Recently, the news that Pinduoduo's overseas platform Temu has landed in the US market has begun to attract more and more attention. Many domestic e-commerce sellers have given great hope to Temu. At the same time, several sellers who have been fighting in the cross-border e-commerce industry for many years recently told Hui.com that they are very worried that Pinduoduo will introduce domestic sellers into cross-border e-commerce on a large scale. market, and the price war in the industry has further deteriorated.
Today, Huiwang will give you an in-depth analysis of the reasons behind Temu's entry into the United States from the perspective of overseas consumers, and how much impact this platform has on overseas markets and every Chinese cross-border e-commerce seller.
Part 1: Pinduoduo copied the secret of making a fortune in China to the United States
Pinduoduo should be the fastest running dark horses after Taobao, Tmall, JD.com and Douyin in recent years. But I have never bought anything on it. The main reason is that the price is ridiculously cheap, and each order will either make the merchants lose money, or make Pinduoduo investors lose money. But what surprised me was that my own parents, who didn't like to take advantage, became loyal customers of Pinduoduo. Ask them why this happened, they said: Pinduoduo:
The price is cheap and more importantly, the service is very good, the delivery is very fast , the return and exchange are very convenient
I like to study the past and present of each company and its unique business model, so I have also read a lot of legends and introductions about Pinduoduo. Maybe I am wrong here, but I can describe the business model of Pinduoduo I have seen. share with everyone
Why does Pinduoduo grow rapidly in China?
1. The price is unimaginably cheap, and the reason why it can be cheaper than other platforms is that, in addition to the merchant's profit, many times it comes from the platform's subsidy to the merchant, that is, Pinduoduo subsidizes the price of goods.
2. Consciously reduce the review of goods in the early stage. Here we mainly talk about some goods that other platforms do not allow to sell, such as: goods that may have intellectual property problems, knives and other dangerous goods
3. WeChat internal traffic support. Huang Zheng, founder of Pinduoduo, often calls Tencent "Dad", and he is "one of the children" in N projects invested by Tencent. Because of the need for customers to invite customers to copy quickly through the above low prices, Pinduoduo must rely on a communication tool that is widely used by customers, that is, "WeChat".Therefore, when Tencent banned most users from sending product information or external links, it just made room for Pinduoduo to develop.
Pinduoduo's operating model in the United States
According to Hui.com's observation, Pinduoduo is working hard to copy the above domestic fortune model to the United States.
1. From the screenshot below, you can see that Pinduoduo’s discount is very strong, the average price is only 10/10 of Amazon’s, and free shipping!
2. Constant discount coupons will always make people feel cheap and cheap
3. At the same time, through the share button of temu, you can see that Pinduoduo is encouraging consumers to share through Facebook, Instagram, WhatsApp, Twitter, and SMS to gain fission.
The second part: The American platform is eyeing, Temu is startling every step of the way
I remember when Amazon announced its withdrawal from the Chinese market in 2019 (the first Amazon public event in China was co-hosted with Hui.com), many people laughed at Amazon, believing that eBay and Amazon, the originators of e-commerce platforms, were all used by local Chinese platforms. chased away. In recent years, the price-performance ratio of domestic electric vehicles has far surpassed that of Tesla, so that domestic taxi platforms and ordinary consumers have purchased electric vehicles of domestic brands. At the same time, Tesla closed its location in Beijing last week, which is also the number one in China. A showroom would also make us feel like we beat Tesla, the #1 big brand in EVs.
However, you may need to look more closely at the
Overseas technology companies vs Chinese technology companies: hard work, money?
1. Every listed company in the West, especially in the United States, will be closely analyzed and paid attention to by the board of directors, shareholders, securities regulators, and news media. When the company's operating costs rise but profits decline, no matter how large the sales are, it cannot be sustained. . So they will choose to suspend related businesses;
2. Whether it is Amazon or Tesla, the market in the eyes of the world is the world, not a country. So they will always compare and balance the investment in various regions, so as to think which one has a higher rate of return, increase investment, and launch a market with a low rate of return on investment;
3. We see that Chinese companies seem to think that as long as they defeat these American or overseas companies in China, they can eat the entire Chinese market, so they will continue to subsidize and do marketing desperately. The higher the sales of the company, the greater the loss. Ultimately, if we look at domestic e-commerce platforms, e-commerce sellers, express delivery companies, and electric vehicle companies, we will find that after the departure of American and overseas companies, the involution is more serious.
