WeChat***壹番金融 (ID: Finance Yifan), Wen Taishi James.
1688, which has been in the limelight recently, has become a wonder soldier in Taotian.
*And JD.com's new "refund-only" clause came into effect this week, and JD.com released the news of "salary increase for all employees" yesterday, which shows that the two old e-commerce giants have not given up and Pinduoduo are just right.
And 1688's many mentions in Ali's strategy are also seen as a sharp weapon for Taotian to fight against Pinduoduo on the low-price battlefield after Taote. Compared with Taote, 1688's biggest improvement is that it has solved the problem of traffic**, caught the "splashing wealth" from Xiaohongshu, which has seen the soaring attention of young people on social **, and is also differentiated from Pinduoduo for the positioning of small B merchants for big brands.
At the same time, Ali's requirements for 1688 are not only here, but also dig more imagination about going to sea in it.
However, in the overseas market, even as a strategic innovation business of Alibaba Group, 1688 still has to consider the business differentiation from Jiang Fan's side. In contrast, Pinduoduo, which drove the backbone of Duoduo to Temu, the difference in the organizational ability of the two is still more obvious.
"1688 Strict Selection", which was launched last year, is the main column of 1688, and its current sales account for roughly half of the total sales. 1688 Yanxuan's positioning is Generation Z, where "the wallet has not yet bulged", and the new middle class with a "deflated wallet", which shows that it has no intention of competing with Pinduoduo for absolute low prices. On top of this, the club stores focus on flat substitution, with an emphasis on white label products that pay attention to quality. To do "conditional low price", 1688 needs to find an anchor point for a good price.
Pan Jie, the person in charge of "1688 Strict Selection", found that about 60%-70% of the ** merchants of goods there were on 1688. Therefore, "Sam Ping" has become a concept out of the circle.
This positioning of 1688 is determined by the traffic **. It is Xiaohongshu, which gathers a large number of Generation Z and the new middle class, that has made 1688 popular, and the users on both platforms are mostly women. According to data released by 1688 on the 5th of this month, the proportion of "Generation Z" between the ages of 25 and 30 is close to 50%, while the proportion of "new middle class" between the ages of 30 and 35 is 45%. Among them, the small Bs who are actively building private domain e-commerce undoubtedly play a more important role.
According to data from 1688 Yanxuan, 64% of Class B buyers purchased more than 90% of Yanxuan's transaction valueThe remaining 36% of Class C buyers are also motivated to buy as a side hustle or to try to start a business.
As the current public domain traffic gradually touches the ceiling, the e-commerce sales channel has a tendency to become more and more fragmented, and the small B merchants with the rise of the private domain have nourished 1688. If this uniqueness is well played, it can be regarded as a major feature that distinguishes it from Pinduoduo.
These small B users are often not professional, and their purchasing habits are similar to those of C users, so 1688 has made great efforts to align the platform's purchase standards with B2C e-commerce after the current president Yu Yong took over last year
In the past, 1688 defaulted to 72 hours of delivery, but now it requires 48 hours, and 24 hours is also encouraged by marking and giving trafficInquiries from Class C users are also required to respond within 3 minutes, otherwise the platform's AI customer service will intervene and the customer will be assigned to other merchantsIt also breaks the practice of non-return of wholesale business and retail items, and more than 4 million items provide free shipping service for a certain amount.
In the selection of standard products, 1688 favors products with new technology, new materials, new functions and safety-driven categoriesIn terms of the selection of non-standard products, 1688 keeps up with the fashion trend.
1688 does not currently operate a large number of agricultural products like Pinduoduo and Sam's Club, but Pan Jie, the head of 1688 Yanxuan, has revealed that it is likely to be involved in the future.
1688 usually endorses two types of labels: one is completely homologous, such as the real Sam's foundry;The other type is factories that can achieve the same quality as international brands, such as manufacturers that can highly replicate lululemon's foundries in Turkey and Afghanistan.
For the intellectual property issues that may be involved in the first category of goods, 1688 usually asks the factory to make adjustments in packaging and grammage, so as not to destroy the original channels of others.
However, the 1688 model has to expect a continuous influx of new merchants, because once a small business grows into a large business, or is familiar with the ** chain, it is very likely to bypass the platform and contact the factory directly.
