Shulou(Shulou.com)06/02 Report--

This year's Singles Day campaign became even hotter. Tmall naturally offered various great tricks to defend the home field of Singles Day. JD.com and his little brother pinduoduo also joined in successively, and it was very lively for a while.

In contrast to JD.com 's malaise, pinduoduo's share price rose again recently, and even surpassed JD.com to become the second place in e-commerce, eager to try.

Judging from the market share of e-commerce alone, pinduoduo is not huge-- only 1/20 of Ali and 1/4 of JD.com. But what on earth do investors believe that such a large and lossmaking company can reach a market capitalization of $50 billion? From the author's point of view, the super blessing of Tencent is undoubtedly the biggest weight.

Over the past few years, Tencent has cleared its ecommerce business and then continued to raise bets on JD.com, pinduoduo and VIPSHOP-with shares of 17.8 per cent, 18.5 per cent and 8.7 per cent, respectively, according to the latest shareholdings. They are basically the largest shareholders except the founders. Therefore, among the three giants, Tencent basically represents the highest interests. Strategically, the three companies should also be in line with Tencent's own interests.

Therefore, the biggest focus of this year's Singles' Day is still-how do Tencent departments challenge Ali's position, erode its share and divide its users?

First of all, let's look at the competition on the traffic side. In addition to the stock of e-commerce users, how to grab new users? Over the past 12 months, Tencent's pinduoduo has indeed been the fiercest-pinduoduo has added tens of millions of users due to the perverted split of Wechat.

How does Tencent compete and support in terms of traffic?

In JD.com 's quarterly report released earlier this year, JD.com announced the renewal of a three-year strategic cooperation agreement with Tencent, which will take effect from May 27, 2019. The two sides agreed that Tencent will continue to provide JD.com with outstanding primary and secondary access points and traffic support on the Wechat platform, and the two sides plan to continue cooperation in communications, advertising and membership services for a period of three years.

This cooperation can be traced back to March 31, 2014, when JD.com officially signed a strategic cooperation agreement with Tencent. Within five years, JD.com became Tencent's preferred physical e-commerce partner, ranking higher than other e-commerce companies. The agreement also stipulates that JD.com can get Wechat's exclusive primary e-commerce entrance, as well as Mobile QQ's entrance. This exclusive agreement means that with the exception of JD.com, no other e-commerce platform can have a corresponding level of entrance on Wechat.

In addition to JD.com, pinduoduo, VIPSHOP and Mogujie can also get corresponding traffic supply in the Nine Palace grid of Wechat. According to 
 's prospectus, in February 2018, pinduoduo and its main shareholder Tencent reached a five-year strategic cooperation framework agreement to cooperate in payment solutions, cloud services and user interaction, while exploring and exploring potential cooperation opportunities.

Wechat users can access pinduoduo's mobile platform directly, or they can get discounts through social networks such as Wechat and QQ to "make orders"-by sharing product information on social networks, or by inviting friends and relatives to "make orders".

For pinduoduo, who started as a social ecommerce, Tencent's traffic can be a source of growth. From its establishment to the annual GMV (website transaction volume) more than 100 billion yuan, pinduoduo only used three years. To achieve the same result, Taobao ran for 5 years.

VIPSHOP and JD.com have carried out traffic cooperation with Tencent at the same time, and the three parties have built a win-win ecological chain of cooperation in strategic business. Tencent will provide VIPSHOP with Wechat wallet entrance and Wechat platform traffic cooperation. JD.com will provide an entrance for VIPSHOP on JD.com 's home page of app and JD.com 's home page of Wechat moments, and will help VIPSHOP achieve certain GMV sales targets on JD.com 's platform.

The value of APP traffic of Tencent is 161.7 billion, which is twice that of Baidu and Ali.

The Internet is actually a traffic business, and the traffic of Tencent still firmly occupies the top spot of the mobile Internet. In this era when mobile accounts for 90% of e-commerce, this also reasonably explains the rapid growth of Pinduo and the recovery of VIPSHOP's performance. Even JD.com, who was affected by the Dong GE incident, was slightly weak, but he also recovered in the second quarter, with revenue, profits, cash flow and users all returning to growth.

Tencent's traffic value is concentrated on social networks, with a total value of 161.7 billion yuan, Baidu's is focused on search and promotion, with a total value of 69.9 billion yuan, and Ali's is focused on e-commerce with a total value of 69.4 billion yuan. The traffic value of Tencent system is almost twice that of Baidu system and Ali system.

In contrast, Ali in addition to the "sinking artifact" cost-effective, is still looking for new channels to transform, of course, Douyin, Kuaishou, Weibo and other platform traffic is still a lot of money.

The combined GMV of Tencent has reached 1/3 of the Chinese market, in addition to the "WeChat merchants" under the iceberg-how big is this giant whale? I believe that not only the market, but also the State Administration of Taxation do not know. In 2018, the industry information network speculated that the domestic WeChat business GMV has exceeded trillion, which is almost another pinduoduo. And according to internal sources, pinduoduo will launch Wechat brand stores in the near future, there will be like, Weimeng, official account traffic system of big brands, enable interaction to create a new ecology. The market behind this is eaten one by one, by contrast, Ali is still continuing to tap the help of "private domain traffic".

As far as the strategy of "10 billion subsidies" is concerned, is it possible for the three companies to compete together under the communication of Tencent, through focusing on commodity subsidies and increasing the intensity of individual categories, to form an absolute price advantage, so as to obtain users?

The price concessions of commercial competition are also happy to be seen by users. The essence behind this balance of power between the two sides is that Tencent slows down Ali's speed in the main battlefield under the condition of controlling the overall situation, low cost and low input. In order to strive for more areas and industry card advantage.

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