote the traffic of Taobao to small, beautiful, personalized Novelty stores are tilted, blurring the low price tag of Taobao, and fully catering to the expectations of consumption upgrades.
In the past three years, Pinduoduo successfully landed on NASDAQ on July 26, 2018, with a market value approaching US$34 billion, the number of active buyers exceeded 300 million, and active sellers exceeded one million. Three major e-commerce platforms.
In March of this year, Alibaba launched a special version of Taobao, and for the first time regarded Pinduoduo as an opponent. This APP, which was managed part-time by the “Tiantian Special Sale” team of the Taobao business group at that time, positioned itself as a shopping platform that could save money and make money, claiming to provide interesting and fun interactive gameplay, rich reward red envelopes, allowing buyers to buy Find the ultimate cost-effective products while discovering the joy of buying, buying, and buying.
This positioning and style of play have not changed much from when they changed their name to Tao Te three years later. At that time, Alibaba’s e-commerce business still maintained a rapid growth rate of 30%. The launch of Taobao’s special edition was more like an eyedrop for the opponent, and the symbolic meaning was greater than the actual effect.
The Taobao special edition has really been taken seriously, and it has come to 2020. At Alibaba’s quarterly financial report conference in March of this year, the name of Taobao’s special edition appeared for the first time. CEO Zhang Yong’s positioning is to serve “low-end users” and “a more concise and fully cost-effective platform”. Also at this press conference, Zhang Yong disclosed a data. Of its 70 million users, 70% come from the “low-end market”. At this time, the number of active users of Pinduoduo has reached 731.3 million, which is comparable to the number of active users of the entire Ali e-commerce platform.
The special edition of Taobao, which has received attention, has grown from a dozen people to nearly a thousand in a short period of time, and moved out of Hangzhou Xixi Park where Taobao is located, and has become an independently operated project.
Until then, the head-to-head confrontation between Tao Te and Pinduoduo really began.
After the independent operation, the Taobao Special Edition focuses on the concept of M2C (manufacturer to consumer), fully integrates the resources of the Ali system internally, and through the connection with 1688, with the help of its nearly 20-year factory training plan, within 100 days, it will absorb 1.2 million merchants including 300,000 foreign trade factories have settled in, and the factory resources cover 170 first-level industrial belts, accounting for 70% of the national first-level industrial belts. Externally, it held high the banner of the ultimate cost-effectiveness, launched the “1 Yuan Fragrance Festival”, free shipping of best-selling factory products for 1 Yuan, red envelope cashback and other activities, attracting attention with extremely low prices that exceeded user expectations.
With the full support of Ali Group, the users of Taobao Special Edition have grown rapidly, and the number of active users will exceed 100 million by the end of 2020.
In May 2021, the Taobao Special Edition was officially renamed “Taote”, and announced in a high-profile manner that it will subsidize 1 billion yuan, launch an official subsidy zone and services that pay for what you buy, and buy more and get more back. Showdown with Pinduoduo.
Congenital insufficiency, small loss
The high-handed style has earned Taote the nickname “Pinduoduo II” among consumers, but in the eyes of e-commerce practitioners, the difference between the two is extremely obvious.
The first is congenital deficiency. Due to well-known reasons, Pinduoduo’s famous “cut a knife” model is extremely dependent on the fission of social software headed by WeChat. However, Taot not only cannot spread directly through WeChat links and small programs like Pinduoduo, but even uses WeChat to pay. It’s all a luxury. This is also the reason why, from the very beginning of its establishment, Taote has directly “compared prices” without engaging in routines, emphasizing the interactive gameplay of games and earning money from red envelopes as its marketing selling points.
Source: Zheshang Securities
This also directly led to the high cost of customer acquisition of Taote. According to public information, in 2016, the customer acquisition cost of Pinduoduo’s new users was only 10 yuan per person, while the customer acquisition costs of Taobao and JD.com reached 166 yuan and 142 yuan respectively during the same period.
By 2020, before Taot was promoted to the stage, Pinduoduo already had 700 million users, had already completed the first round of coverage of the sinking market, entered the normalization of tens of billions of subsidies, and sold Apple at a low price At the stage when mobile phones are used to attract high-order customers, even its customer acquisition cost has reached 203 yuan per person. Although there is no separate data for Taote, which relies entirely on advertising, the customer acquisition cost of Alibaba has always been much higher than that of its peers. Compared with the 10 yuan/person when Pinduoduo rose, it is very different.