According to 1688's own calculations, its annual turnover is 800 billion yuan, but the turnover of bypassing the platform is as high as 1 trillion yuan.
Compared with Taote, which requires a large amount of subsidies, the naturally grown 1688 is obviously more suitable for the Internet industry where the purchase volume is ebbing, reducing costs and increasing efficiency.
Taote, which lacks traffic, also withdrew from the direct sales model "Taote 100" and "Taote 10" at the beginning of last year, but the supply side is too heavy, and the demand side needs to have stronger purchasing power.
Before Taote could find a demand that matched its direct sales, Ali said in the financial report that it would let Taote "narrow its losses" and marginalize its business.
If 1688 can connect with WeChat, even Douyin, and Kuaishou's small B users, and make enough money from "selling shovels", then it is the greatest contribution it has made to Taotian.
From January to November 2023, the number of 1688 cross-border registered buyers increased by 76% year-on-year. This is also its next main battlefield.
The 1688 Vietnam station, which was launched at the end of October, is the product of the cooperation of the Velacorp group in Vietnam in 1688, and this model will be adopted in South Korea in February next year, where the joint venture DC Virus will operate.
Yu Yong, the current president of 1688, was the co-general manager of Alibaba's international website before taking office last year, and has 14 years of cross-border experience, so he is no stranger to overseas markets. However, 1688's cross-border business is still limited to the 2B field, which is not only based on its own strengths, but also to distinguish it from Alibaba's other cross-border businesses.
1688's main business abroad is to do "agency procurement". It provides a cross-border version of the API interface, which imports the pallet information of 1688 into various ** and provides it to buyersIt also provides AI technology "Xunyuantong" that can translate and search images.
Most of the services used by 1688 are procurement agents or service providers between domestic factories and overseas buyers, which is equivalent to the B2B2B modelAlibaba International, on the other hand, is a B2B model that directly connects the first and last two stages.
1688 belongs to Taotian Group, while Alibaba International Station belongs to an international digital business group under Jiang Fan's control.
The predecessor of 1688 Yanxuan, "Factory Goods Pass", practices the popular "full custody" model in cross-border e-commerce, and the docking of small B is also because of scattered consumer demand, and is practicing the popular "small single quick response" in the field of cross-border e-commerce.
Although Wu Yongming, CEO of Alibaba Group, positioned 1688 as a strategic innovation business, he himself did not intervene in Alibaba's overseas e-commerce business like he directly served as the CEO of Taotian Group, so 1688 is still restricted in overseas business expansion, and it may be difficult to catch up with this wave of cross-border "full custody" trend driven by Temu and SHEIN.
There are 1.03 million cross-border merchants on 1688, far exceeding the more than 200,000 on Alibaba's international stationAs of November this year, the number of 1688 cross-border registered buyers exceeded 5.94 million, far less than the 40 million announced on the official website of the international station on December 16.
Theoretically, if these two companies are integrated with each other, they may be able to achieve the effect of "1+1>2", but due to the division of labor of large groups, this integration is very difficult to achieve.
Overseas, the model of temu, shein, etc. is more similar to 1688, and with the rise of these giants, the competition in overseas markets is bound to become more intense.
Although the results of 1688 are in the eyes of Wu Yongming, from his current layout, ** is its real main battlefield.
For Taotian and JD.com, which focus on brand goods, if they want to do "low price", they still have to think of ways to differentiate their business. Before, **Tmall integration was a strategy, and independent Taote was pinned on high hopes;Jingdong also has Jingxi;Even Douyin e-commerce divided brand merchants who pay more attention to GMV and white-label merchants who pay more attention to order volume into two groups: A and B, in May this year.
Although 1688 is currently allowed by the group to engage in 2C business in China, with the best efforts to enter the cost-effective market, 1688 can only cooperate in the business, take the initiative to adjust the scope, and strive to make a distinction.
However, Ma Yun replied to worried employees on the intranet on the day of Pinduoduo's earnings report on the 28th of last month, and one sentence was "Only an organization that is willing to pay any price and sacrifice is respectable."
Therefore, in addition to the future of 1688 depends on the development of private domain e-commerce, the rest depends on Ma Yun's determination and trade-offs.