---
title: "Unpacking Pinduoduo's Ambition"
description: "As online retail growth hits a bottleneck, the fresh food e-commerce industry is breaking through traditional models with new formats like front warehouses, store-warehouse integration, community group buying, store-to-door delivery, and cold cabinet pickup, intensifying competition. According to iResearch's 2020 report, the market reached 279.62 billion yuan in 2019, up 36.7% year-on-year. In 2020, demand for fresh food delivery surged due to the pandemic, significantly boosting transaction volumes."
author: "吉光先生"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-09-21"
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# Unpacking Pinduoduo's Ambition

> As online retail growth hits a bottleneck, the fresh food e-commerce industry is breaking through traditional models with new formats like front warehouses, store-warehouse integration, community group buying, store-to-door delivery, and cold cabinet pickup, intensifying competition. According to iResearch's 2020 report, the market reached 279.62 billion yuan in 2019, up 36.7% year-on-year. In 2020, demand for fresh food delivery surged due to the pandemic, significantly boosting transaction volumes.

**As online retail growth hits a bottleneck, the fresh food e-commerce industry is gradually breaking through traditional models, with new formats such as front warehouses, store-warehouse integration, community group buying, store-to-door delivery, and cold cabinet pickup emerging one after another, leading to a flourishing but increasingly competitive landscape.**
According to iResearch's 2020 China Fresh Food E-commerce Industry Research Report, **the market transaction scale reached 279.62 billion yuan in 2019, up 36.7% from the previous year.**
In 2020, affected by the pandemic, demand for fresh food delivery surged, significantly boosting the transaction scale of fresh food e-commerce.
The fresh food market has huge development potential, with projections that by the end of 2023, the transaction scale will exceed 800 billion yuan.
According to the latest information from Tianyancha, Pinduoduo's affiliated company, Shanghai Xunmeng Information Technology Co., Ltd., has filed multiple new trademark applications, including Duoduo Supermarket, Cai Xiao Mai, Cai Xiao Duo, and Xiao Duo Supermarket.
The chart shows that the application dates for Duoduo Supermarket, Cai Xiao Mai, Cai Xiao Duo, and Xiao Duo Supermarket trademarks are all August 5, 2020.
Coincidentally, a month earlier, the same company had also filed multiple trademarks for "Duoduo Maicai" (Duoduo Grocery Shopping). These trademarks cover international classes including catering and accommodation, transport and storage, convenience food, beer and beverages, website services, and social services.
Having gone public within three years of its founding, and with a market value exceeding $100 billion within two years of listing, and 628 million annual active buyers, **Pinduoduo** has carved out a path and ascended to the "throne" in a landscape where China's e-commerce consumer internet seemed already settled—truly a **Saint Seiya**.
Success is never accidental; the future is unstoppable. As Pinduoduo continues to grow, its "ambition" is evident.
The trademarks registered this time are mostly for daily necessities business projects. Given Pinduoduo's existing user base, one can't help but wonder what these projects are intended for. **Will Pinduoduo break the current "tripod" situation of Hema Fresh, Miss Fresh, and Xingyou Preferred?**
Looking at Pinduoduo's development history, the author believes that Pinduoduo's "grand strategy" of new retail in four steps is beginning to show. This article aims to present it in a "light and humorous" manner.
Where is the road?
> Duoduo Supermarket: I want to "flip" community supermarkets of 500-2000 square meters in second- and third-tier cities, providing technology empowerment to store owners, so their faces are filled with "Duoduo Supermarket" smiles.
> Xiao Duo Supermarket: I want to learn from the "good student" Hema Fresh, opening direct-operated stores in first-tier cities, striving to surpass Hema in the next exam and take first place in the class.
> Cai Xiao Mai: I'll stick to developing my main business, standing shoulder to shoulder with my "good friend" Miss Fresh, focusing on first-tier cities.
> Cai Xiao Duo: I'm different from Cai Xiao Mai; I won't go where it goes. I plan to develop the lower-tier market and learn from Xingyou Preferred.
In many people's eyes, Hema Fresh and Miss Fresh are already insurmountable "giants"; but in Pinduoduo's eyes, they might just be Nokia and Motorola.
**-01-**
**Duoduo Supermarket: How to Walk the "Flipping" Path?**
#  According to statistics, there are 6 million convenience stores and over 100,000 medium-sized supermarkets in China. Alibaba's Ling Shou Tong Tmall stores and JD's New Route JD Convenience stores have both seen this big cake, but neither has solved the operational problems of small stores. Instead, they have faced numerous issues and trust crises between promises made before store flipping and fulfillment after.
Compared to the millions of small store owners, the 100,000 medium-sized supermarket operators have the time and energy to think about issues like出路 and survival space. If Pinduoduo can seize this market and successfully "flip" medium-sized supermarkets, a "win-win" is within reach.
