Fu Weigang text
Some time ago, Pinduoduo's market value surpassed Alibaba's, causing a huge shock in Chinese concept stocks and even the entire technology and Internet world.
Subsequently, Ma Yun rarely came out to respond to Pinduoduo's transcendence, and said that "I firmly believe that Ali will change and change";On December 9, Liu Qiangdong also posted a response on the intranet, "Jingdong must change".
If the time goes back to 5 years ago, a company said that it would surpass Ali, it will most likely be said to be a fool's dream, you must know that even Tencent, which has hundreds of millions of users, finally packaged its own e-commerce company to JD.com, and since then it has only been dedicated to e-commerce investment and not to end up in person - and Pinduoduo happens to be the company it invests in.
But since 2019, with the rapid growth of the number of users, the market believes that Pinduoduo surpasses JD.com, and even Ali is not an impossible thing, it is just a matter of time. Especially since November 2020, Pinduoduo has continuously surpassed JD.com in terms of GMV, market capitalization and number of users, and the number of active users is even close to Tmall.
Driven by strong performance, Pinduoduo's stock price and market capitalization have skyrocketed. There are many interpretations of the rise of Pinduoduo in the market. Searching for "why Pinduoduo is successful" as a keyword, the answers are: the founder Huang Zheng's foresight, seizing the dividends of WeChat traffic, seizing the blue ocean market of consumption downgrade, Tencent's support, and the founder's luxury circle of friends ......There is no doubt that these explanations are correct, but one of the most important factors is overlooked, and that is the platform economy, the rise of which has provided unparalleled opportunities for start-ups of all kinds.
Shoulders of giants
Starting a business is never easy, how to find your own users?How to get the payment link?Taking e-commerce as an example, a company must at least go through several links such as user registration, payment, logistics, and data services.
For a long time, it will not be easy to attract new users, and users may slip away if the registration steps are a little cumbersome. However, thanks to the platform economy, these links have been greatly simplified, and even many content startups only need to create a WeChat *** to solve it. Because registered users can use the existing ***QQ number or Alipay account, payment can be made through Alipay and WeChat payment, and data services can also be provided with the help of cloud services provided by major companies, without the need to set up their own servers. From this point of view, for many small and medium-sized enterprises, the existence of large platforms is more convenient for them than to curb them.
Pinduoduo, for example, has grown rapidly by relying on its existing platform (or even its competitors) for at least users, payments, and logistics: for example, its social network, which relies on WeChat, quickly found its own users, and authorizes logins to significantly reduce the cost of signing up for new usersIt also facilitates users' payments through third-party payments such as WeChat Pay and Alipay, making shopping smootherIt also relies on the logistics information network built by SF Express and Cainiao, so that merchants can conveniently send items to users ......As the World Bank points out in its report, The Changing Nature of Work, "The rise of platform-based markets has allowed technology to impact a larger number of people at an unprecedented rate." Individuals and businesses only need a broadband connection to trade goods and services on the platform. This 'brick-free scale' provides economic opportunities for millions of people living outside industrialized countries and even industrial areas. ”
Pinduoduo isn't the first time that a latecomer has surpassed an early comer, but it's coming faster than in the pre-platform economy era: Walmart replaced Sears as the No. 1 retailer in the U.S. in 1992, 30 years after Sam Walmart opened its first Walmart store in Rogers, Arkansas, and Sears was a company founded in 1884It only took more than 5 years for Pinduoduo to surpass the number of active users, and it was also established in 2003. It is precisely because of this that Pinduoduo has become the fastest-growing e-commerce platform in history - in just 5 years, it has built a company with 7An e-commerce platform with 88.4 billion annual active users, which was unthinkable in the past. As is often said, it took Pinduoduo more than 5 years to achieve what other companies could achieve in nearly 100 years.
If Pinduoduo had been born 10 years earlier, it would definitely not have such a rapid growth rate, because WeChat to help it start a business at that time had not yet been established. WeChat was born on January 21, 2011, and in 2014, the third year after its founding, it had more than 500 million users.
In other words, the reason why Pinduoduo has been able to grow by leaps and bounds in just 5 years is because it stands on the shoulders of giants. Today, with the convenience of social networks, payment networks and logistics networks, coupled with the creativity of entrepreneurs, they have keenly grasped the needs of users in the sinking market, making it create a record for the fastest development in the history of global retail. Interestingly, these giants include its rival Alibaba, which to date uses Alipay and Huabei as payment tools.
Competitive pressures
Schumpeter said of competition in retail: "The real competition does not come from the increase in the number of the same stores, but from department stores, chain stores, mail-in stores, and supermarkets." At the same time, he said, "Competitive pressures force — no, inspire — entrepreneurs to replace old things with new ideas, new products, new processes, new organizations." The platform economy is a product of market competition, which provides products and services that are completely different from the traditional pipeline economy through new processes and new organizations, thereby enhancing the connection between merchants and users and enriching consumers' choices. Pinduoduo's experience is a vivid footnote to the "new process and new organization".
