Taobao VS Pinduoduo competitive product analysis report!

This article is a competitive product analysis report of Taobao and Pinduoduo. The article focuses on analyzing the advantages and disadvantages and operational development of these two e-commerce products, and sorts out the operational ideas to share with everyone.

On October 25, 2019, a report dominated the headlines of major media: As of the close of trading on October 24, Pinduoduo's market value reached US$46.4 billion, surpassing JD.com's market value of US$44.6 billion, becoming China's fourth largest Internet company, second only to Alibaba, Tencent and Meituan Dianping.

In September 2015, Pinduoduo was officially launched. In the following four years, it came into people's attention at an astonishing speed and grew into a behemoth. Now its market value has surpassed JD.com, which has been in operation for 15 years, and it has become the second largest e-commerce company after Taobao.

So, in the second half of the Internet that has already arrived, what adjustments should Pinduoduo make to meet challenges from all sides? And what actions should Taobao take to consolidate its position as the e-commerce leader?

This article will analyze the following aspects through competitive product analysis, and finally come up with suggestions for the above issues:

1. Competitive product overview: briefly describe the development history, positioning and business model of the two platforms.
2. Market analysis: explain the background information such as the development status of the e-commerce industry.
3. User analysis: Create user profiles for consumers on the two platforms and analyze their usage habits.
4. Merchant analysis: Explain the composition and competitive status of merchants on the two platforms.
5. Functional analysis: Provide information structure diagrams of the two applications and conduct comparative analysis of similar functions.
6. Double 11 Marketing Activities: Introducing the marketing activities adopted by the two platforms to welcome the upcoming Double 11.
7. Summary and Suggestions: Summarize the above analysis and give the author's suggestions on the future strategic direction and functional innovation of the two platforms.

Note: The statistical pictures in the report are from the analysis reports of iResearch, Analysys and CNNIC.

1. Overview of Competitive Products

1.1 Basic Information

1.2 Purpose of Competitive Products

• Gain in-depth understanding of the current status and market conditions of the e-commerce industry
• Analyzing the overall situation of Taobao and Pinduoduo
• Discover the highlights and shortcomings of the product and find opportunities
• Find the differences between the three products

1.3 Development History

1.3.1 Taobao

• On May 10, 2003, Taobao was established with investment from Alibaba Group. In October, the third-party payment tool “Alipay” was launched. The total transaction volume in 2003 was 34 million yuan. On July 1, 2014, more than 20,000 Internet companies settled in
• In 2004, Taobao Wangwang was launched, linking instant messaging tools with online shopping.
• In 2005, Taobao surpassed eBay EachNet. In May, Taobao surpassed Yahoo Japan to become the largest online shopping platform in Asia. In 2005, the sales volume exceeded 8 billion yuan, surpassing Walmart.
• In 2006, Taobao became the largest shopping website in Asia. Survey data showed that nearly 9 million people went shopping on Taobao every day.
• In 2007, Taobao was no longer a simple auction website, but the largest online retail business district in Asia. This year, Taobao's annual transaction volume exceeded 40 billion, making it the second largest comprehensive shopping mall in China.
• In 2008, Taobao's new B2C platform Taobao Mall (the predecessor of Tmall) was launched; in September, Taobao's monthly transaction volume exceeded 10 billion.
• In 2009, it had become China's largest comprehensive shopping mall, with annual transaction volume reaching 208.3 billion yuan.
• On January 1, 2010, Taobao released a new homepage, followed by Juhuasuan, and then Yitao.com.
• On the morning of January 11, 2012, Taobao merchants
• The city officially announced that it would be renamed "Tmall". On March 29, 2012, Tmall released a new logo.
• On November 11, 2012, Taobao and Tmall platforms set a new record for single-day online shopping at 19.1 billion yuan.
• In 2013, Alibaba, through its wholly-owned subsidiary Alibaba (China), purchased preferred shares and common shares issued by Sina Weibo Inc. for US$586 million, accounting for approximately 18% of Sina Weibo Inc.'s total fully diluted shares, thus fully integrating Taobao e-commerce and SNS.
• On November 11, 2016, the transaction volume of Taobao and Tmall once again broke the record, reaching 120.7 billion yuan. In 15 hours, Tmall's sales reached last year's total sales of 91.2 billion yuan, with online sales accounting for 82%.
• On November 11, 2017, Taobao and Tmall’s transaction volume once again broke the record, reaching 168.2 billion yuan, with wireless transaction volume accounting for 90%. The total number of payments completed by consumers worldwide through Alipay reached 1.48 billion, an increase of 41% over 2016. As of 24:00, 225 countries and regions around the world have joined the 2017 Tmall Double 11 Global Carnival.
• In October 2018, the latest version of Taobao Mobile launched the "Little Black Group". Click the "+" in the upper right corner of the Taobao Mobile message to open the Little Black Group. Little Black Groups are only created by women with a Taobao value of 600 or above. The minimum number of people in a group is 4, and 15 people are required to be online. Starting from November 1st, Xiaohei Group will launch coupons for group purchases among friends.

