Author | Sisyphus XXIV Pinduoduo, which has achieved profitability for six consecutive quarters, has unbelievably strong performance.The day before yesterday, Pinduoduo’s third quarterly report once again brought growth data that exceeded market expectations. Among them, the revenue in the third quarter of this year was 35.5 billion, a year-on-year increase of 65%, and the net profit was 10.590 million, a year-on-year increase of 546%. Subsequently, Pinduoduo’s U.S. stock rose 16% before the market.Even Pinduoduo’s stockholders began to take Versailles on social software: you said the big increase in the second quarter was accidental, and you said that the big increase in the third quarter did not have reference value. How can people not love such a low-key and pragmatic company?What is more worthy of attention than the performance is the rapid development of Pinduoduo’s overseas version of Temu and the imagination brought by this new platform.Since September this year, Pinduoduo has launched an overseas version of Temu, spending a lot of money to buy volume and subsidizing consumers. Through unbelievably low prices (such as $2.44 for a sweater, and free shipping), it has rapidly spread in the North American market. It opened up the situation and triggered the “human-to-human” fission transmission of overseas netizens.One month after its launch, Temu ranked first in the number of downloads of overseas e-commerce apps.It is reported that SHEIN, the second largest e-commerce platform in the United States with 120 million users, directly issued a red alert, “one”, and “never hire” employees who leave for Temu.A senior practitioner in the cross-border e-commerce industry once told the media that on the first day Temu was launched, everyone in the company downloaded the research and finally found that Temu is bringing “terrible” dimensionality reduction to the cross-border e-commerce industry hit.”I don’t know how to fight back, and I’m very powerless,” said the practitioner. After experiencing the company’s large-scale layoffs, he received an interview invitation from the Temu team.Relying on ultra-low prices and social fission, Temu stole the limelight of the entire cross-border e-commerce industry during this year’s “Black Friday”. Some people even boldly predicted that relying on Temu, the market value of Pinduoduo in the future may surpass that of Alibaba.Pinduoduo Temu’s three axes: super low price, user experience, viral marketing“Many of my American classmates will buy things on Temu, basically no more than 5 dollars, just like shopping in a small commodity market. I bought hundreds of orders in a week, and I am very happy.”Ming Jie, an international student in the US, lamented that Temu only costs $1.99 for an Amazon data cable that costs $8.99, with 30% off for newcomers and free shipping. It’s unimaginable that it’s so cheap.No matter the country, low prices are addictive. This is Pinduoduo’s simple and crude first ax to go to sea.The $3.49 slippers and the $0.89 ring compete with large American e-commerce platforms such as SHEIN and Amazon at extremely cheap prices. According to Chopper’s statistics, the prices of core categories such as home furnishing, clothing, and 3C digital on the Temu platform are about 10% of Amazon’s products.One consumer industry founder even did a data scrape—Temu’s sales rank among the top 4,000 SKUs, with a cumulative GMV of US$48 million and an average unit price of US$3.4. The top category of sales is Bluetooth headsets. Among them, the Lenovo wireless Bluetooth headset with a unit price of US$3.7 is a hit.Mingjie said that the earphones she bought also enjoy a student discount. According to the platform rules, eligible students can get a 15% discount.The second trick is user experience.In Temu, “free shipping for the first three orders of newcomers on the whole network”, and also enjoy the “30% off without threshold” discount on the basis of low product prices. Even during the Black Friday period, some products are as low as 10-30% off, which educates the United States. When users come to Temu, they must first learn how to use discount coupons, and there are various small tasks to bring users into the pit.The “90-day free return” directly tells customers that if they are not delivered in time or are not satisfied, they will be refunded, keep the goods for themselves, and try to make friends with customers.Temu’s approach has also affected other e-commerce platforms. Amazon’s member users have observed that Amazon used to offer free shipping for purchases over $35, but recently it has also started free shipping for purchases below $35. The return policy is that if it is Amazon’s internal error, the shipping fee (including customs duties) will be borne by the platform and a full refund will be made.In fact, Temu’s return policy is modeled after Pinduoduo’s in China. Returns are so convenient that refunds for undelivered products are extremely fast, and there is no need for confirmation from merchants, which is extremely pleasing to consumers.The third trick is viral marketing.Xiao