E-commerce "bandits" Pinduoduo

Editor's note: This article is from the Economic Observer, written by Ren Xiaoning and reprinted with permission from 36 Krypton.
The word "gangster" may seem negative, but on the positive side, it's probably the best word to describe Poundland, which only turned one year old on July 26th.
In the era after the rise of Alibaba and Jingdong, almost everyone thought that the flow dividend of e-commerce was close to the end, and everyone was mentally prepared for a long-term struggle for supremacy between the two powers. But just at this time, Pinduoduo overnight rise, this bandit-like new e-commerce enterprises to break the pattern of the two powers to share the world.
The leading brother of this e-commerce bandit is a low-key simple and even let a person feel a bit of wood, Zhejiang Huang Zheng. Clothing low-profile, rarely appear in the media, Huang Zheng is actually a "ruthless" role, which has long been recognized by the knowledge of people, investment wizards Duan Yongping found that in 2006, and Buffett's dinner party in addition to his own son, Duan Yongping also brought to the twenty-something years old Huang Zheng.
Wang Xing, founder of Meituan, speaks highly of Huang Zheng, saying not long ago that it should be exciting to see how the next few years will see two very smart people, Huang Zheng of Pinduoduo and Jiang Fan of Taobao/Tmall, battle it out. "It's amazing that he came through on his own in a summer like this!" A member of the media asked Huang Zheng to meet him on Jinbao Street in Beijing, and in a long-sleeved shirt and long pants, he braved the heat from Wangfujing, 1.5 kilometers away. Even though he had heard about it before, the media person was surprised by Huang Zheng. Everyone knows that Huang Zheng is Pinduoduo's deserved "Mr. Key", holding 44.6% of equity and 89% of voting rights.
In the eyes of his employees and outsiders, Huang Zheng, who has a shoulder bag, takes a taxi, rides on a high-speed train, doesn't buy a house, and doesn't have a private jet, is a schoolteacher without a strong materialistic desire, but he's a ruthless character full of desires and old-fashioned business tactics in the field of business, because he has driven the consumer desires of hundreds of millions of people - Huang Zheng said in a previous media interview "Consumption upgrading is not about letting Shanghai people go to live like Parisians, but about letting Anqing people in Anhui have kitchen paper to use and good fruits to eat" ......
When someone in my circle of friends asked me to help cut prices on Pinduoduo, I despised him, I don't want people to misunderstand that I live outside the fifth ring; when a relative or friend uses Pinduoduo, I laughed at him, I'm not a user of Pinduoduo; when someone recommended that I download, I refused to do so, I think that the low price is equal to the poor quality; when someone gave me a Pinduoduo three wallet mail cell phone cable, I downloaded it, and I became a user of it! ...... Huang Zheng and his Pinduoduo is so step by step "pull together" hundreds of millions of users, from the countryside to the city. "What Huang Zheng is doing is still more in tune with human nature." Microblogging V, scholar Zhang Baineng so commented.
In a sea of unintelligible and controversial voices, Pinduoduo has 443 million users, more than 5,000 employees, and last year's GMV totaled 471.6 billion yuan. But this is far from Huang Zheng's vision of "Costco + Disney" (Note: Costco is the largest chain of membership warehouse stores in the U.S.), and he said when talking about the competition with other peers, "This is just the beginning!" How many e-commerce giants must this send shivers down their spines ......
They are willing to spend time playing
A typical Pinduoduo user from Shanxi, a day is: every day in the morning, in the middle and evening three time periods, she will open the Pinduoduo APP, she planted in the "DuoDuo orchard" trees need watering, these three time periods, you can get water droplets.
During the process of collecting the water, Poundland prompted to browse the product for 1 minute to get an extra bonus. She clicked in, encountered interest will click to see, not necessarily buy. But this click has been recorded by Pinduoduo big data, in the subsequent push process, Pinduoduo will be based on her clicking habits to recommend the goods she is interested in.
In the process of watering, DuoDuo orchard upper right corner tips, today and "explosives crazy grab" activities, click in, you can cut the price of free to get a balance car, cell phone, she chose their own interest in cell phones, sent to and friends and relatives together to set up Pinduoduo mutual support WeChat group, and @ them to cut the price.