1.3.2 Pinduoduo

• In September 2015, Pinduoduo was officially launched.
• In February 2016, Pinduoduo's monthly transaction volume exceeded 10 million, and the number of paying users exceeded 20 million.
• In July 2016, Pinduoduo's user base exceeded 100 million and it received US$110 million in Series B financing.
• In September 2016, Pinduoduo and Pinhaohuo announced their merger.
• On October 10, 2016, Pinduoduo’s single-day transaction volume exceeded 100 million yuan on its anniversary celebration.
• On July 26, 2018, Pinduoduo officially entered the U.S. capital market with an issue price of US$19 and a market value of US$24 billion.
• In October 2018, Gome Electrical Appliances and Pinduoduo started cooperation, with the former providing electrical appliance product management business to Pinduoduo.
• On August 17, 2019, Pinduoduo's "New Brand Plan" and JVC TV held a new product launch conference, releasing the first batch of customized smart large-screen TVs since the two parties reached a strategic cooperation. That
• The 65-inch 4K smart large-screen TV is priced at only 1,999 yuan.

1.4 Positioning & slogan

1.4.1 Taobao

• Positioning: Targeting consumers in all cities, providing them with high-quality and affordable products.
• Slogan: Go to Taobao and find what you like

1.4.2 Pinduoduo

• Positioning: Targeting price-sensitive consumers in low-tier cities, providing users with low-priced goods through group purchasing.
• Slogan: Buy together to get a bargain

1.5 Business Model

1.5.1 Taobao

Taobao's main business model is transaction commission, value-added services and advertising promotion income in various scenarios. In addition, when opening a store, you need to pay a certain amount of deposit (starting at 1,000) depending on the category of the product, which is also a major source of income for Taobao.

1.5.2 Pinduoduo

Pinduoduo’s business model is similar to that of Taobao, but its transaction commissions and advertising fees are much lower than those of traditional e-commerce platforms.

2. Market Analysis

2.1 Current Development Status of E-commerce Industry

(1) E-commerce transaction volume exceeded 30 trillion yuan

Data from the National Bureau of Statistics show that the national e-commerce transaction volume reached 31.63 trillion yuan in 2018, an increase of 8.5% year-on-year. Among them, the e-commerce transaction volume of goods and services was 30.61 trillion yuan, an increase of 14.5%.

(2) Online retail sales continued to grow and its share of total retail sales continued to increase

In 2018, the national online retail sales reached 9,006.5 billion yuan, an increase of 23.9% over the previous year.

Among them, the online retail sales of physical goods were 701.98 billion yuan, a year-on-year increase of 25.4%, and the proportion of online retail sales in the total retail sales of consumer goods increased to 18.4%, an increase of 3.4% over the previous year, and the growth rate was 16.4 percentage points higher than the total retail sales of consumer goods in the same period; the online retail sales of non-physical goods were 198.67 billion yuan, a year-on-year increase of 18.7%.

(3) The operating income of the e-commerce service industry was RMB 3.52 trillion

In 2018, the operating revenue of the e-commerce service industry was 3.52 trillion yuan, a year-on-year increase of 20.3%.

Among them, the operating revenue scale of e-commerce transaction platform services was 662.6 billion yuan, an increase of 31.8%; the operating revenue scale of electronic payment, logistics, information technology and other services in the supporting service field was 1.30 trillion yuan, an increase of 16.1%; the operating revenue scale of derivative service fields such as agency operation, training and consulting was 1.55 trillion yuan, an increase of 1935%.

(4) Rural online retail sales reached 1.37 trillion yuan

Rural e-commerce has entered a new round of innovative growth. In 2018, the national rural online retail sales reached 1.73 trillion yuan, a year-on-year increase of 30.4%; the national agricultural products online retail sales reached 230.5 billion yuan, a year-on-year increase of 33.8%.

2.2 E-commerce platform transaction volume

In terms of the number of annual active buyers, Pinduoduo has 419 million annual active buyers, surpassing JD.com. However, the consumption capacity of Pinduoduo users is still relatively low, with the annual per capita consumption being only 1,127 yuan, which is 1/5 of JD.com and 1/7 of Alibaba.