Pinduoduo seems to be inherently inadequate in the United States
Temu's entry into the United States is undoubtedly a dangerous move in the context of the saturation of the domestic e-commerce market and the decline in online sales after the domestic economic slowdown. In the first step, the domestic advantages of Pinduoduo we mentioned are almost invisible in foreign countries.
First of all, Temu's overseas price advantage is not obvious
The price of Temu may be lower than that of Amazon and eBay, but it is not low compared to AliExpress, which has been in overseas markets for many years. Moreover, there is competition from low-cost platforms such as Wish.
Secondly, Temu's free shipping is effective in 5-15 days, which is basically the speed of an international small package . If you want fast delivery, consumers will need to pay an additional $12.90 courier fee for a $3.98 item, and the time limit will also be 5-10 days. Free shipping requires a single order purchase of $99.00 or more.
Looking at Amazon, the delivery time for all Prime orders in the US market is 24-72 hours, and Prime members are free of charge. Even if there is a minimum order quantity, it only costs $25, which is 1/4 of Pinduoduo . What's more, Amazon can now basically do free shipping on most items with no minimum purchase amount.
Looking at the return and exchange services, of course, Pinduoduo is very mature in China, but it is sent to the United States through the warehouse in China. We are not sure about the Americans who use return as part of their purchasing habits. If there is a return or exchange, Temu can give them. What kind of customer experience to provide .
And Pinduoduo basically cannot rely on WeChat to develop overseas. According to the current sharing function of the 5 sharing platforms, 3 (Facebook Messenger, Instagram Direct, WhatsApp) belong to Zuckerberg's Meta, Twitter belongs to Elon Must, and SMS belongs to Apple , Google's mobile phone system, and telecom operators like AT&T. It is hard for us to imagine how fast such a fission would be .
The most worrying thing may be the copyright and security issues that may arise after the products of the merchants on Pinduoduo. Everyone is afraid of infringement complaints on Amazon, Walmart, and eBay, and Amazon forces sellers to purchase commercial insurance, which is actually one thing American sellers do when selling goods in the United States. Therefore, overseas commodities are more expensive than domestic ones. An important reason is that risk costs and operating costs are much higher than domestic ones. Temu's low price, platform subsidies, and large marketing investment strategy would have brought huge financial pressure to Pinduoduo. Once infringement or security problems occur in the United States, it is likely to bring Temu's reputation and economy. huge loss.
Part 3: Pinduoduo bets on low prices, byte bets on content
In fact, not only Pinduoduo, ByteDance also recently launched a new fashion platform in the US market, called: IfYooou ( /qnhic ). Compared with Pinduoduo, ByteDance seems to be much more low-key. Ming did not hype it through the media, nor did it generally attract investment from Chinese sellers. This may be ByteDance because TikTok has been questioned by the US media and Congress to understand the US market more, that is: in the US, low prices do not work!
Therefore, in terms of positioning, ByteDance did not make a multi-category platform like Pinduoduo, but chose a very vertical platform "fast fashion apparel" . Its target opponent is not Amazon, but Shein, whose market value in China now exceeds that of Zara and H&M.
From the perspective of ByteDance, many Chinese companies are hoping to quickly gain market share with low prices and overwhelming publicity, but looking at the status quo of the previously ambitious AliExpress and JD.com in the United States, it is obvious that perhaps Shein and TikTok are The only two successful companies in the US market, and only Shein is truly the only e-commerce company .
Therefore, ByteDance is very clear: the price attribute of American consumers is weak, while the star and social attributes are strong.
This is not to say that American consumers are indifferent to prices, but that American consumers are used to seeing low prices. As a result, for a long time, various large supermarkets and e-commerce platforms have not only competed for prices, but also issued credit cards to consumers to enhance their stickiness and repurchase rate.
However, since social platforms originated in the United States and thrived in the United States, and now vertical social platforms are emerging in an endless stream in the United States, content marketing and word-of-mouth social platforms are extremely important in the development of the American market.
In the screenshot below, you can even see that Shein has a lot of solid social brand ambassadors, but they are not well-known models and influencers (Top-down), but many ordinary consumers (bottom-up).
It is believed that after Thanksgiving, Black Friday and Cyber Monday in two weeks, the competition between e-commerce platforms in the United States will be more intense due to the addition of Temu. We will also pay closer attention to the trends of each platform and Western consumers, and conduct more analysis and sharing with you.