Zhao, an international student, told Chopper that he first knew about Temu in September, and Pinduoduo was doing ground push in their school, and he could get mouse, hat, sports watch, etc. for free by scanning the QR code and downloading the app; online, he had seen Temu Advertise on YouTube.image source instantlyJam, who is engaged in cross-border e-commerce, revealed that Pinduoduo invested an advertising budget of 1 billion yuan in September in an attempt to break out the market. It has indeed accumulated a group of seed users, but the cost of acquiring customers is extremely high.Taking SHEIN as an example, the cost of activating a user is about 35 US dollars, which is only the advertising fee for downloading. The cost of actions such as users overcoming their psychology and successfully binding cards to place orders should cost hundreds of dollars. “Tomorrow’s traffic will be more expensive than today. Temu will only cost more.”In order to meet the performance goals, the Temu user growth group began to move the referral and reward mechanisms such as “recruiting new users” and “cutting a knife” to the United States – on mainstream social platforms such as Facebook, twitter, and Instagram, you can see There are so many old and new links, and every time you invite 3 friends, you get 150 yuan. Foreigners launched a collective action of “sweeping wool”.Moreover, when newcomers place an order, as long as they bind their bank cards, they can choose a product on the event page for 1 cent and have it delivered to their home with free shipping. “In fact, the official can send it for free, but 1 cent means that you need to bind a credit card and fill in the address. It is easy to convert users who bought back from social platforms, thereby increasing the conversion rate.” Jam said.”Cut a knife” is even more useful abroad.During Black Friday, as long as users share the Temu lottery interface with their acquaintances through social media and help each other, they will have the opportunity to draw a $50 shopping coupon. Facebook user “Maria Moni” entered the Temu group on November 20, and sent links to the group every day, and also called on everyone to send links to help each other.Due to the rapid spread of fission and word of mouth, Temu quickly gained a group of users who are willing to actively share. Melissa, an Internet celebrity with 68,000 subscribers on Youtube, mainly does unboxing evaluations of shopping website products. Recently, she released no less than 4 Temu product evaluations, with a maximum playback volume of 78,000. Amazon’s evaluation video was played The amount is no more than 10,000.In the Temu evaluation and comment area, many fans said that because of Melissa, they know that Temu is so cheap. Melissa revealed in the video that for the products she shared, as long as users place an order from the link, she can also get a rebate commission.Big merchants are fighting each other, and small merchants are in ruins?Low price and free shipping, the platform is doing charity? Are Temu merchants really making money?Pam, a merchant who sells false eyelashes, told Chopper that she made 18 orders on the first day she opened her store on Temu in early November, and each of the 9 products on the shelves had sales. More than 100 orders, as long as the product is on the shelves, it will be out of stock.Pam was able to get through the cold start quickly because she had accumulated a group of fans in the Amazon store before. For the same false eyelashes product, Amazon is priced at $9.9 and Temu is $2.49, a difference of nearly 4 times. Pam said that the profit is the same. Most of my money was burned by advertising, so I switched to Temu, at least there is natural traffic.”Speaking of Temu, in fact, the platform did not copy Pinduoduo in all aspects, but followed SHEIN’s self-operated model: the role of the seller is the supplier, without pricing power, the platform sets the price for sales, and then settles with the seller based on the supply price.The advantage is that merchants do not need to pay any fees to settle in, 0 yuan to settle in, 0 commissions, and no complicated operations are required. You only need to confirm the selection and price with the corresponding investment promotion person, and the platform bears all expenses after entering the warehouse.Many Amazon and AliExpress sellers have a new way of playing: using Temu as a supply chain. The method is to link on Amazon and place an order on Temu after the order is placed, so as to arbitrage. This is done because the retail price of some products on Temu is cheaper than their purchase price.A seller gave an example, a bag, AliExpress 22.49 US dollars, his purchase price is 1.5 US dollars, Temu only only 0.3 US dollars free shipping, “Even if the customer doesn’t like it, the refund will go through Amazon’s mechanism.”You can make money in a short period of time, but risks also exist. Because like Pinduoduo in China, Temu’s courier box will have a card for asking for good reviews. If there is a customer complaint, it is easy to be banned by Amazon. Secondly, it