3. User Analysis

3.1 User Profile

3.1.1 User scale

Taobao:

Taobao monthly independent device count from April to September 2019

Pinduoduo:

Number of monthly independent devices of Pinduoduo from April to September 2019

3.1.2 User Attribute Comparison

1) Male to Female Ratio

Taobao:

Pinduoduo:

2) User age ratio

Taobao:

Pinduoduo:

3) Monthly income level ratio

Taobao:

Pinduoduo:

A comparative analysis of user attributes shows that: in terms of user composition, the proportion of female Pinduoduo users is significantly higher than that of female Taobao users, and the proportion of older age groups and users with lower monthly income levels among Pinduoduo users is also slightly higher than that of Taobao users.

At the same time, in terms of city-level distribution, the proportion of Pinduoduo users in lower-tier cities is slightly higher than that of Taobao users.

3.2 Analysis of User Usage Habits

3.2.1 Taobao

1. Taobao is almost equally popular among male and female users, with data showing that Taobao users visit the app more than seven times a day on average and search for more than 19 products.
2. Most Taobao users have a certain level of financial strength, but they prefer to buy high-quality and low-priced goods. Purchasing behavior is more cautious, and the timeline from noticing the product to successfully placing an order is relatively longer. Most users are accustomed to adding their favorite products to the shopping cart, comparing prices from different stores, or waiting until the product is discounted before purchasing.
3. Taobao users prefer to share. They are willing to spend time commenting on the products they purchased and browse other people's comments to obtain some information about the products.
4. Some Taobao users are more concerned about consumption risks. They would rather spend a little more money to ensure that the quality of the goods they buy and after-sales issues are guaranteed.
5. Taobao users are more proactive and subjective. Generally speaking, they have certain purposes and their purchasing motivation comes from themselves.

3.2.2 Pinduoduo

1. Pinduoduo is more popular among older female users with lower income levels.
2. Pinduoduo's users have relatively more free time and are extremely sensitive to prices. Social e-commerce platforms such as Pinduoduo meet their social, leisure and shopping needs at the same time.
3. A considerable number of Pinduoduo users have social circle members with similar consumption concepts as themselves. Therefore, they are more willing to share low-priced products they discover on the spot with friends and relatives in order to obtain greater discounts through group shopping.
4. The goods consumed by Pinduoduo users are mainly fast-moving consumer goods, food and daily necessities, and there are relatively few high-end products. Usually, an order is placed immediately after a brief selection when something needs to be purchased. At the same time, the requirements for quality and after-sales service are relatively lower.
5. Pinduoduo users' purchasing motivations are more influenced by others, and many purchasing behaviors come from recommendations from acquaintances.

4. Merchant Analysis

Taobao

Taobao currently has nearly 10 million merchants. In recent years, Taobao has focused on supporting top sellers. It can be seen that top and mid-level sellers, who account for only 4%, contribute three-quarters of the sales of the entire platform.

As the number of merchants increases, the competition faced by tail sellers becomes more intense, and it becomes more difficult and costly to obtain traffic.

There is no doubt that the store operation capabilities of the tail sellers are far inferior to those of the top and mid-level sellers, making it difficult to attract traffic.

Pinduoduo

As of the end of 2018, Pinduoduo had a total of 3.6 million active merchants. Compared with the huge scale of Taobao merchants, the competitive environment faced by Pinduoduo merchants is not as fierce, but this environment will also change as the number of merchants increases.

Since Pinduoduo mainly adopts the group purchasing method to purchase goods, it has previously obtained a large amount of traffic from external social platforms, making the operating costs of merchants relatively low.

Pinduoduo's merchants are mainly small and medium-sized merchants. At present, it does not have a "top-heavy" structure like Taobao.

V. Functional Analysis

5.1 Main information structure and description

5.1.1 Taobao’s main information architecture and description (red indicates modules that Pinduoduo does not have)

5.1.2 Pinduoduo’s main information structure and description (blue indicates modules that Taobao does not have)

From the perspective of the product information architecture of the two products, each has distinct characteristics:

(1) Taobao

As one of the earliest e-commerce platforms in China, Taobao's information architecture is much more complex than Pinduoduo's.

Taobao adopts a variety of marketing methods and also has strict control over the quality of goods. There are certain standards for the reputation of merchants participating in promotional activities and the quality of their products. Low price is not the only criterion for recommending them to consumers.

On Taobao, consumers are exposed to products in more diverse ways, not only through app recommendations and active searches. Products are also presented through "Weitao" blog posts, Wow Videos (short videos), Yangtao (buyer shows), etc. Consumer users may learn about product information from multiple perspectives.

Taobao is also trying to obtain huge traffic through social e-commerce based on traditional e-commerce. However, compared with Pinduoduo's group buying method based on social interaction among acquaintances, Taobao adopts the KOL-style sales method, mainly through supporting big anchors of Taobao Live to form a fan economy and thus obtain excellent sales capabilities.