It's hard for people who are in Tier 1 or 2 cities to understand why so many people are willing to spend so much time, to draw prizes that they probably won't win, and to share links that might bother others. Dada, the co-founder of Pinduoduo, however, says that the reality is that most consumers still have a lot of time on their hands.
In fact, Pinduoduo from the rise to the "skyrocketing", relying on socialization. This is an e-commerce model that has now been flooded, but is still the main weapon of Jinduo and Alibaba, Jingdong fight.
In October last year, that Shanxi Pinduoduo user mentioned above told reporters that almost the whole village was grabbing red envelopes and planting fruit trees in Pinduoduo every day. And in July of this year, they were still playing tirelessly, and some people even knocked on their neighbors' doors at 12 o'clock in the middle of the night to ask them to help click the red packet link.
Whether it's a bonus or a game, the ultimate goal is to get users to shop. When the fruit trees in DuoDuo Orchard mature, users can be given real fruit. However, if you want to speed up the growth of the fruit tree, you need to apply fertilizer, which can be given through the Pinduoduo shopping mall to buy things. Thus, Poundland guides users through their first purchase.
And much more orchard this one originally used to attract users of the project, "has realized the break-even", this is in June this year, Pinduoduo vice president Jing Ran told the Economic Observer reporter of a fact, much more orchard every day for free packages mailed out nearly 2 million pounds of fruits, all by Pinduoduo to pay the bill, this expenditure has been back to the capital.
In this regard, Dada explained, "business logic makes sense, your users are here, you must have the opportunity to sell goods, as long as there is a good scene, can combine the two aspects, naturally the goods are sold." Pinduoduo's financial data for the first quarter of this year shows that the annual live users of 443 million, monthly live users of 290 million.QuestMo-bile data shows that in July this year, Pinduoduo's daily live users have reached 130 million.
At present, the core users of Pinduoduo are still in the sinking areas, which is regarded as a weak purchasing power by outsiders. Dada explained that the proportion of users in first- and second-tier cities has been rising, but "we actually pay little attention to this."
And the above Pinduoduo executives said, "We are a social scene shopping, people first, what the user likes, what to provide." In the recent year, Poundland has also studied other ways to play such as traveling and live broadcasting, but it turned out that Poundland's users still like watering and planting trees, and like to play DuoDuo Love Elimination, so they gave up.
In this recent year, around the existing users, Pinduoduo has thought of all kinds of ways to improve the customer unit price. This is also the premise that has been established on the premise of social stickiness, Pinduoduo need to break through the direction.
iPhone Crazy Subsidy War
During 618 this year, Poundland did one of the biggest promotions in history. The whole line of iPhone price reduction, the biggest difference of a cell phone is cheaper than Apple's official website 2811 yuan, and there is no time limit, no snatch, mass sale.
Some sellers on other platforms saw the business opportunity and sold iPhones at a higher price on their own platforms without shipping them, and then forwarded the orders from Pinduoduo at a lower price. Later, Pinduoduo had to notify the merchants and ask for the Pinduoduo logo to be labeled inside the packing box.
This crazy price cuts, by the outside world laughed at, this year only Poundland is seriously doing 618.
Pinduoduo invested tens of billions in subsidies for this 618. Why does Pinduoduo dare to spend so much money? "This thing is good for Pinduoduo no matter from the business, or from the user's mind," said a senior source of Pinduoduo to the reporter, "for example, Pinduoduo subsidizes 100 million, Taobao, Tmall and Jingdong want to be at a price with us, and it has to be subsidized by at least 20 billion, right? Just see if it drops."
Pinduoduo's business logic lies in the fact that Ali and Jingdong have already established the brand trust of high-priced goods, and if the same subsidies, too many people are buying, and can't afford to subsidize. Pinduoduo has not yet established this user awareness, can use this to fight big with small. This completely subverts the classic theory of business school, the ultimate business competition is to fight the price war, the big companies through the price strategy to eliminate the small companies, Huang Zheng is the opposite in this matter!
The 618 project is the most recent big thing that Pinduoduo has gathered the strength of the whole company. To this end, Pinduoduo has set up a special project team to draw elites from other departments to fight this battle. For new business, Poundland has the habit of drawing old employees to reorganize, if the new business can be sustained, the project team will be maintained, if not, it will be broken up and returned to their original positions.
