Analysis on the development of the battle Alibaba VS Pinduodu in 2020
If the top listed Internet companies in China can be divided into consumer companies and content companies, then the market value of consumer companies such as Alibaba, JD, and Pinduoduo has increased significantly, while the market value of content companies such as Tencent, Baidu, NetEase, and Weibo has only increased slightly or even decreased. It can be seen that e-commerce platform companies have gained a lot in 2019 and will continue to grow for some time. This article will analyze the development trend of Alibaba Pinduoduo in 2020, and provide references for everyone.
Alibaba: whether Juhuasuan can help Alibaba reach its peak again
Alibaba is already China’s largest Internet company by revenue, profit, and market capitalization. Alibaba own taobao and Tmall (kaola) and have build an e-Commerce empire in China.
Before 2019, Pinduoduo had already attracted the Alibaba’s attention, but Alibaba believed that Pinduoduo was helping it expand into the rural market and did not place the competitor in a highly strategic position.
But by 2019, Alibaba had added only 39 new projects, the lowest since 2014. The e-commerce platforms represented by Juhuasuan have become the signature products of Alibaba group again. By 2020, Juhuasuan will become the number one product for Alibaba to crush its competitors.
Pinduoduo is now Alibaba’s most important competitor, and while competitive pressures are rising, they are not extreme, to be honest.
Pinduoduo also went through their IPO in July raising $1.63 billion. Here are some of the highlights:
- Pinduoduo went above 100 billion RMB per year of merchandise sold on the platform 2 years after its launch
- Monthly Active Users (MAU’s) reached 195 million in June 2018
- Pinduoduo users are predominantly female, living in Tier 3+ cities
- The average order on Pinduoduo is 6 USD, against 30 USD on Taobao/Tmall and 60 USD on JD.com
With its 366 million monthly active users, Pinduoduo is a serious rival of Alibaba and JD.com. Last month, Pinduoduo reported that second-quarter revenue had more than doubled from a year earlier. Its $40 billion market value places it among China’s five most valuable ecommerce companies.
But in the middle and later stages of the competition, Alibaba will need to think about how to occupy market share and contribute profits to the group.
Pinduoduo is the fastest e-Commerce platform last year.
Pinduoduo: how to maintain sustainable growth
Currently, Pinduoduo has a big controversy on the e-commerce platform. This e-commerce platform with the original accumulation of WeChat has brought too many surprises and uncertainties to the market and consumers.
In the long run, “Ten billion subsidies” is a quick way to attract consumers in the early stage of the platform, but not a sustainable business model. After Pinduoduo users become scale, the scope and role of subsidies will be reduced accordingly. Despite the subsidies, some consumers remain loyal to specific brands, not channels like Pinduoduo.
In addition, Pinduoduo compared with Alibaba, there are also logistics problems. Alibaba already has a large stake in almost every logistics company in China. Although Pinduoduo has established its own system to prevent data from being controlled by Alibaba, once Alibaba raises the price of logistics, the profit margin of Pinduoduo merchants will be further compressed.
For Pinduoduo, how to solve the problem of logistics, to better convert consumers into loyal customers, and to achieve stable long-term development is the next problem they need to solve.