Taobao has a comprehensive address book system that allows consumers to add and manage friends and initiate group chats. At the same time, consumer users who meet certain conditions can also open small black groups and obtain rewards by sharing purchases, etc., trying to bypass WeChat and allow purchases to be shared among acquaintances within the app.

Taobao users have relatively stronger spending power and are likely to place multiple orders in a short period of time. At the same time, when Taobao users plan to buy more expensive high-end products, they may first "plant grass" and wait and see for a while before buying. Therefore, Taobao has a complete shopping cart system that meets the above needs of consumer users very well. The shopping cart system also provides support for marketing activities (such as Double 11), encouraging users to consume in batches to obtain discounts.

The integration of the fun and scenario-specific mini-game "Taobao Life" has enhanced the experience of young users, who account for a large proportion of Taobao users, and increased user stickiness.

(2) Pinduoduo

The structure is simple, and consumers obtain product information through only three channels: promotional activities, application recommendations, and active searches. This makes it easier and more direct for Pinduoduo merchants to carry out operational activities.

When choosing themes for promotional activities, Pinduoduo focuses more on "affordable prices" rather than cost-effectiveness, which is consistent with the higher proportion of price-sensitive users among Pinduoduo.

Promotions focus more on the product rather than the brand or store.

Pinduoduo has multiple entrances to different games, and you can get coupons and other prizes by playing the games. The game is interesting to a certain extent, but not interesting enough, the gameplay is simple, and the game is often played more smoothly through the form of "sharing with friends to help". This is consistent with Pinduoduo's social attributes and its relatively older user age composition.

There is no shopping cart, and each order adopts the more affordable discount method of group purchasing, guiding consumers to actively share and buy immediately.

5.2 Similar Function Analysis

5.2.1 Home Page

1) Taobao

The information structure is complex and the content is rich.

It has multiple external application entrances, such as Ele.me, Fliggy, etc., to create a one-stop integrated consumption platform.

There are various forms of promotion, and each has its own characteristics to provide users with rich choices. It not only approaches the issue from multiple angles (low prices, good products, flash sales, special sales, etc.), but also focuses on both products and stores (daily good stores).

Products are displayed in a variety of forms, providing consumers with reference from multiple angles, influencing their choices and promoting purchases. On the one hand, it keeps up with the trend of the times and adopts forms that are familiar to and loved by current consumers - short videos (Wow videos), live broadcasts (Taobao live broadcasts), etc., to achieve the purpose of selling goods; on the other hand, it has set up special areas such as "Good Goods" and "Foreign Shopping" to display products objectively and in detail through blog posts and buyer shows.

Personalized product recommendations: intelligently recommend exclusive products based on consumers’ recent purchasing behavior, user portraits, etc.

2) Pinduoduo

The information structure is simpler and the user learning cost is lower.

There are various forms of promotions, but the affordable prices are more highlighted in the theme names and information presentation, such as clearance sales and 10 billion subsidies. Brand sales highlight brand discounts to convey to consumers the feature of strong product promotion.

There are multiple entrances to small games (daily check-in, Duoduo Orchard, Golden Pig Makes Big Money, etc.), where you can get discounts by playing games, and the platform attracts new users by encouraging consumer users to share their friends' help in the game.

Products are also recommended in a personalized way.

5.2.2 Product purchase page

1) Taobao

• Below the product information (product image, price, name, etc.), the product’s shipping address, express fee, related services (seven-day no-questions-asked service, etc.) and parameters, and other information closely related to the product itself are displayed.
• It not only has product reviews (comments from consumers after purchase), but also displays selected buyer reviews from "Yangtao" for consumer reference.
• There is a question entrance (Ask Everyone) where consumer users can ask questions or view questions they want to know about the product, and at the same time, they can also answer questions from others.
• Scroll down the page and a floating navigation will appear at the top, allowing you to quickly move to the corresponding position on the product page (product, review, details or recommendation).
• At the bottom of the page there are shop, customer service, favorites, add to cart and buy now buttons. Select "Add to Cart" and the product will be added to your account shopping cart, so you can check it at any time and keep an eye on it.
• The store will ship the goods after the payment is successful.

