In China, a new battle for rural customers starts, Alibaba VS Pinduoduo.
Recently, Alibaba has relaunched Juhuasuan, as a way to prevent too many Ali users from turning into Pinduoduo users. Subsequently, Juhuasuan launched a “ten-billion-yuan subsidy” plan in December 2019 to compete with Pinduoduo’s market operation strategy. Juhuasuan’s general manager of operations said: “Juhuasuan’s “ten-billion-yuan subsidy” will continue, and will be further intensified in the future.
Behind Juhuasuan’s “ten-billion-yuan subsidy” is the support of Alibaba platforms such as T-mall supermarket and T-mall international. On Dec 12, Juhuasuan successfully attracted more than 5 million visitors. In sinking markets in third-tier cities and below, year-on-year transaction growth reached 41%.
Juhuasuan provided a brunch of products in this activity, including Apple, Dyson, SK2, and other top brands. For Pinduoduo, the competitive pressure is very obvious, because Juhuasuan touches the core interests of Pinduoduo. At this stage, Juhuasuan, even if only to share part of the traffic and orders of Pinduoduo, is a very cost-effective input-output business.
The expansion of Pinduoduo’s user scale, in essence, simplifies the sinking market. Through the fission effect of WeChat’s resources, the expansion of users is multiplied. Pinduoduo proved that the sinking market can be fully e-commerce, and have strong purchasing power.
Pinduoduo currently has a serious platform operation problem: mature e-commerce users find that the Pinduoduo shopping experience is not very good, because they cannot ensure that the merchants will deliver goods on time and that they can buy their desired products. This is very different from Alibaba’s platforms.
However, the platform rules are not very easy to optimize. It takes time and a lot of cases to improve and to repair the accuracy and fairness of the rules of the platform.
In Pinduoduo’s Q3 financial report of 2019, the loss caused by Pinduoduo’s marketing cost is still increasing, and the overall data of the financial report is not satisfactory. The “Ten-billion-yuan subsidy” plan increases the user base but does not necessarily increase the frequency of purchases.
Pinduoduo’s development model has overturned the previous rule of the e-commerce industry, that is, Pinduoduo first completes a huge user base, then upgrades the comprehensiveness and diversity of the user base, and finally solves the problems of the platform and business services.
The goal of Juhuasuan is to come up with the same marketing strategy to disrupt Pinduodu’s phased strategy.
Pinduoduo completed the user base reserve before 2018. With the expansion of business scale, Pinduoduo’s supply capacity has been unable to meet such a large user population.
Therefore, Pinduoduo’s current strategy should be to strengthen the operation and service quality of platform merchants. However, Pinduoduo has made expanding its user base a strategic priority. The competition between Pinduoduo and Juhuasuan has turned into a scramble for e-commerce population resources.
Let’s wait and see what the outcome will be.
See more about China’s e-commerce here.
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