**So, how should the "flipping" path be taken?**
First, one should understand the "pain points" of individual medium-sized supermarket operators. The author believes that what they truly need is nothing more than **complete store facilities and equipment, including inventory management systems, customer flow recognition systems, intelligent surveillance and anti-theft systems, product pickup recognition systems, and self-checkout systems.**
**Second, provide technology empowerment. These technologies are not new, but for individual supermarkets, they will bring a qualitative leap to the store.** If Duoduo Supermarket can "arrange" all of these, achieving store online, product online, employee online, management online, and customer online, it would be excellent.
Can a medium-sized supermarket with daily sales ranging from 50,000 to 100,000 yuan increase revenue by more than 20%? The author believes the following steps are feasible:
First, rely on Pinduoduo's "welfare" for upgrades and renovations, providing varying degrees of support in marketing, product procurement, and operations management;
Second, rely on Pinduoduo's massive supply chain capabilities to develop regional OEM products for stores, increasing gross margins;
Third, "frantically" export the Pinduoduo model to help supermarkets build private domain traffic pools.
Compared to the simple and crude operation of flipping, the author firmly believes that **only regional joint procurement, integrated supply chains, improved product quality, enriched product structures, and the creation of regional OEM products can achieve a win-win situation.**
If you treat a supermarket store as an oil field, it will eventually run dry; if you treat it as a piece of farmland, the future might be different.
**-02-**
**Xiao Duo Supermarket: Is "Catching Up" with Hema Fresh Possible?**
According to data analysis from a consulting firm, **Hema Fresh's main users are elite groups in first- and second-tier cities**, with male users accounting for 53.2%, and 76.9% of users being married. Their main characteristics are high income, high education, owning a house and a car. Most have a high pursuit of quality of life, strong purchasing power, and pay more attention to the quality of fresh products rather than price.
In fact, the elite in first- and second-tier cities are not insensitive to price, but are willing to pay a premium for Hema's 30-minute delivery and relatively rich product structure.
Hema's store openings are based on Alibaba's big data, targeting precise consumer groups in cities. But looking closely, Hema's expansion is nothing more than occupying landmark business districts. It must be said that at least 5% of the cost of goods purchased by customers at Hema is store rent.
**Is it possible for Pinduoduo to surpass the "three-good student" Hema Fresh?**
We know that Hema develops trunk-line shopping centered on business districts. If Xiao Duo Supermarket can find a different path and develop a "community center branch-line shopping" strategy, it might be an optimal choice.
What is trunk logistics and branch logistics?
Simply put, from Beijing to Shanghai is trunk logistics, and from Shanghai distribution center to Jing'an New City is branch logistics. This segment is where a courier company's capability is truly tested.
Besides its rich product structure, Hema is fast. To win, Xiao Duo Supermarket can only be "faster" than Hema.
Regarding Hema Village and Hema's backend support, their status is determined by front-end store sales volume. In the eyes of experts, backend construction is a moat. In the eyes of capital, these are things money can solve.
Secondly, Xiao Duo Supermarket can "focus" more on ALDI. Affordable and good quality is not the pursuit of art collectors, but in urban life, it is an unchanging pursuit of consumers. **Saying customers don't care about price might be because Xiao Duo Supermarket hasn't launched yet.**
Pinduoduo's rough-and-tumble growth period cost the company dearly; the lessons are clear.
Xiao Duo Supermarket's development must avoid past pitfalls, ensure stable (backend supply chain) output and service, and create a good shopping environment.
**The retail industry is nothing more than strengthening the supply chain and enhancing the four points: "output, environment, service, and marketing."** Everything else is icing on the cake.
**In contrast, Hema's unified product system, supply chain system, logistics system, and Hema Village are solid moats. Moreover, Hema has evolved from version 1.0 integration to version 2.0 light manufacturing, developing a small Hema ecosystem. These are difficult to surpass.**
The author believes that if Duoduo Supermarket "flips" medium-sized supermarkets, with sufficient technology and capital, it should not be a big problem. But if Xiao Duo Supermarket wants to recreate a Hema, it must understand the hippo and its fatal weakness. By the way, the usually gentle hippo can be fierce when provoked; its only fatal weakness is that its buttocks are not thick enough. This answer comes from an animal encyclopedia.
**-03-**
**Cai Xiao Mai: Can It "Aim" at Miss Fresh?**
Data analysis shows that Miss Fresh's main users are urban white-collar workers, with female users accounting for 61.7%, aged between 25-34. Their common characteristics are **high education, high income, high pressure, and little free time, so they tend to prefer affordable, convenient, and safe fresh products.**
**How can Cai Xiao Mai precisely "aim" at Miss Fresh?**
Here, the author wants to share a very interesting topic. A philosopher once asked a priest: Can I smoke while praying? The priest said no. The philosopher asked again: Can I pray while smoking? The priest said yes.