2) Pinduoduo

• A toast dialog box will pop up in the image display area, indicating that a user is group shopping for the product.
• Product promotion information and group buying status are highlighted below the product information (product picture, price, name, etc.).
• Scroll down the page and a dialog box will appear at the top, showing recent product group purchases and positive reviews.
• All products have free shipping.
• The entire application does not have a shopping cart system, which encourages consumers to select products and immediately buy them in a group.
• At the bottom of the page there are buttons for store, favorites, customer service, individual purchase and group purchase. You can initiate a group purchase by sharing the product link with people you know, or you can group purchase with netizens who also want to buy. The price of group purchasing is lower than the price of individual purchase, which is a purchasing method encouraged by the platform.
• After initiating a group purchase, you pay for the goods first, and the store will ship the goods after the group order is successful.

5.2.3 Shop decoration

1) Taobao

The backend operations of Taobao store decoration are more flexible, the navigation tab can be customized, the plug-in types of each page are richer, and the information structure is more complex. The following is a function comparison using the "Nike Official Flagship Store" as an example.

• There are two rows of navigation tabs above and below the display area. The sub-tabs in the upper navigation bar are Home Page, Products, New Products, Buyer Shows and Members (except Home Page and Products, other tabs can also be customized). The navigation sub-tabs below are home page, all products, store micro-taobao, product categories, and exclusive customer service (not customizable).
• There are abundant store decoration plug-ins under each sub-tab, such as page navigation plug-ins, various display plug-ins, membership card plug-ins, etc. Clicking on the display area can directly link to the product purchase page or to the event details page.
• The “Buyer’s Show” page displays the “Yangtao” buyer’s show of the store’s products.
• The "Membership Card" page displays the store membership card and the special benefits that members can enjoy.
• The “Weitao” page displays the Weitao blog posts published by the stores.
• The "Product Classification" page classifies products by category, making it easier for consumers to find them. The background provides a wealth of plug-ins that can flexibly layout and display classified information. At the same time, by clicking on the corresponding area, you can link to the product display page or the event details page.

In general, Taobao store decoration is more flexible and has more methods, and many Taobao merchants have strong operational capabilities, which provides them with a tool that is powerful enough to support store operation activities.

At the same time, the store conveys as much product information as possible to consumers, which is consistent with the high proportion of potential consumers (who have purchasing intentions, but purchasing behavior does not occur immediately) among Taobao consumers, attracting them to browse more product information and make choices.

2) Pinduoduo

The backend operations for Pinduoduo store decoration are relatively simple, with fewer plug-in options, and lower learning and operating costs for merchants. Below, we take a brand flagship store (Nike) and an ordinary store as examples to compare their functions with Taobao stores.

①Brand Store

Brand stores are official stores of well-known brands with quality assurance. You don’t have to worry about buying fakes or imitations in brand stores.

• There is a navigation bar under the store Title, and the sub-Tab name can be customized. However, since there are not many decoration plug-ins under the sub-Tab and Pinduoduo's consumer users are not particularly concerned about various marketing activities, usually, the store will set up 3-4 sub-Tab at most.
• Almost all display areas are linked to the product purchase page, and the marketing is simple and direct, focusing on the discounts and prices of the products.
• The classification page is displayed in pure text, which is simple, intuitive and has a clear purpose.
• The style of the entire page is simple and standardized.

②Ordinary merchant shops

• The structure of an ordinary store is simpler, and usually there may only be two navigation tabs.
• The sub-tab page lists products intuitively, which is very concise and direct.

In general, Pinduoduo store decoration is simpler and the page style is more intuitive. Most Pinduoduo merchants do not have strong operational capabilities. Such store decoration with low learning costs has brought convenience to their operations and reduced competitive pressure.

On the other hand, Pinduoduo's consumer users are more likely to be actual consumers (who purchase immediately after having the intention to purchase) and are relatively price sensitive. Direct listings of products and discounts can more easily lead to purchases.

5.2.4 Product Reviews

1) Taobao

• The review display page displays the review time, product specifications and review content.
• The order in which the reviews are displayed is determined according to certain rules, generally in reverse chronological order.
• You can filter product evaluation information of corresponding styles and parameters by product category.
• You can filter review information by review type.
• Click the "..." button to report a review.
• You can like and comment on other people's reviews, and you can also reply to other users' comments.
• After you rate a product, you can rate it again.
• The evaluation results of all users will be comprehensively displayed in the "Store Impression" and will have an impact on the store.

In general, the Taobao evaluation system has complete functions to support consumer-user interaction in the product review area, whether it is between consumers and merchants or directly between consumers. The platform hopes that users will generate as much valuable information as possible and make this information reflect value.

2) Pinduoduo

• Product reviews display the review content and product specifications, but the review time is not directly displayed in the review.
• You can filter review information by review type.
• Click the "..." button to view the review posting time, report the review, and filter reviews for the current product specifications.
• Product reviews are only displayed on the review page, and the star ratings in the published reviews are not yet reflected in other places in the app.