For the 618 project team, Dada's assessment requirements are: to be able to enhance users' trust in Poundland.
As for the effect of this time, the above-mentioned Pinduoduo executives believe that "especially good", "so that people who previously did not believe that you can buy such things in Pinduoduo, especially those active digital 3C enthusiasts, feel that after the purchase of all the 'real incense '."
Subsidies for high-priced goods, Pinduoduo said it will do it for a long time. In addition to Apple phones, Pinduoduo is currently negotiating with other high-end cell phone brands.
Behind the subsidy is Pinduoduo's desire to increase the user unit price. In the first quarter of this year, Pinduoduo users grew from 300 million to 443 million, and the annual user unit price grew from 673 yuan last year to 1,257 yuan. But compared to Jingdong and Ali, Pinduoduo user consumption is still far from the truth. In the first quarter of this year, Ali announced data that the average annual user consumption was 8,715 yuan, and in the fourth quarter of last year, Jingdong announced a figure of 5,498 yuan. "Our users only spend a thousand dollars a year on Jinduoduo, the average consumer should spend more than 10,000 dollars a year." Dada believes that this shows that the current Pinduoduo only meets a part of the user demand, and a very small part of it, and if it can't be solved, it will become a big bottleneck for Pinduoduo. "It is not necessarily necessary to sell 9 yuan 9 free shipping things, but really good, can fit the needs of users, while cost-effective goods. This year, Jinduoduo constantly looking for such things." "If he even dares to buy a 10,000 dollar cell phone, then a few hundred dollars will be even more daring to buy," Dada said, trust is so built layer by layer.
Not another Ali.
On July 26 last year, Pinduoduo went public in the United States, after which its market value once exceeded $33.2 billion. Cao Sheng, founder of Gray Cognition Society, told reporters that Wall Street was bullish on Pinduoduo at the time because it was optimistic that Pinduoduo could replicate another Taobao and could replicate the relationship between Taobao and Tmall.
In July 2019, Dada said more than three times to the Economic Observer: "We are not another Ali". And in March this year, Huang Zheng also told investment bank analysts on the earnings call that he would not do a platform similar to Tmall afterward.
"In fact, this road is very obvious, you are on someone else's track, the other side of the money is dozens of times, hundreds of times, the other side of the resources are also dozens of times, hundreds of times, or even thousands of times, then you certainly can not fight, you may be more likely to die." Dada told reporters.
What is Pinduoduo, which does not do Taobao and Tmall, going to do? Since the beginning of this year, Pinduoduo has invested its strength in the upstream of the supply chain, intensively launching the agricultural products upstream and the Pinduoduo factory program.
In June this year, the reporter in Yunnan to see Pinduoduo do agricultural products on the line of employees Uli Ji, he stayed in the poverty-stricken county of Qubei for three months, the appearance of dark skin and the locals are no different. Uligi is responsible for signing contracts with local farmers, finding Pinduoduo store managers, and shipping the ripened snowdrop fruits from the fields directly from local stores. This model allows the snow lotus fruit, which costs an average of 10 yuan per catty in Beijing's food markets, to be sold on Pinduoduo for 3 yuan per catty.
So far, Poundland has trained more than 60,000 new farmers who have set up stores in their places of origin and sell their produce at low prices.
Huang Zheng himself is also looking at the supply chain upstream, he said at a forum at the beginning of the year, spent a lot of time to look beyond the super first-tier cities, "looked at a lot of origins, manufacturers, different regions of the consumer," "the feeling is still quite strong, these places actually have huge differences. "
One of the points of difference he feels is that Chinese OEMs make goods for foreign brands, but the money is mainly made away by the brands, and he feels that this distribution is a bit off, and that "in the era of the mobile Internet, there is the possibility of a new way of facilitating the production of a different, new-age brand out there."
Doing glass products, Anhui Deli shares e-commerce head David, explained to the reporter the new brand operation mode of Pound Factory. Deli in Pinduoduo on-line private brand flagship store, first on-line 1,000 pieces of products, through the one yuan spike channel trial and error. After users receive them, Pinduoduo collects user evaluations and gives feedback to Deli.