may involve infringement, logistics substandard and other issues.For merchants, the most uncontrollable thing is “after-sales service”. The official stated that for orders with quality refunds, a fine of ten times the price of the product will be imposed.A cross-border e-commerce store owner smiled wryly. He now earns three or four thousand a day, and his orders have been rising, with an average profit of 2-3 yuan per order. However, because of the 90-day free return, there will be many malicious chargebacks, and nothing has been done. Lost a few hundred dollars.Some people in the industry said that in fact, Temu’s entire set of game rules is the survival of the fittest. In the early stage, large-scale investment was attracted, and a large number of sellers rushed in. As time went by, more price-competitive factories and supply chains settled in, and they would continue to compare prices. Fighting, the supply price changes, but the platform price remains the same, the lower the price, the better, all the inventory pressure can only be borne by the merchant.In the process of chatting with several cross-border e-commerce merchants, Chozhu found two very obvious contrasts, “If the price is right, SF Express will pick up the package at your door, and there is no postage. If the product cannot be sold, Temu will send the product back For merchants, it is SF Express.”Even, “I will ask you to reduce the price as soon as it is sold, and if you don’t lower the price, you will be replaced by others.”In Pam’s view, her products are basically ex-factory prices now. Small merchants don’t have the capital to make Temu, only factories dare to do it. “The selection of products can’t be more expensive than 1688. The official system can collect through the system to know how much the product is guaranteed.”In terms of product selection, although there are many groceries on Temu, mainland products such as small accessories and 3C digital products are already the Red Sea in the Red Sea.Recently, Temu has been promoting more niche categories such as nail care products, pet supplies, and camping products on social media, as well as holiday-limited Christmas decorations, trying to provide different needs for potential customer groups. Bring new opportunities.Temu supports Pinduoduo’s larger “market value imagination”A few months ago, Pinduoduo began to gradually transfer employees who buy more vegetables to Temu.From the perspective of human efficiency, Pinduoduo has less than 10,000 employees, compared with Ali’s nearly 100,000 employees, and compared with JD.com’s acquisition of Debon, the total number of employees in JD’s system has exceeded 540,000.Facing the menacing Temu, SHEIN, the second largest overseas e-commerce platform, was also forced to fight back.According to “Southern Weekend” report, Temu has moved its Guangzhou office near SHEIN, and promised to double the annual salary of SHEIN’s core buyers. In order to avoid employee turnover, SHEIN hid its internal address book on the one hand, and on the other hand publicly told employees that employees who quit Temu will never be hired.At the same time, Temu’s investment personnel have publicly disclosed to suppliers that SHEIN’s source of the same product will be put on the shelves first.Before the launch of Temu, Pinduoduo’s domestic hinterland was also continuously invaded by other e-commerce platforms. For example, Ali launched Taote, and the Douyin Speed version launched a 9 yuan 9 zone. No doubt they all hope to compete for Pinduoduo users.Although Pinduoduo’s domestic market is facing challenges from various giants, the rapid growth in the financial report shows that no giant has shaken Pinduoduo’s industry position.In the third quarter, Pinduoduo’s core revenue was online marketing revenue, which increased by 58% year-on-year to 28.4 billion. In the financial report conference call, Chen Lei, CEO of Pinduoduo, said that one of the reasons for the surge in online marketing revenue is the increase in advertising revenue.”The increase in advertising revenue is due to the growing demand for high-quality brands from consumers on the Pinduoduo platform. In the future, more brands will cooperate with Pinduoduo, including agricultural products, home appliances, cosmetics, etc.”Some people in the industry believe that there are many forms of Pinduoduo’s advertising revenue, and the more common one is the opportunity to obtain keywords through online bidding. Higher advertising revenue means that more merchants will invest in Pinduoduo during the quarter.Industry insiders predict that in the next 3-5 years, Pinduoduo’s domestic e-commerce scale will double again, which is a high probability event. At that time, the GMV will be 5 trillion, the take rate will be 3.5%-4%, and the net profit rate will be 40%, corresponding to a net profit scale of more than 70 billion.But with the launch of Temu and its overseas performance, it is clear that Pinduoduo’s ceiling has once again been pierced. Temu’s clear strategy and planning undoubtedly brought greater imagination to Pinduoduo’s market value.
