Click the image for details. Recently, your social media feed has likely been flooded with invitations to register for Meiri Pinpin. According to Sun Yuan (former COO of MissFresh), the user volume was so high that the servers crashed! In JD.com's latest earnings report, the notable new business is the rapid growth of "JD PinGou." Perhaps Pinduoduo's rapid rise has forced JD.com to accelerate its social e-commerce layout. JD CEO Xu Lei stated that the goal of the PinGou business is to enter lower-tier cities, attract female users, and activate long-tail merchants. He believes apparel is one of the suitable product categories for PinGou because it is a high-frequency item. One of Suning's three strategic pillars in new retail is called "Suning PinGou." At the 315 Quality Release Conference on February 26, Suning PinGou played two cards: "Pin Base" and "Pin Brand": on one hand, "contracting mountains, lakes, and seas," focusing on direct sourcing from fresh produce bases; on the other, supporting 40 selected small and medium brands with traffic. Community group buying continues to lead the financing hotspots in the sluggish primary investment market. Leading platforms have claimed that monthly GMV has already exceeded 100 million yuan. Group buying, low prices, and lower-tier markets have become the defining features of the PinGou model. At its core, it boils down to three points:
1. Traffic pool logic: From traditional spending money to acquire users, to buying users from users.
2. Marketing logic: From traditional advertising marketing to new marketing through social fission.
3. Supply chain logic: From traditional one-click dropshipping to front-warehouse 1-hour delivery and self-pickup next-day delivery. From a business model perspective, neither distribution, front warehouses, nor pickup points are innovative. But from the consumer's perspective, two of the most important consumption experiences can be felt: A: Enjoy lower product prices with conditions attached.
B: Faster or cheaper home delivery services. Either point is enough to make a platform rise quickly. The opportunity is right in front of us; we can make mistakes, but we cannot miss it. See if we can spell out a future. Traffic and Cost 1. The ceiling of traditional e-commerce users In 2018, the hottest new retail saw online platforms aggressively invade offline, due to the exhaustion of online traffic growth. Converting the massive traffic of offline transactions into online platform data became a consensus, leading to the investment and M&A war between AT (Alibaba and Tencent), which in 2019 turned into a battle for B-end users between the two business systems. The core logic is low-cost offline customer acquisition. Cost changes: Tmall: In 2017, customer acquisition cost exceeded 200 yuan.
JD.com: In 2017, customer acquisition cost was 228 yuan.
MissFresh: In 2018, customer acquisition cost reportedly exceeded 230 yuan.
Suning Xiaodian: Uses store cashiers to guide APP traffic.
Hema: Forces APP traffic through store checkout.
Duodian: Uses store cashiers to guide APP traffic. 2. The traffic pool of WeChat, a super app with 1 billion daily active users Pinduoduo took only three years to become the fourth-largest e-commerce platform. It relied on group-buying gameplay, using low-priced products to achieve fission-style spread within WeChat groups. This activated the lower-tier user market outside the Fifth Ring Road. It showcased a miracle moment of "Users are right there; you can see them but can't touch them. " Although both are backed by Tencent, JD.com's PinGou business finds it hard to achieve lower customer acquisition costs than Pinduoduo. JD's imagination lies in cross-selling products, such as converting low-unit-price customers attracted through PinGou into typical mall customers to increase retention and average order value. At this stage, the PinGou business volume is still small; JD still relies on WeChat as the core channel for new customer acquisition, with WeChat still contributing more than a quarter of new customers. The current version of community group buying still taps into WeChat traffic, using group leaders like moms and store owners to build online WeChat groups around LBS-based pickup points to acquire users and mini-program orders, combining distribution with low-cost next-day delivery. Optimists firmly believe it can create a third pole model for e-commerce. Cost changes: Pinduoduo: According to the prospectus, customer acquisition cost was 10 yuan in 2017, 24.3 yuan in Q1 2018, and MAU growth cost was 48.3 yuan.
Meiri Pinpin: Customer acquisition cost is less than 10 yuan, with tiered rebates.