Through big data, Deli individually customizes larger, thicker, and other glassware that would not have been produced before, in proportion to the needs expressed by users, and goes online to complete the sale. Deli is China's largest glassware manufacturing company, before mainly doing OEM. After entering Jinduoduo in January this year, Deli's highest record was to sell 20,000 pieces of private label red wine glasses in a single day.
Poundland is currently piloting Pound Factory in 500 factories. The goods are mainly daily necessities, including glassware, paper towels and pans.
After going deeper upstream, Pinduoduo's ability to define has grown. In last year's IPO prospectus, Huang Zheng said that Pinduoduo had established a new shopping model. But in describing this new model, he used words that are difficult for the average person to see, "a new space where the virtual space of the network and the real world converge."
In April of this year, the wording of Huang Zheng's latest shareholder letter was clearer, as he defined Pinduoduo as "a new e-commerce in a new era." His new explanation is that Pinduoduo tries to understand the temperature of the person behind each click, and tries to converge homogeneous needs through people-to-people connections and trust.
Having people-oriented social attributes is what makes Poundland different from other e-commerce companies.
Huang Zheng's Young Kintetsu
Listed for a year, the e-commerce industry where Poundland is located is highly competitive. Dada has fought a few battles, one of the most satisfied with the state of the whole team, "fighting spirit is very high, which is very rare", "as long as the team fights do not break up, then I always have a breath can breathe over."
Poundland's initial team, not quite the same as the average startup's youngsters, are all veterans who have founded several companies together.
Dada, with eight years of service, is not counted as the oldest employee of Poundland, and there are those who have stayed for 12 years. "We've been together for as little as three or five years, and more than ten years." All of these startup teams are still at Poundland, and Dada says they have a sense of trust in each other.
Now more than 5,000 employees, more young people, the average age of 26 years old, middle-level cadres also have a preference for internal training of young people, there are two or three years of training students, has managed a few hundred people. Dada said, this year through the war, found a lot of "general talent".
This is Huang Zheng killed four sides of the "close guard" - very easy to be inspired to do things fearlessly and feverishly. Dada's evaluation of the staff is: work hard, many people come in will be inspired by the atmosphere.
Offensive, challenger, bandit-like fighting spirit of the young team, management is bound to pose a big challenge, seemingly introverted Huang Zheng is also a ruthless character in this regard, which is also a guarantee of combat effectiveness.
For employee management, Pinduoduo is relatively strict. Pinduoduo's fighting strength may stem from the team's extremely strong sense of rules.
Huang Zheng himself takes rules very seriously, said the aforementioned Pinduoduo executives, "We allow free discussion, but the unanimously recognized value of the management is that once a thing becomes a rule, then everyone must abide by the rules."
A Pinduoduo employee told reporters that Pinduoduo has a strong sense of rules, such as the small matter of eating, the company has a fixed placement of the room for ordering food, and employees need to be collected at a fixed point in time. If an employee does not pick up in time leading to waste, they may be penalized to a certain extent. However, the employee admitted that these rules were all informed in advance, and slowly, everyone developed a respect for the rules.
Poundland also has strict penalties for those who do not follow the rules. The last few times Pinduoduo internal briefing, are some things that the outside world may seem trivial, Pinduoduo has staff rental subsidies, the rental process, if the private transaction with the agent, once found will be dismissed and never be hired.
Huang Zheng himself is very important to the sense of rules, the above-mentioned Pinduoduo executives said, "you can hardly imagine, an employee, if you forget to punch the card, may end up applying to Huang Zheng there." Huang Zheng now for the company's specific business is not much control, let go to the executives, but once there is a violation of the company's values, "Benben" thing, he must find out who this person is.
The rules have been in place since the inception of this company. A group of veterans of many ventures imagined at the company's inception the problems that might arise afterward, "the same kind of thing according to the rules, and when a new problem arises, a few people quickly touch on it. But there is nothing new under the sun, basically nothing particularly complicated." The above Poundland executives said.
Some people interpret this sense of rules as a kind of harshness, Dada disagrees. He believes that outsiders misunderstand Poundland, "We have strict places and we have forgiving places. The strict place is, because our platform is fighting a war, so the requirements for execution are very high. The tolerant place is that you go to war, and if you hang up or something happens, we won't let you take the blame."
