Original link: https://www.latepost.com/news/dj_detail?id=1277
“LatePost” exclusively learned that Pinduoduo is preparing a cross-border e-commerce platform. The application is expected to be launched in mid-September, and the first stop is the United States. The model will follow the example of SheIn, the largest independent cross-border e-commerce station in China, and is attracting investment in all categories.
This is considered one of Pinduoduo’s most important strategic projects at present. Several first-level supervisors of Pinduoduo’s most important strategic project before, the community group buying business “Duoduo Maicai”, have been transferred to take charge of the specific matters of the overseas project.
Although it is not explicitly stated, Pinduoduo’s internal default is that the leader of the overseas project is Pinduoduo COO Gu Pingping (flower name: Abu). After Pinduoduo made it clear that its first stop was in the United States, it has determined that Zhao Jiazhen (flower name: Dongzao) and Grape (flower name), who were previously responsible for Duoduo’s first-level supervisors in multiple provinces and regions, will be responsible for investment promotion in the US market. The advertising and promotion of the new application is still led by Wu Yao (flower name: Sakuragi), the head of the main station growth, and Liu Xinqi (flower name: Zicheng) is responsible for the supply chain. This lineup is a collection of “grocery warriors” and “company veterans”.
Since May this year, nearly 80 supply chain employees of Pinduoduo have moved to Panyu, Guangzhou, which is also the starting point for SheIn to build a clothing procurement supply chain. Similar to SheIn, sellers on Pinduoduo’s cross-border platform are only responsible for putting products on the shelves and shipping them to Pinduoduo’s designated domestic warehouses. The platform selects products, sets prices, and fulfills contracts.
Similar to the way that the original Pinduoduo main site attracted small and medium-sized merchants, Pinduoduo’s cross-border platform also gave merchants a “0 yuan entry, 0 discount” discount. A person close to Amazon sellers said that the Amazon platform’s entry cost And the sales fee is very high, and merchants who use a full set of Amazon warehousing and logistics will be deducted 30% of their income.
The environment has been turned upside down, and Pinduoduo has significantly reduced its domestic e-commerce business investment in the past four quarters and continued to make profits. Entering the global market is the best option for Pinduoduo and almost every other Chinese internet company.
Pinduoduo, which was launched in 2015, relies on Alibaba’s rookie logistics infrastructure, Tencent’s WeChat traffic, and the introduction of low-priced white-brand products abandoned by Taobao and Tmall. It has met the consumer needs of hundreds of millions of people along the proven path. Qian, in just six years, has become an e-commerce giant with a commodity turnover of 2.4 trillion yuan.
Cross-border e-commerce also has a ready target to emulate. SheIn, which started out in women’s clothing, has gradually allowed consumers in Europe, America, the Middle East and other markets to accept the consumption method of buying cheap clothes across the country in the past decade, and is now transforming into a full-category e-commerce business.
Half a year secret preparation
“LatePost” previously reported that Pinduoduo, which set a record for listing speed, failed to reproduce the rocket-like growth rate in 2021, whether it was attracting new users or increasing the consumption amount per user.
DAU (daily active users) and GMV (sales turnover) are the most important metrics within Pinduoduo. Now, the number of users who open Pinduoduo every day has exceeded 400 million, and the number of users who open Pinduoduo every month remains at 830 million. The main site of Pinduoduo has spent a lot of effort on “payment conversion rate” this year. more likely to place an order.
“Peaking growth” is a definite panic for the company. Confusion about the company’s business trends not only pervades the company, but also pervades the market sentiment.
In early January this year, Pinduoduo’s cross-border overseas project sprouted out of such “anxiety”. The cross-border project was officially launched in May. The first-level supervisors responsible for investment promotion from Gu Pingping, Duoduomaicai and the main station digital went to Europe and the United States to conduct market research to learn about local warehousing logistics, local supply chain, and local users’ consumption habits.
In June, Pinduoduo had an internal discussion on “full category or small category” and whether to adopt all outsourcing of the logistics model.
A person close to Pinduoduo said that the cross-border project currently seems to be a full-category platform in the SheIn model. The reason why Pinduoduo does not have an advantage in the clothing category is that SheIn does not first focus on the clothing category. The daily turnover of the clothing category is only in the order of ten million. Just over 500 million yuan.