This is also reflected in Alibaba’s financial report. Its financial report for fiscal year 2021 shows that the total loss in the strategic investment field for the whole year was 34.6 billion yuan, including investments in new retail, local life services, and Cainiao Network, as well as losses related to the “vigorous investment” in Taobao’s special edition. “.
Perhaps it is precisely because of the group’s high investment that Taote is under heavy pressure to generate income.
On the other hand, in the eyes of many e-commerce practitioners, another obvious difference between Taote and Pinduoduo is that the commission is too high.
Lone wolf, an online celebrity shop owner who has been in the industry for many years and has in-depth research on various e-commerce platforms, is extremely upset about this. In his opinion, Taote, as an e-commerce platform focusing on cost-effectiveness, charges 3-5% commission deduction points equivalent to Tmall for merchants, which is simply unimaginable. No matter whether it is the direct supply from the place of production advertised by Taote or the direct sales from the factory, when the involution is so serious, most sellers can only get 3%-5% of the profit when they participate in Taote activities. Without income, passively fall into a cycle of selling more and more losses, and the quality is getting worse and worse.
This also directly led to the fact that Taote’s price-performance ratio was not as high as claimed, and made the most active and experienced small and medium-sized sellers lose interest in opening a store in Taote—you know, Pinduoduo’s commission deduction point is only 0.6%, the same cost and the same price, it is obviously more profitable for sellers to settle in Pinduoduo.
Source: @城市地方
Comparing the two phases also produced an unexpected result.
Taote, which charges high commissions, has inherited the tradition of Tmall, and is very caring for merchants who settle in. When encountering disputes with buyers, it often takes the side of merchants, raises the stick high and gently lowers it. Check the app market to download the Taote APP. In the evaluation of the page, you will find that there are many negative reviews focused on the untimely delivery, the wrong product, and the problems that cannot be solved by looking for the platform.
Jiangxi Radio City Live column reported such a case in 2021: Mr. Li, a consumer in Nanchang, Jiangxi, bought a “Little Swan” brand washing machine on the Taote APP, but what he got was the counterfeit product “Swan Mountain”. After buying fake products, Mr. Li wanted to go through legal procedures to defend his rights, but found that there was no way to defend his rights. He contacted Taote many times to solve the problem but could not solve it. @城市地区报告reporter visited and investigated on the spot, and found that from sales to production, the registered company was all “empty shells”.
Subsequent reports showed that these fake “shell” companies falsely registered through the intermediary and passed the platform review, that is, the intermediary gave the customer an address for registration, and the customer paid rent every year to keep this address, but actually worked at another address. At the end of the report, the City Live column stated that Taote used the slogans of “affordable” and “low price” to attract users in the sinking market, but opened the door too broadly. It only needs a business license to sell things on the platform, which has no effect. Due regulatory obligations, so that “Little Swan” can be sold as “Swan Hill”. No matter how good the platform model is, and no matter how great the discount is, it is only the “entry point” to realize sales. To achieve sustainable development, it depends on trust and word of mouth. “Don’t smash your own brand for the sake of rushing sales, then it may be beyond redemption.”
Pinduoduo, on the other hand, is almost merciless to the sellers who settle in. If the delivery is not timely and the logistics is too slow, if the seller is a little careless, the platform will deduct a deposit ranging from 5 yuan to 10 yuan, and send it to the buyer as a cash coupon. Even if the buyer applies for “refund without return” on the grounds of dissatisfaction after receiving the goods, he can get the firm support of the platform. After this operation, everyone in the seller is in danger, but the satisfaction of buyers has been greatly improved.
Dalin used to be a loyal user of Taobao. He also dismissed Pinduoduo in the early days. He didn’t download it until he found out that his friends who opened stores on Taobao went to Pinduoduo to shop. According to him, he bought dozens of products that he didn’t like, and returned them for refunds, and he never encountered any excuses.
Pinduoduo’s continuous growth of active users is probably related to this, and it has attracted more merchants to settle in. Statistics show that in April 2021, the number of active merchants on Pinduoduo was 8.6 million, and by April 2022, this number rose to 14 million, an increase of 62.7%.
Embarrassing positioning, the road ahead is lost
Blocking Pinduoduo, but not comparable to Pinduoduo, the real embarrassment of Taote lies in its positioning itself.