Community group buying: Customer acquisition cost is less than 5 yuan, with group leaders sharing 10% of retail sales. New Marketing for E-commerce Platforms: Let Users Find Users The essence of group buying is a distribution membership system: making users become marketing personnel to attract more users, thereby enjoying sales rebates from lower-level users or lower purchase prices. Pinduoduo adopts a group-buying model, where the group leader can enjoy a lower leader price;
Community group buying adopts a group leader operation model, where group leaders attract users around pickup points and earn a commission on each order;
Meiri Pinpin adopts a tiered model, where members develop members through invitation codes on social media or in WeChat groups, advancing to senior members or selectors to enjoy sales rewards from downstream group users. Unlike traditional WeChat business rebate models, these models do not support the profit-sharing system with inflated gross margins; instead, they pass on customer acquisition costs and marketing expenses to users. Users do not need to pay a basic membership fee; they are both consumers and promoters, with extremely low education costs, no barriers, and simple operation, instantly generating tremendous explosive power. Thoughts: For the upcoming 5G era and the Internet of Things, each user and the items linked to their account system will carry massive interactive data. Water is taken from users and returned to users, forming a symbiotic and shared business ecosystem. This is the future of so-called "new marketing." At the same time, multi-level distribution models must be compliant, or they will inevitably be short-lived. Supply Chain Restructuring Currently, the digital construction and deployment of product supply chains are still in a very fragmented stage: The 2C logistics network centered on express delivery has entered a bottleneck period;
The 2B city distribution network is still in the infrastructure construction period;
The digital transformation of the entire supply chain is still in its early stage of fragmentation, making the ideal of "one inventory" difficult to achieve. To reduce delivery costs and improve delivery speed, the PinGou model has made active attempts in the supply chain. Traditional models: Centralized warehousing and distribution: The 2C central warehouse model represented by JD.com is gradually opening up as a socialized third-party platform.
One-click dropshipping: Using third-party express as the delivery method. This is the delivery model for most platform-based e-commerce. Based on the world's most developed express network, most regions achieve next-day delivery at best, with little room for cost reduction. For categories with short shelf life and strong immediate demand, such as fresh produce and FMCG, they are seeking more suitable breakthroughs in delivery cost and speed: 1. Front warehouse model: Represented by MissFresh, Taoxianda, Dingdong, and PUPU, the front warehouse model trades cost for speed, achieving 1-hour delivery. It has been proven that consumers are willing to pay for speed. Whether it's SF Express or MissFresh's VIP monthly fee users, they have successfully given consumers the power to choose. 2. Pickup point model: Platforms represented by community group buying use localized procurement and pickup points to achieve next-day delivery at the lowest delivery cost. For price-sensitive users, they order the same day, pick up at the community pickup point the next day, and maintain customer after-sales rights in WeChat groups. The entire process fits the lifestyle of housewives, so we see that in third-tier cities with a slower pace of life, community group buying develops extremely rapidly. 3. Shared supply chain: Meiri Pinpin leverages the centralized procurement and front warehouse system established by MissFresh to achieve a supply chain integration of group buying model plus ultra-fast delivery. Meicai and its Meijia Youxiang follow the same logic. Using one supply chain as the foundation, different business models under the service system have become a trend. "Three parts are determined by fate, seven parts depend on hard work; only by fighting can you win" is a classic Minnan song often requested by "old-timers" in KTV. Now the wheel of fortune has turned, and it has become the footnote for the hottest e-commerce model of 2019. Social interaction in marketing, social interaction in e-commerce. It is always the most valuable human nature to explore. Wang Jun: A renowned new retail expert. Chief retail analysis expert and special columnist for New Distribution. Previously worked at: Quanshi Convenience Group, HNA Zhanghe Cloud Warehouse, and Radio and Television Group. He has rich practical experience in FMCG supply chain and new retail channels. He has in-depth research on innovative fields such as community group buying, unmanned retail, and IP commercialization. Extended reading from the author's community group buying column: New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 15 to March 18. This conference will focus on the topic of "Breaking the Game" and conduct in-depth discussions with numerous brand owners, supply chain service providers, distributors, and retailers. Compared to previous conferences, this summit will be fully upgraded. In addition to the original topics such as channel innovation, city distribution logistics, and distributor transformation, it will also add multiple parallel forums on new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing and exchanges, we believe every brand owner and distributor can learn the latest business models, expert opinions, and implementation methods, finding new tools and methods for their own breakthrough in 2019 and returning to the track of rapid growth. Review of previous conferences -END-