Huang Zheng, the founder of Pinduoduo, pointed out at the company’s fifth anniversary in 2020 that Duoduo Shopping is a “touchstone” project for Pinduoduo to “explode the tip of the pyramid”. This stems from the article “It’s Time for Huawei to Blow Up the R&D Pyramid” inside Huawei in 2016 – old employees should not lie on the credit book, they must do new business, and all employees must rejuvenate.
At that time, Pinduoduo mobilized more than 1,000 people to go to all parts of the country to prepare for Duoduo grocery shopping, accounting for 1/6 of the total number of employees.
Two years have passed, and the tough stage of Duoduo’s grocery shopping has passed. A community group buying business practitioner said that Duoduomaicai’s internal goal is to achieve profitability in areas not covered by Meituan Select, and try to surpass the other party on the basis of profitability in areas that coexist with Meituan Select. The market is still inconclusive about whether Duoduocai will be the first in the market. An analyst who has long been concerned about community group buying predicts that Duoduomaicai and Meituan Optimize will each have a market share of 40%.
Now, cross-border projects have become a new “touchstone” for Pinduoduo. Pinduoduo encourages provincial and district leaders who buy vegetables to sign up for cross-border projects. Stayed in Duoduo for a whole year. When the heads of the provinces and regions officially enter the overseas market, the regions of Duoduo Shopping will be further merged.
Zhao Jiazhen and Grape (flower name), the two first-level supervisors in charge of investment promotion in the US market in cross-border projects, have taken over more than three provinces and regions in Duoduomaicai before, while Liu Xinqi, the head of the supply chain, was the main site before. and the head of the supply chain for grocery shopping. On the sixth anniversary of Pinduoduo last year, although there was no celebration at the Golden Hongqiao Center of Pinduoduo headquarters, and Huang Zheng did not speak again, the company showed a short video to the employees of the grocery shopping business. Sharing experience, Zhao Jiazhen and Grape (flower name) both made speeches as the finale.
Following Duoduo’s grocery shopping, Pinduoduo has not launched new businesses that excite employees and the market. Cross-border projects have also made many employees excited again.
At present, only the employees at the supply chain end are devoted to the cross-border project full-time, and the employees involved in the rest of the main station are equivalent to “working two jobs”.
The cross-border project is referred to internally as “Project X” and progress remains highly confidential even internally. This is in line with Pinduoduo’s consistent style. Supervisors of each business line only need to focus on the business they are responsible for, and grass-roots employees only need to complete the assigned work indicators. Few people can piece together the company’s business profile, so that the business has a high degree of confidentiality. sex.
First stop is America
Why did Pinduoduo choose the United States as the first stop to go overseas? The United States has been the country with the largest total consumption in the world for more than 100 years, and it has obvious attractiveness. There are trillion-dollar consumer companies like Amazon in the United States, but only 14.2% of Americans’ consumption in 2021 will be online orders, and China’s 24.5% in 2021. In addition, “LatePost” learned that Gu Pingping had said internally that the e-commerce competition in the Southeast Asian market was too fierce.
CICC cited eMarket statistics in a research report in April this year. The online consumption habits brought about by the epidemic are extremely sticky. The global and US retail e-commerce sales scale and penetration rate in 2020 have achieved a significant year-on-year increase. By 2025 In 2020, it has almost a straight upward trend. eMarket predicts that the US e-commerce market will reach 1.61 trillion US dollars in 2025, with a compound growth rate of more than 15% from 2020 to 2025, which is faster than the global market.
The U.S. e-commerce market is fragmented, with Amazon accounting for 41% of the market, followed by Shopify with 10.3%; third Walmart with 6.6%, fourth eBay with 4.2%, and fifth place basically only selling expensive Apple of private label electronics.
Amazon is the daily consumption of middle-class families in the United States. At present, nearly half of American families pay Amazon $139 a year to become a Prime member and enjoy two-day delivery of goods. According to data released by Pitney Bowes, Amazon will have 8.4 billion packages in the United States in 2021, of which 4.8 billion will be delivered by Amazon Logistics.
In order to provide extremely fast delivery, Amazon employs millions of warehousing and logistics workers in the United States at an hourly wage of at least $15 (if they don’t work overtime for 40 hours a week, the worker’s monthly salary is equivalent to more than 17,000 yuan), which means that Amazon cannot do to extremely low prices. According to the 2021 financial report, the logistics cost of the goods delivered by Amazon logistics accounts for 27% of the commodity price, while the logistics cost of JD.com, which provides a similar logistics experience in China, accounts for 6% of the commodity price.