Since the commercialization of the Internet, especially with the growth of online giants, there has been a voice at home and abroad to break the monopoly, arguing that the economic characteristics of the platform company's product market – such as network effects, economies of scale, data collection, complementary commodities or market operations – have created an unfair competitive environment or insurmountable barriers to entry for new entrants. The "dragon slaying boy who eventually becomes an evil dragon" often seen in social ** reflects this concern.
However, in my opinion, such concerns, if any, are unnecessary. Because the characteristics of the platform economy determine that it is difficult to achieve monopoly, the reason is that the low cost of user migration makes it in stark contrast to the regional segmentation caused by the special geographical location of traditional offline stores, and the platform is almost unable to make behaviors that substantially hinder competition. There are a lot of platforms that seem like they're not going to be the same, but they're going to be competitors.
WeChat, which is known for social networking, is not directly engaged in e-commerce business, but it connects merchants and users through WeChat mini programs, fully connects social platforms, content platforms and retail platforms, and realizes the intelligent connection of online and offline cross-scenarios in the retail industry. The recent story is that Douyin and Kuaishou, these short ** platforms have also joined the e-commerce war, and their market share in e-commerce live broadcast is catching up with ** live broadcast.
This characteristic of the Internet forces major platforms to improve their services attentively, and they will be defeated by competitors if they are not careful. In the United States, for example, since the beginning of the dot-com bubble, the leader of the Internet has changed several times, and Yahoo, which was in full swing 20 years ago, is now bankrupt. The same is true in China, where the gateways** that dominated traffic 20 years ago have now taken a back seat or even disappeared. In just a few short years, we've seen a shift in the seat of the internet giants, from the 90s to the early 20th century, when portals were the era, then search engines, and now e-commerce and social networks are leading the way. Even the seats within e-commerce and social networks are constantly changing, and Pinduoduo in the e-commerce field has risen rapidly to surpass JD.com, and even surpassed ** in some indicatorsSocial networks are the "headline system", which is rapidly rising and challenging Tencent's position.
An even more interesting case is the 2001 U.S. Department of Justice lawsuit against Microsoft, in which the U.S. Department of Justice, together with 19 states and the capital District of Columbia, sued Microsoft for violating the Sherman Antitrust Act, accusing Microsoft of abusing its market power to force the sale of browser software Internet Explorer in the operating system Windows, which was seen by its competitors as this Sales practices are believed to be the root cause of Microsoft's win in the browser wars, as other browser software such as Netscape N**igator or Opera requires users to use a modem to connect to the Internet** or purchase it from a software store. Ironically, however, today Microsoft is still the leader in the operating system market (where it lost the antitrust lawsuit), but it has lost its position in the browser market (where it won). Today, Google Chrome is the browser leader, accounting for about 69% of the user market share, followed by Mozilla Firefox, Microsoft's Edge and Internet Explorer together with a market share of about 15%.
The final result of this costly lawsuit is contrary to the goal of the lawsuit, and to some extent shows that the antitrust lawsuit against Microsoft was wrong, and the reason why Microsoft's browser has a high market share is not the result of ** sales, but the user's liking - there is no better product than Microsoft's browser on the market for the time being. But the huge litigation costs are ultimately borne by all users. The lawsuit also validates Judge Frank Easterbrook's theory of antitrust false positives. In 1984, Eastbrook, then a professor at the University of Chicago Law School, noted in "The Limits of Antitrust Law": "In many cases, the cost of wrongly allowing a monopoly is small, while the cost of wrongly condemning competition is great." A beneficial approach might reduce the cost of production per unit of output;The loss caused by a monopolistic practice is limited to the costs it incurs. ”
Antitrust definition
Of course, this doesn't mean that the platform economy is flawless. Especially as a new way of organization, the platform economy brings convenience to users, but also often incurs confusion, dissatisfaction and even opposition, such as merchants according to the user's income level differential pricing - in the pre-digital economy era, consumers are Xi to the unified pricing of merchants, and in the platform economy era, there may be merchants according to the user's ability to pay and willingness to pay more detailed differentiated pricing. Do these behaviors, which are called "big data killing", infringe on the rights and interests of consumers or enhance the interests of consumers, and whether they enhance or restrict competition?There are great differences in theory and practice.
At the same time, it must also be pointed out that not all acts that infringe on the rights and interests of consumers should be resolved through the Anti-Monopoly Law, and now many people resort to anti-monopoly as soon as they encounter relevant problems, and anti-monopoly is seriously generalized, and it is detached from the real thinking about these problems: most of the time, the "monopoly" often means more market share, and it has nothing to do with the four types of monopoly mentioned in the Anti-Monopoly Law. Many problems such as "big data killing" can be solved under the framework of the "Consumer Rights Protection" and the Civil Code, without the need to use the "Anti-Monopoly Law".
In eight years, Pinduoduo's market capitalization has surpassed Alibaba's, in fact, it is also providing a clearer signal to regulators: the platform economy is more conducive to market competition, not the other way around.
(The author is a researcher at the Shanghai Academy of Finance and Law).