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Testing Wholesale Business, Targeting 1688, Pinduoduo Sparks B2B War!
-01- Pinduoduo Launches Wholesale Business Pinduoduo had just made the Fortune 500 list, and now it has made a new move. Recently, a merchant revealed that Pinduoduo has launched a new business called "Duoduo Wholesale", entering the wholesale field with the banner of 0 commission and no promotion fees, providing supply sources for millions of merchants. From the screenshot, it can be seen that the merchant page for Pinduoduo Wholesale is not yet fully built, showing a "under construction" status, but the merchant said they can report this business to their account manager. In the merchant's "Supply Management" page, a new function called "Drop Shipping" has been added. Drop shipping, also known as collection and consignment mode, generally involves collecting high-selling products from across the platform, filtering them, and placing them in the store as their own supply, then selling them to customers at a markup. But Pinduoduo uses a store group model, starting with at least ten stores. That is, by opening multiple stores, competition is created to generate profit. This allows for a quick start, and using group control software, one can log in and operate multiple stores simultaneously, as well as collect, list, and modify prices across stores, achieving multi-store operation and profitability. Currently, Pinduoduo's "Drop Shipping" is mainly displayed on the product shelf of its group-buying mini-program "Kuaituantuan", but this shelf is currently only open to "WeChat physical goods merchants". That is, Duoduo Wholesale is still in the "internal testing" stage and has not yet officially opened to the public. Even as a trial, this move reflects Pinduoduo's ambition to enter the B2B sector. Its goal is clear: to benchmark against Alibaba's 1688, the industry leader, and attempt to shake Alibaba's foundation at its source. However, Alibaba, which has been deeply involved in the B2B field for 20 years, is not so easily shaken. This will be a tough battle for Pinduoduo.
-02- 1688: A Mountain in Front of Pinduoduo When it comes to Alibaba's e-commerce platforms, consumers often think of Taobao, Tmall, Xianyu, and Juhuasuan, but few think of 1688. In reality, 1688 is Alibaba's hidden "trump card", and its importance is no less than other platforms. It is known that Alibaba started as a B2B company in its early days, and wholesale trade was Ma Yun's "old business". The famous saying "Make it easy to do business anywhere" reflects Alibaba's mission as a wholesale market. After Taobao was established and Alibaba entered B2C, its B2B business was not abandoned but gradually renamed to 1688 and grew quietly. Today, 1688 brings together more than 10 million enterprise stores, with 150 million daily online visitors, accounting for 40% of China's domestic B2B share. It serves over 1 million suppliers and over 28 million buyers, with annual sales exceeding 400 billion yuan, making it the largest online wholesale market in China. Moreover, not only wholesalers, but many consumers also regard 1688 as a place to "fleece wool". For example, a serum priced at 219.9 yuan on a certain platform shows a cost price of only 5.1 yuan on 1688, a markup of more than 40 times! Even for some common foods, the average price on 1688 is 2-3 times cheaper than retail. No matter how you look at it, 1688 is the first choice for wholesale, a result of 20 years of accumulated reputation. For Pinduoduo to climb over this mountain is extremely difficult. Moreover, Pinduoduo's long-standing low-price advantage does not exist in the B2B field. Wholesale prices already minimize profits, so how can Pinduoduo squeeze further? Even if additional subsidies are given, Alibaba's healthy cash flow is not afraid of Pinduoduo. From this perspective, it is unclear whether Pinduoduo is "using four ounces to move a thousand pounds" or "a mayfly trying to shake a tree".
-03- Regardless of the Road Ahead, This Battle Must Be Fought! Knowing there are tigers in the mountain, they still go towards the mountain. Pinduoduo's B2B war with Alibaba is not a deliberate choice but a necessity! Do you know why products on Pinduoduo are so cheap? Yes, one of the main reasons is its direct-from-origin model, which changes the traditional sales process of purchasing, wholesale, and retail, eliminating the middlemen's markup, allowing producers to directly connect with consumers, thus prices are incredibly low. That is, Pinduoduo already has a large number of supply channels. Considering that Pinduoduo's scale is still far behind Alibaba, the supply capacity is more than sufficient. Since it has resources, why not use them? Why doesn't Pinduoduo build its own wholesale platform? Additionally, the B2B market itself is large enough to accommodate Pinduoduo. According to iiMedia Consulting's "2019-2020 Enterprise Procurement Industry Research Report", in 2019, China's B2B market transaction scale reached 25.94 trillion yuan, and it is expected to reach 31.19 trillion yuan in 2020. That is, after years of development, the domestic B2B market is still growing rapidly, indicating it is far from saturation and has great development space. In recent years, we have seen that besides 1688, JD.com and Suning have also been making efforts in the B2B field, carefully "snatching food from the tiger's mouth". Entering B2B is a general trend, and Pinduoduo is already late to the game! Another point: if it does well in the wholesale market, Pinduoduo's own supply chain can also be improved. Pinduoduo started as a social e-commerce platform, with Tencent's traffic support, and has the potential to become a dedicated wholesale platform for WeChat businesses. Although its scale is small, it can form its own faction and to some extent block Alibaba. In summary, Pinduoduo is showing a "courage wins in narrow encounters" spirit, putting up a brave front regardless of whether it can win.
-04- How Far Is Pinduoduo from Alibaba? Although the gap in B2B scale is already obvious, Alibaba "crushes" Pinduoduo in more ways than just 1688. There are at least two other mountains that Pinduoduo cannot easily cross in the short term. One is logistics. Even with quality supply, without smooth logistics, it is like punching cotton. In March this year, Southeast Asian logistics giant "J&T Express" entered China. Its founder has some connection with Duan Yongping, and Pinduoduo's founder Huang Zheng is Duan Yongping's beloved disciple. If they can cooperate, Pinduoduo should be like a tiger with wings. However, compared with Alibaba's Cainiao Network, J&T Express is still inadequate. Recently, there were rumors that J&T Express was "blocked" by the Tongda system, though unconfirmed, but given Alibaba's logistics strength, it is possible. As an e-commerce company, being restricted in logistics is like being strangled by the throat, which is a much greater threat than 1688 to Pinduoduo. The other mountain is technology. Through ten years of cultivation, Alibaba has Alibaba Cloud, the third-largest cloud computing share globally, and its own research institution, DAMO Academy, with technological strength ranking among the top internet companies in China. As for Pinduoduo, due to its late start, the gap with Alibaba is not small. If compared to martial arts, while Pinduoduo is still practicing the One Yang Finger, Alibaba's Six Meridians Sword is already perfected. Digitalization is a general trend, and developing technology is an unavoidable hurdle for Pinduoduo. Therefore, the gap between Pinduoduo and Alibaba is not just about 1688. Rome was not built in a day, and Pinduoduo's e-commerce path is long and arduous.