Recently, the news about Pinduoduo's market value surpassing Alibaba has been hanging on the hot search. said that it was overtaking, but in fact, it was only for a short time. Last Wednesday, November 29, Pinduoduo's market capitalization on the Nasdaq jumped to $192 billion. At the time, Alibaba's market capitalization was $191.5 billion, $500 million lower than Pinduoduo. However, this situation did not last long. As of the same day**, Alibaba's market value was $1.9 billion higher than Pinduoduo.
In fact, who has hundreds of millions more than who is no longer the point. Rather, on the whole, Pinduoduo has the ability to keep pace with Ali. In addition to market capitalization, Pinduoduo has another statistic that is very noteworthy, which is per capita income. According to previous statistics, in the first three quarters of 2023, Pinduoduo's per capita income will be 12.22 million yuan. What concept?It is 707 times, is Ali's 417 times.
Why did Pinduoduo suddenly grow so much?Some time ago, **Bad Reviews" did an analysis. In the third quarter of 2023, Pinduoduo's revenue increased by 94% year-on-year, and net profit increased by 47%. Among them, the growth of domestic e-commerce business is about 40%. But it's not the business that's growing the most. In their financial report, the largest increase is called transaction fee income, with an increase of 315%. This transaction fee income mainly consists of two businesses. The first is to do the community's most important grocery shopping, and in the past year, the fluctuation of Duoduo grocery shopping is not very large. Therefore, this growth is likely to come from the second business, which is Pinduoduo's overseas e-commerce business Temu.
Although Pinduoduo has kept the details of Temu's performance secret, according to market agencies, Temu is now the fourth most visited retail** in the United States, behind Amazon, Walmart and eBay.
How did temu's growth come about?You know, they only went online in September 2022, and it's only a little over a year now. There are many analyses of temu on the market, and we won't talk much about those specific operational details. Just talking about the two key decisions of temu, even if you don't do e-commerce, you may be able to get a little inspiration.
The first is Temu's advertising strategy. Some people may still remember that in February 2023, Temu spent $14 million to play two 30-second commercials at the Super Bowl, known as the American Spring Festival Gala, with an average of $230,000 per second, breaking the record for the most expensive Super Bowl advertisement. And it is said that Temu is already planning to continue advertising at the Super Bowl next year.
At first glance, you might say, isn't this just that people have a lot of money?What is there to analyze?
However, if we take a look at the Super Bowl, it's probably the best deal Temu can spend.
First of all, the Super Bowl's secondary transmission effect is extremely strong. You advertise on other platforms, and it's over. However, the Super Bowl ad, from recruitment, confirmation, to final release, has a lot of tracking coverage at every step. How long is this transmission cycle?For example, not long ago, BMW confirmed that it will release a new commercial at the Super Bowl in 2024, when celebrities will appear. As a result, before the advertisement came out, there were already a lot of ** people who began to guess, who will this celebrity be?You see, it is difficult for ordinary advertising to have this long-term impact.
Another example is the advertising for the Super Bowl, which has a regular inventory every year. Like what's the most expensive Super Bowl commercial, the funniest Super Bowl commercial, and so on. That's right, as long as the Super Bowl is still going on, this inventory will not stop. And every year when taking stock, if there is no bigger financier in the follow-up, then you will see that the most expensive ad in Super Bowl history is TEMU in 2023, which is also the youngest brand in Super Bowl advertising.
To put it bluntly, if you vote for someone once, they can't wait for you to promote it for a lifetime.
Second, the Super Bowl has laid a foundation of credit for Temu's advertising in other channels. Because of the Super Bowl endorsement, it is not so abrupt for temu to advertise elsewhere, after all, everyone at least has a familiar face. According to the calculations of relevant institutions, so far, 46% of Temu's Internet advertising expenditure has been invested in Facebook, 22% in Instagram, and 15% in YouTube.
You see, when it comes to doing business in the past, many people like to quote the sentence that the flowing water does not compete for the first, but the competition is endless. However, from Temu's advertising strategy, you can clearly see that when it comes to advertising, you have to have both a blockbuster and a lot of talk.
Okay, so this is the first key move we want to talk about temu, the advertising strategy of saturation attacks.
The second key move is full custody. This is very similar to Pinduoduo's business model in China. The so-called full custody means that the merchant only needs to provide the goods, and as for the later operation, sales, and promotion, all of them are handed over to Temu to complete. From this point of view, it is not so much that TEMU is an e-commerce platform composed of many merchants, but that it is a huge e-commerce store in itself.
For example, when you buy something on temu, you will have the same feeling as on Pinduoduo, that is, the presence of this part of the store is particularly weak. You see, when you buy something on other platforms, the store is a particularly important link. A lot of stores have to work hard to save reviews and crowns. You know, every action is a cost, and it will eventually be added to the commodity. As a result, the more merchants settle in, the more fierce the competition, the more merchants will invest in advertising, and the more these investments will be reflected in the markup of the goods. Note that in this process, even if every merchant is trying to maintain low prices, the overall water level is still there.
However, temu's logic is that the merchant only acts as a ** merchant. You provide a product first, and temu is responsible for verifying**. They'll research other channels to make sure yours is the lowest price. Next, do a quality check on the product. At the same time, the merchant also needs to pay a deposit to temu, in case there are follow-up consumer complaints, and the problem is found, you can use the money to pay.
After completing the previous few things, a product can be listed on temu. As for the back, the merchant doesn't have to worry about it, it's all left to temu. In this model, merchants do not have to advertise in order to grab customers, which saves a lot of money. Note that this saving is not only reflected in the fact that a few items have become cheaper, but also in making the ** water level of the entire temu significantly lower than that of other platforms.
In other words, what Temu really has done is not only the cost of logistics and promotion, but also a considerable part of the cost of involution between merchants on the platform.
This is Temu's second key action, using the full custody model to smooth out the cost of involution between merchants and lower the overall water level of the platform.