5.2.5 Message (Chat)

1) Taobao

• There is a fully functional message system. The message page displays logistics information, system notifications, interactive messages, store messages, content number messages and chat messages, and there are prompts when receiving new messages.
• The number of unread messages is displayed at the top of the page, and you can clear the unread messages with one click.
• You can add other consumer users as friends through QR codes or Taobao passwords, and they will be displayed in the address book, and you can initiate chats at any time. You can chat one-on-one or create a group chat.
• When the account's naughty value reaches 400, you can open a Xiaohei group. You will receive corresponding red envelope rewards by sharing products in the Xiaohei group with group members or purchasing products shared by group members.

2) Pinduoduo

• The functions are simple. The chat page displays recent order information, logistics information and chat conversation information, and prompts when the information is updated.
• You will frequently receive official promotion notifications. The promotions pushed are customized based on product browsing records and user portraits, and the notifications cannot be turned off.

5.2.6 Money-saving red envelopes

1) Taobao

• The price is 18.8 yuan/month. If you purchase a continuous monthly package, it will be 17.8 yuan/month, calculated as 30 days per month.
• After buying the money-saving card, there are two privileges: one is to receive the red envelope coupons totaling 95 yuan displayed on the page, and the other is to receive the random red envelopes issued by the money-saving card from time to time.
• The red envelope coupons available on the page include 4 5-yuan no-threshold coupons and several full-discount coupons, with a minimum of 50 yuan and a maximum of 200 yuan.
• You can receive one coupon unconditionally every day, and there is a validity period limit.

2) Pinduoduo

• The price is cheaper, the savings are greater, and there are more benefits to enjoy.
• The price is 5.9 yuan/month, and each month is calculated based on 31 days.
• You can enjoy a variety of benefits by purchasing a money-saving monthly card, each of which is explained below.
• Daily Magic Coupons: Receive coupons with a total face value of 194 yuan. The face value of a single coupon is shown in the picture above. You can receive one coupon every day. The condition for receiving it is to invite three friends to help. The coupon is valid for three days.
• Shipping label privilege: For every 15 orders completed each month, one order can be randomly selected for shipping label, with a maximum exemption of 50 yuan. This privilege can be enjoyed up to 2 times per month.
• Free use: You can apply for a maximum of two product trials per day (the application may be unsuccessful), and the application results will be announced the next day.
• Money Saving Radar: Helps users scan the entire network for low-priced and selected products.

5.3 List of main functional modules

As can be seen from the above figure, as an e-commerce shopping platform, Pinduoduo already has the most basic functional modules. In accordance with the characteristics of target consumers and merchants, it has cut off the shopping cart functional module that most e-commerce platforms have, added a group purchase module, simplified store decoration, and utilized its previous cooperative relationship with Tencent. The group purchase link is allowed to be shared and spread on WeChat, so there is no friend system set up within the application.

In modules other than the basic functional modules, Pinduoduo has currently only set up multiple game entrances, and relies on rewards for playing games (you can ask friends for help) to attract new users and encourage consumers to purchase goods.

On the merchant side, Pinduoduo's simplification of modules such as store decoration and product evaluation has lowered the threshold for merchants to open stores and operating costs, creating a relatively fair business environment with less fierce competition; on the consumer user side, Pinduoduo's setting of functional modules is to help them find their favorite products in the most straightforward way and buy them at the most favorable price.

In addition to the basic functional modules, Taobao has also set up many other functional modules: there are Taobao Live and Weitao with social attributes; there are good goods, Wow Video, Yangtao and content accounts that display product information in different forms; there are Taobao Life, Family Account and Theme Change to enhance user experience.

In addition to meeting the basic needs of consumers and merchants, Taobao pays more attention to helping consumers choose satisfactory products and get pleasure from shopping, and helps capable merchants better manage their stores, so that merchants who serve consumers can maximize their value.

6. Double 11 Marketing Activities

6.1 Taobao

①Official event: Share 2 billion event

• There are various ways to play (4 in total), including playing alone to win prizes, and teaming up with friends to win prizes by PK with other teams.
• The rewards come in a variety of forms, including red envelope rewards that are accumulated over time, as well as ultimate prizes that can be claimed when certain conditions are met.
• One of the ways to play involves attracting new customers, by which you can get up to three Double 11 red envelopes.
• The event not only mobilized consumers, but also merchants. The activity sets out that consumers can receive rewards when they browse products in certain stores, helping merchants build momentum.
• Shopping subsidies are distributed across the entire platform, and most products can enjoy a discount of 50 yuan off for purchases over 400 yuan, and the subsidies can be stacked with other forms of coupons.