The second-ranked Shopify is also biased towards the consumption of the middle class and above. It is not an e-commerce platform. Its main business is to build e-commerce websites for consumer brands with brand power and product power. American consumers pay more attention to differentiated and customized products and brands, and have the habit of accessing websites through browsers and search engines. Shopify provides brands with a shopping experience different from Taobao, Pinduoduo, and Amazon, so that brands can not be involved in the brutal price war on the Amazon platform. The cutting-edge shoe and apparel brand Allbirds has been using Shopify all the way, and has now been listed, and has never sold anything on Amazon.
Cheaper goods are the obvious entry point, and why SheIn has a foothold in the United States.
SheIn gave up the wedding dress business in 2012, and turned to cross-border women’s clothing. She was the first to enter the US market, focusing on women’s clothing with low prices, fast new products and large quantities. At present, the main brand of the platform, SheIn, is priced at US$10-15 per item, and its high-end women’s clothing brand MOTF is priced at US$20-40. The platform also has pet brand PetsIn, etc. SHEGLAM is its independent beauty station brand.
According to data released by eMarketer at the beginning of this year, SheIn’s download ranking in the US market rose from 7th in 2020 to 2nd, with 32 million downloads, a year-on-year increase of 68%. Data from research firm Earnest Research shows that in the first half of 2021, SheIn’s share of the fast fashion market in the United States has reached 28%.
SheIn’s delivery time for goods sold to the United States is 8-12 days. SheIn’s logistics model is domestic direct delivery, all by air, overseas warehouses do not deliver goods, only returns are allowed, and returned products will enter secondary sales. SheIn has many logistics partners in each country. The cooperation model is freight forwarding. The logistics cost will be paid by the partners, and the partners will notify SheIn of the relevant operating costs such as overseas customs clearance.
The four major carriers, USPS, UPS, FedEx, and FBA, handle 98 percent of all U.S. packages. The cost of express delivery in the United States is about $12 per order. In order to increase the unit price of customers and control logistics costs, SheIn requires consumers to purchase over $49 before providing free shipping. If it also cuts in with cheap commodities, Pinduoduo will also face the problem of how to increase the unit price of customers and reduce logistics costs.
It is unclear which logistics parties Pinduoduo will cooperate with for cross-border transportation. One fact is that on August 5, Jitu Express announced that it had signed a strategic cooperation framework agreement with HNA Cargo, which has resource advantages in international routes such as Southeast Asia, Europe and the United States. Previously, Jitu has covered 13 countries and regions including Asia, Latin America and Africa, and the cooperation with HNA has made cross-border business in the European and American markets possible. Jitu, which only entered the Chinese market in March 2020, took only two years to step into the first echelon of private express delivery in China. 90% of its parcels once came from Pinduoduo, and it is not surprising that the two cooperated in the European and American markets for the second time.
This time, when going overseas to the United States, Pinduoduo’s first investment category is also the low-priced daily necessities and home textiles that it is best at in China. And SheIn has already verified in the United States the attractiveness of “fast new products, low prices, and many choices” to consumers in mature markets.
“LatePost” learned that in SheIn’s annual sales of $20 billion in 2021, the US market and the European market each account for about 25%. From the perspective of user base, customer unit price and repurchase rate, the European and American markets are the most important markets for SheIn, and they are also the first markets to be covered by Pinduoduo.
It’s just that Pinduoduo is now building a huge e-commerce platform, and the investment is much larger than the previous SheIn.
There is no ready-made cheap traffic waiting for Pinduoduo. SheIn was the first wave of companies using social network KOLs in 2011, and became the first user of Pinterest in 2013, which is also the beginning of Facebook’s social marketing dividend period. Now, 70% of consumers search for SheIn and enter the site spontaneously.
In the US market, there are two main types of advertisers, one is Google keyword search, and the other is social media represented by Facebook. A cross-border practitioner said that taking the United States as an example, the CPS (cost per order user) is about 20 US dollars, the situation in Europe is similar, and that in Southeast Asia is US$5-8.
A person close to Pinduoduo said that Huang Zheng’s way of thinking is “dare to be the queen of the world”, and the various businesses under Pinduoduo, the WeChat community group buying mini-program Kuai Tuan Tuan, learns from group solitaire, and the community group buys Duoduo to buy vegetables. What is the best choice for prosperity, and now the cross-border overseas project is learning SheIn – “verify that others have run through, and directly throw money in, there is still a chance.”
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