What many people don’t know is that it is not the first product launched by Ali to fight against Pinduoduo. In 2019, Juhuasuan once called out a subsidy of tens of billions, which was tough with Pinduoduo; and as early as 2018, it once managed Taobao’s special edition “Daily Special Sale”, which can still be found on Taobao’s homepage, and even The concept of “optimized factory goods, factory direct supply” promoted by Taote has a corresponding “Tao Factory” channel on Taobao. As an ordinary consumer, it is difficult to distinguish the difference between them, so that, under many reports about Taote, there are curious netizens who ask, why do Taobao have Taote?
The same question, at the Alibaba 2021 fiscal year performance conference held on May 13, 2021, someone specifically asked Zhang Yong, Chairman of the Board of Directors and CEO of Alibaba Group. At that time, Taote had just changed its name, and a subsidy of 1 billion yuan was on the way.
Zhang Yong’s answer is, “China is a country with a large population and a vast territory. There are many different types of consumers with different purchasing power and consumption preferences. Therefore, we are committed to providing consumers with more A platform to meet the needs of different levels of consumers. The value proposition of the Taobao Special Edition is very clear. It is aimed at price-sensitive consumers and provides them with cost-effective products. On our flagship platform Taobao Mobile, We offer more diverse product choices, more fun experiences, and more consumption levels. Therefore, their value propositions are different.”
“The value proposition is different”, a very idealistic answer. It can be understood that Ali wants to build it into a shopping platform for users who are only sensitive to prices, excluding those users who want more diverse products and have more consumption needs, and this happens to run counter to Pinduoduo up. After sitting on 800 million active buyers, Pinduoduo is climbing upwards, trying to build itself into the platform that Zhang Yong said has “richer and more diverse product choices, more fun experience, and more consumption levels”.
In this sense, it should not be Taote, but Taobao, who is fighting against Pinduoduo.
The realistic answer is also cruel. After a year of full support, although Taote’s annual active consumer users exceeded 300 million, 80% of them were former users of Taobao and Tmall. Of course, Alibaba officials still have an idealized statement about this, “More than 20% of Taot’s annual active consumers are users who have never shopped on Taobao or Tmall before.”
These words are beautiful, but compared with the description in Alibaba’s third quarter financial report for 2022, “various cost reduction and efficiency enhancement measures have received initial results this quarter, and Taote’s loss scale has been significantly reduced”, the latter seems to be closer to Alibaba. The current true attitude towards Tao Te is shrinking and reducing losses. This also means that Taote is getting farther and farther away from catching up with the goal of sniping Pinduoduo.
The chill among them has been felt by the merchants who settled in Taote very early. As a seller with stores on Tmall and Taobao, Liu Yan received an invitation to settle in Taote in early 2021. After more than a year, she felt that the traffic in the second half of this year dropped sharply, and she began to regret that she should not waste her energy on Taote. Online, “Taobao’s traffic is decreasing, let alone Taote”.
Source: Douyin Live
Traffic anxiety is the trouble of the whole Ali.
With the rapid rise of interesting e-commerce companies headed by Douyin Mall, a large piece of the traditional e-commerce cake has been taken away, forcing Taobao and Tmall, which originally insisted on platform positioning, to invest a lot of resources to increase live broadcasts, video , Master the content of planting grass to cope with consumption changes under the new situation. For Taote, which is defined by Ali’s senior management as only providing consumers with cost-effective products and does not need a richer experience, it seems more unusual and lonely at the moment.
Whether to continue to invest and use far higher customer acquisition costs than rivals in exchange for the growth of “1/5” non-Amoy users, or to maintain the status quo and introduce a similar advertising space bidding method into Taote, using names such as “price comparison king”, Driving merchants to involve and charge marketing fees to contribute profits to the group has become a difficult problem for Ali’s management.
On November 25th, Taote started a new round of investment promotion, and offered three major entry benefits: reduced service fees, reduced security deposits, and free promotional coupons.
But in contrast, go directly to Taobao, isn’t it good?
*This article is written based on public information and is for information exchange only, and does not constitute any investment advice
(Disclaimer: This article only represents the author’s point of view, not the position of Sina.com.)
This article is reproduced from: https://finance.sina.com.cn/tech/csj/2022-12-03/doc-imqqsmrp8434252.shtml
This site is only for collection, and the copyright belongs to the original author.