②Store Activities

• A Double 11 navigation tab is added to the store to display Double 11 event information.
• Most of the Double 11 store activities adopt the method of issuing large coupons, price reductions and prepayment discounts. Prices are the lowest throughout the year, stimulating consumers to buy in bulk.
• Double 11 elements can be seen everywhere in the application, warming up for Double 11.

6.2 Pinduoduo

The activity is simple in form, using the method of further subsidies and price reductions to highlight the low prices.

VII. Summary and Suggestions

7.1 Summary

A brief summary of the above analysis can be obtained as follows:

7.2 Recommendations

Through the above analysis and summary, the author has a more comprehensive understanding of the situation of the two platforms. Next, some suggestions are made for the future development of the two platforms from the two aspects of strategy and function.

7.2.1 Taobao

(1) Strategically

1) Continue to explore new models and methods to cater to consumers in lower-tier cities

The survey shows that the proportion of Taobao users in the sinking market is lower than that of Pinduoduo. This is mainly because Pinduoduo focused on the sinking market in its early days, adopted a group buying consumption model and used low prices to attract price-sensitive consumers in the sinking market.

However, as can be seen from the above figures, the people in the sinking market, especially the rural population, have obvious disposable income. The slow-paced living environment and lower life pressure often make them have a stronger desire to consume, and they are even not inferior to the first- and second-tier population.

At the same time, with the development of the national poverty alleviation plan and the construction of infrastructure, the Internet penetration rate in the sinking market will increase year by year. Compared with the nearly saturated first- and second-tier city markets, the sinking market is a breakthrough, bringing great potential for growth.

What is important is that with the consumption upgrade brought about by increased income, consumers in the sinking market no longer simply put low price as the primary concern in consumption, and they also have higher requirements for indicators such as quality and reputation.

This makes the low-price and group-buying model adopted by Pinduoduo in its early stages of development no longer so advantageous, but in terms of quality control and supporting services, Taobao does a much better job.

With such basic conditions, if Taobao can tap into the deeper needs of consumers in the sinking market and find new models and methods that are more suitable for consumers in the sinking market, it will be able to find growth points and bring incremental growth.

2) Focus on developing home furnishing and maternal and infant markets

① Maternal and infant market

The overall market of the maternal and infant industry is vast, but the penetration rate is not high. Especially in third-tier and lower cities where there are more users and potential users, the proportion of consumer users in the maternal and infant industry is even smaller. In the future, the maternal and infant industry will be an area to focus on development, and the sinking market should become the main battlefield for maternal and infant products.

② Home improvement market

Data shows that China's Internet home improvement industry is developing rapidly and the market size is growing rapidly, but compared with the output value of the entire home improvement industry, the penetration rate of Internet home improvement is still at a low level, and there is broad development prospect.

(2) Functionality

1) Allow the inclusion of links to Wow videos in the preview of the product purchase page

The effect is as follows:

Requirements:

• On the first or last page of the product display carousel, you are allowed to add a link image of the Wow video. Click the image to jump to the Wow video playback page of the product.
• The fixed position in the upper left corner shows the duration of the video.

Reason: On the one hand, it maximizes the impact of content marketing and provides consumers with a new source of reference. On the other hand, it also allows merchants to maximize the value of content produced by them (because currently, most of the views of Wow videos come from recommendations, but such recommendations are not particularly accurate after all).

2) Modification of the function of "Yangtao Buyer Show"

① Investigate the opinions of consumers in low-tier cities on “Yangtao Buyer Show”

Taobao's original intention was to upgrade picture and text reviews to Yangtao Buyer Shows, which is equivalent to a better evaluation of the products. However, since the concept of "Yangtao Buyer Show" is rather vague and many of the reviews are overly refined, some users may have the impression that "Yangtao Buyer Show" is a means of hype by merchants and is not true and objective enough.

If the proportion of this idea is still high, this function needs to be adjusted accordingly to make this part of the comments appear more real and objective.

②Add reward mechanism

If the "Yangtao Buyer Show" posted by a user is selected as "Yangtao Selection" by a merchant, the user will be given a certain reward (such as store coupons). On the one hand, this will encourage some KOL users to produce higher-quality content reviews for the store. On the other hand, it will also make users more fond of and dependent on the platform.

7.2.2 Pinduoduo

(1) Strategically

1) Strengthen quality control and improve supporting services

Due to Pinduoduo's early focus on low-price group buying model, it did not have strict management in the introduction of merchants, resulting in the rampant counterfeit goods on the platform. Not only does it face the risk of being sued, but it has also had a negative impact on the platform's reputation, posing a hidden danger to the platform's long-term stable development.