As a co-founder, Dada is responsible for investment promotion. He allows his subordinates who report to challenge him, "business, sometimes there is a lot of noise", for the results, "listen if it makes sense, or say we should try it first, if you're wrong, then you'll be told by me for two months in the future, you don't blame me. If you are right, then you can also talk about me for two months".
Pinduoduo executives in the company office environment, no special treatment, in addition to Huang Zheng due to the need to meet with a separate office, all others, in a unified open grid office.
Poundland has no president's meeting, no weekly or monthly meeting, and any communication problems are emphasized to be solved on the spot, and the company's staff has risen from 1,000 to more than 5,000, or so. "This company is very interesting, its consciousness is different from other companies in many ways," said the above-mentioned Pinduoduo executives, a lot of messy things are affecting efficiency.
No end to counterfeiting
On July 12, the reporter came to the day of Pinduoduo's corporate headquarters, the security guards at the entrance of the building looked nervous and stopped everyone who didn't have a badge, asking, "Are you a merchant?" In this building, there is always a constant stream of merchants to Pinduoduo trouble, Pinduoduo and the merchants of the conflict point is the fake one penalty ten. Once it is found out, Pinduoduo will really penalize them, and the merchants who have been fined 10 times will accuse Pinduoduo of causing them to lose their money.
Last year, before the "paragraph" storm, Pinduoduo has already cracked down on the sale of counterfeits, invited Kerry Logistics Chairman Yang Rongwen as an independent director, who served as Minister of Information and Industry and Minister for Foreign Affairs in Singapore, a country where the law is strict and harsh, and used the idea of strict and harsh law to control the sale of counterfeits on the platform.
But the questions about Poundland are far from being put to rest.
Dada has had the most dealings with merchants at Poundland and the most trouble from them. In a serious moment, red paint was thrown on the front door of Dada's house. But, he says, "These are the prices we paid as we grew up."
Last year's listing was an unanticipated starting point of events for Pinduoduo.In July 2018, shortly after the listing of Pinduoduo, the segment on the Internet flirting with Pinduoduo's cottage and fake goods was widely circulated. The above Pinduoduo executives said that this incident had a very big impact on Pinduoduo, "at least 3 years."
In 2018, Pinduoduo focused on eliminating fake products, shutting down more than 60,000 merchants suspected of violating the law, as well as blocking more than 30 million product links. To further reduce the number of fake and infringing products, Huang Zheng said on the Q1 2019 earnings call that he would add 500 new employees to the product quality team to fight counterfeiting this year.
But Pinduoduo is still criticized by the outside world. Cao Sheng, founder of the Gray Cognition Society, told reporters that Pinduoduo is still in the period of negative word-of-mouth outbreaks, and there are still user perception management problems, "many people in the five rings still don't trust (Pinduoduo) in their bones."
In April of this year, Dada had admitted that platform governance was the biggest problem facing Pinduoduo at that time, and he stated that he would arrange for a large number of manpower to do manual inspection, set up a copycat word checking and killing the thesaurus, and fight against the phenomenon of "evening brand name".
By July, he told reporters that it was much better, "in terms of attitude, monitoring and means, we have grown very much more than before. In the future we must do to win this thing, at least now it is no longer a major contradiction in the development of Poundland."
What is the main contradiction of Poundland now? Dada believes that failing to meet consumer demand will be a big bottleneck, "Now only part of it, a very small part of it."
He once again mentioned Huang Zheng's words, "If our team wakes up in a state of unrest, it will never be because of the fluctuation of the stock price, but only because of the lack of understanding of the changes in the consumer, as well as the consumer's dissatisfaction and even abandonment of us." "Bandit"-like fighting spirit ushered in the rise of Pinduoduo era, but also caused the outside world's impression of low-class, earth, fake goods rampant labeling, from Huang Zheng in the past several adjustments to the brand responsible person can also be seen Pinduoduo before the brand positioning anxiety. But in any case, e-commerce has entered the era of three giant leaders. Huang Zheng broke the pattern, and as one of the e-commerce market talkers, the first anniversary of the listing of Pinduoduo is becoming clearer and clearer about how to define itself.