0px;”>Pin Duoduo’s traffic distribution logic
Pinduoduo Investor and Tencent Investment Management Partner Li Zhaohui said that from the definition of economics, Pinduoduo has done one thing, an absolute cost advantage.
This sentence not only means that Pinduoduo gets traffic at the lowest price, but also that Pinduoduo can sell goods to achieve the lowest price on the entire network. The same commodity, the price is lower, this is the reason why users can not refuse to fight more. So more users flocked to the platform, and a positive cycle was formed.
The core question is, why can a lot of goods be sold so low. Behind this involves the platform’s mysterious traffic distribution rules.
A set of gameplay created by Ali is that the fastest and most effective way for businesses to be captured by more traffic is to advertise and participate in auction rankings. In other words, the purchase intention and ability of the merchant are the core rules of traffic distribution. As a result of this, merchant costs have been pushed up, commodity prices have remained high, and the platform’s trading volume and revenue have been expanding.
If you use this logic to measure Duoduo, the conclusion will be very bad. Low price means low quality, or the platform has to invest a lot of cost to subsidize merchants.
The traffic distribution rule of Pinduoduo is completely different from that of Amoy. It is a user-led plus recommendation model. Because users naturally like the lowest price of the same product, the lower the price, the easier it is to be distributed by traffic.
The core reason for Ali’s inability to replicate is that Pinduoduo’s own acquisition cost is very low. In addition, Pinduoduo is mainly based on the information-streaming product recommendation form, and the search traffic accounts for less than 40%, even if the merchants place bidding rankings, the effect is limited.
Instead of spending money, it is better to cut prices directly. This is the default rule of Pinduoduo: low prices have more traffic, more traffic equalizes costs, and businesses have the incentive to further reduce prices. As a result, opening a store in Pinduoduo is cheaper than doing business on Taobao. For users, the products they buy are always at low prices, and they can even get lower and lower.
In essence, Pinduoduo is in the process of reforming the back-end supply chain through mass customization requirements at the front end. Promote the realization of a semi-market economy on the supply side with a semi-planned economy.
Familiar recipes and flavors are reminiscent of Zhang Yiming and his App factory.
Zhang Yiming and Huang Zheng, two super distributors of mobile Internet traffic, both meet the needs of users through accurate algorithm recommendations. It’s just that Zhang Yiming is based on the likes of most people. The more information people like, the easier it is to distribute it. Huang Zheng’s fulcrum is the lowest price of the same product. The lower the price, the more recommended the platform.
The side effect of the headline algorithm is that what most people like may not be good content, and valuable information that few people like may not be discovered. Similarly, the result of this gameplay is that the low price has spawned a large number of single-product explosions, and the on-demand customization model is also destined to have limited choices on the platform.
Feedback to the commercial digital levelThat is, twice as many users as JD.com, but GMV is only half of JD.com, and has been thrown out of Ali by several streets. The platform can’t make more money from it. Pinduoduo is in the true sense, not making money, making friends.
At this point, Zhang Yiming did not have much trouble. On the contrary, the information flow recommendation is a reshuffling of advertising. The headline products have become the most powerful mobile product matrix because of the accuracy of the algorithm. This also gives confidence to many start-up companies that do information flow, especially companies like FunTouTou have the ability to generate considerable revenue from the beginning.
What will happen to Pinduoduo in the long run?
People in the Five Rings have embraced Pinduoduo, and there are not a few items with hundreds of thousands of subsidies at a unit price of hundreds of thousands, not to mention that an Apple phone is tens of thousands of yuan. But the user’s annual consumption expenditure level has not yet broken through. If the tens of billions of subsidies are stopped one day, do users in the Fifth Ring feel more fragrant?
Step back, they are more attracted to the brand. If no higher-priced brand merchants settle in, Pinduoduo is always full of absolutely low-priced products. The increase in GMV volume also relies more on relatively low-priced but absolutely high-priced commodities. Obviously, Ali used to deal with JD.com’s two-for-one strategy, but now it is used more in Pinduoduo.
Liu Qiangdong’s unsolved question, I don’t know what answer Huang Zheng will give.