At the same time, with the upgrading of consumption in the sinking market, people are paying more and more attention to quality and service. Blindly pursuing low prices without caring about quality will not only fail to meet the ever-changing consumer demand, but will also be detrimental to the sustainable development of the platform.

Therefore, Pinduoduo should improve its platform management capabilities, strengthen supervision of merchants, and refuse inferior products from entering the platform. It should not only provide low prices, but also try to ensure good quality within the same price range.

In addition, we must strengthen the construction of our own service system, further upgrade the after-sales, logistics and other system aspects, enhance the platform's image, and truly conquer users.

2) Support a group of brands that meet the consumption needs of major users

Relatively high-end brands such as Nike and Dyson will focus on platforms such as Tmall and JD.com, where users are more in line with their product positioning. Even if they join Pinduoduo, they will not lower their prices and disrupt their market operations.

What’s more, these brands are not favored by Pinduoduo’s main users. Pinduoduo can compile a list of brands in various categories that meet or even exceed the expectations of the platform's main users in terms of price, quality, etc., and focus on supporting these brands to gain a good reputation among users.

On the one hand, these brands help enhance user stickiness, and on the other hand, they help establish a positive image for the platform and lay a solid foundation for future expansion.

(2) Functionality

1) Launch the friend system

As Tencent withdrew from Pinduoduo's board of directors, WeChat also issued a statement, beginning to ban the spread of misleading group-buying links on WeChat. This has brought considerable impact and challenges to Pinduoduo's long-standing marketing model that relies on social group buying.

Fortunately, Pinduoduo has basically passed the stage of relying on social media to acquire customers and has accumulated enough users. Pinduoduo should launch its own friend system as quickly as possible and develop social functions that meet user needs, and transfer group purchasing and sharing to the inside of the application.

Once you have an internal friend system, it can support its rich marketing activities and promote new recruitment and sales: for example, you can get additional coupon rewards by completing group purchases with multiple friends, and you can also get different levels of rewards based on the number of people who join orders, etc.

2) Social marketing transforms content marketing and adds systems and functions to content marketing

Social marketing based on WeChat sharing has become a thing of the past, and in the past two years, consumers have increased significantly in the frequency of individual recommendations, videos and live broadcast recommendations.

The traffic dividend is shifting from social networking to content. In the future, personalized recommendations and e-commerce content ecosystems with live broadcasts and short videos as the core will become important means to activate consumers in the sinking market and increase purchase conversion rates.

Pinduoduo can take advantage of its advantages in the sinking market, and combine technologies such as big data to further explore the needs of users in the sinking market and find a form of content production suitable for users in the sinking market.

Once the direction is determined, we should start to develop systems and functions that meet the needs, and continuously change and adjust in practice, use content to influence consumer users and usher in a new wave of growth.

In addition, the content delivery may be the hot short video and live broadcast form at present, or it may be other forms, but no matter what the specific form is, the specific function must be reflected in the differentiation with other e-commerce platforms such as Taobao.

For example: offline, users in the sinking market are more likely to be attracted by marketing activities such as "golden egg smash", "red envelope wall", and "luck draw". We can get inspiration from it. Add a live broadcast room lottery function to merchants in the live broadcast. Users who place orders that meet certain conditions may become winners, directly display the lottery results in the live broadcast room, and the prizes will be mailed together with the order items.

At the same time, in order to cater to the characteristics of users in the sinking market, some interesting interactive links can be added. For example, users who are awarded can "post a winning speech" within a certain period of time (sending barrage, barrage is displayed in the live broadcast room in a special form), making the entire live broadcast experience closer to offline special sales activities that users are familiar with.

Summarize

The above is the main content of this article. Finally, the author wants to say: As the Internet industry enters the second half, "land grabbing" has become history. In the future, the competition in the Internet field will no longer be about who expands faster and who has a bigger stall, but about who can do better, deeper and more detailed.

The user growth brought about by crazy money burning will become less and less. User-oriented, personalization, refinement, in-depth and customized will be favored.

At the end of the first half of the Internet, it is not easy for Pinduoduo to fight for a bloody path from the battlefield of fighting against dragons and tigers with its unique entry point.

However, its hard power, such as big data, cloud computing, artificial intelligence, etc., is still far from Taobao or Alibaba. It is not responding quickly enough to emerging entertainment forms such as live broadcasts and short videos. These are the directions that Pinduoduo needs to speed up its catching up - use technology to drive marketing and use content to obtain inventory.

On the other hand, Taobao has solid technology and rich background. Under the trend of layered consumption, how to understand the needs of consumers at all levels of markets, how to meet the needs of consumers at different starting points and maintain product tone at the same application portal is a difficult problem that Taobao needs to think about and solve in the future.

Author: Icefrost

Source: Icefrost