So, here's the question.
You can't buy cosmetics on the way to buy groceries, but when you buy cosmetics, the salesperson tells you they'll give you a durian for free. Would you take it?
Would you frequently visit that cosmetics company to see if new products are available, and incidentally get a durian? Little do you know, the cost of a small durian is only about ten yuan.
Based on **Huang Zheng's "goods find people" reverse thinking method**, the author can't help but wonder: Could Cai Xiao Mai be a company dealing in fashion and women's products? It just "disguises" itself as a fresh food e-commerce platform, pushing high-frequency fresh products into consumers' view, then uses a Vipshop-like model to sell high-value women's products, making grocery shoppers visit cosmetics stores daily, so consumers buy cosmetics, get a durian, and still feel they've got a bargain?
In fact, **new retail is about recombining elements to truly achieve "affordable and good quality"**. Traditional retail models were the optimal solution under the old conditions. New retail reshapes people, goods, and scenes, redefines the order, and uses technology and data to make "practical cosmetics" not expensive, and "premium fruits" not expensive either. **Expensiveness is just merchants manipulating your emotions; it's what you think.**
The high cost of cosmetics lies in marketing, packaging, and channels; the high cost of fruits lies in storage, transportation, and distribution. When factory cosmetics and origin fruits meet Pinduoduo, they are no longer expensive.
**-04-**
**Cai Xiao Duo vs. Xingyou Preferred: Who Will Rise or Fall?**
Before you know it, Xingyou Preferred's business has covered 13 provinces, 161 prefecture-level cities, 938 county-level cities, 4,777 townships, and 31,405 villages; expanded to over 300,000 stores, adding 8,000 to 10,000 new stores weekly; and handles 8 million orders daily nationwide. These achievements were announced by Liu Huiyu, Vice President of Xingyou Preferred, at the Yuelu Summit on the afternoon of September 8.
"I thought Xingyou Preferred was a company that does solid work, but it turns out they are also harvesting leeks," said a retail practitioner. GMV is the innovator's dilemma. Whether or not Xingyou Preferred exists, small stores are there. The traffic and credit endorsement of small stores are the lifeblood of store owners; they cannot be coldly harvested like leeks.
**In the lower-tier market, who will rise or fall?**
The "Long Tail Theory" (Chris Anderson), which many regard as a guideline, is being validated in the rising "lower-tier market."
In the past two years, the huge incremental space of the lower-tier market is waiting to be developed. The internet dividend in first- and second-tier cities has peaked. Especially for retailers, the most profitable are no longer high-net-worth consumers, but a large number of users in fourth- and fifth-tier cities and rural towns. They are the infinitely long "tail" of the demand curve: extremely large in proportion, average income, and huge traffic.
In 2019, QuestMobile's "Lower-Tier Market Report" showed that among all internet applications in China, Pinduoduo ranked fourth in MAU (monthly active users) growth in the lower-tier market; Toutiao, Pinduoduo, and Qutoutiao achieved triple growth in DAU (daily active users).
Now, in cities below the third tier in China, the proportion of fresh food e-commerce orders has increased significantly. Especially after the pandemic, with the emergence of new retail and new outlets from community group buying, e-commerce giants are actively deploying fresh food e-commerce. The fresh food e-commerce battle is increasingly fierce.
Xingyou Preferred is thriving in the "lower-tier market." Is Pinduoduo just watching?
If Cai Xiao Duo decides to deeply cultivate the lower-tier market, the first thing to do is help small stores with **infrastructure construction**, strengthening the stores rather than inflating GMV. In talent recruitment, if they can hire operators with Japanese retail experience, it will lay a solid foundation for development, because small stores don't need whimsical ideas but solid supply chain, product structure, and service.
Secondly, Cai Xiao Duo should ideally provide millions of small stores with fresh products beyond standard items, even three or five categories. "**Fresh three categories**" (fruits and vegetables, meat, aquatic products) are perishable and fragile, which are the main characteristics of fresh agricultural products. Freshness is an important indicator of the value of these products. These are the products that millions of small stores truly want to do well, and they are exactly the daily necessities that hundreds of millions of consumers need.
It is common for capital and entrepreneurs' thoughts to "part ways." Entrepreneurs sometimes have feelings and want to change an industry or a city's consumption habits, but without money, they have to compromise. In the author's view, "feelings" and "craftsmanship" are the most lacking things in China's retail industry. **Constrained by growth and GMV, it is difficult to embody the spirit of craftsmanship. The retail industry needs innovation, but it also needs to stay true to its original intention.**
Capital can tolerate short-term losses, but its ultimate goal is to cash out and leave. In the eyes of capitalists, there is only entry and exit. There is no eternal business; only running out of ammunition and returning fully loaded.
Source: Retail Business Finance (ID: RetailFinace) Author: Mr. Jiguang
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