At the beginning of the Chinese New Year in 2024, Pinduoduo, a highly motivated company, rarely stepped on the brakes.
On January 5th, a reporter from the Daily Economic News confirmed from the relevant staff of Pinduoduo that the local living business of Duoduo Maicai has been closed, and the Duoduo Maicai project is operating normally.
Previously, media reports reported that Duoduo Maicai launched a local life to store business investment campaign in mid December 2023, originally scheduled to be launched nationwide after the Spring Festival in February 2024.
This means that in less than a month, I thought I would do a lot of fighting and buying groceries to live locally, but I chose to withdraw my troops. For Duoduo Maicai, who survived the "Hundred Regiments Battle", what is the reason behind "not loving war"?
In contrast, in the current field of local life, Meituan and Tiktok are engaged in fierce battles, Ali and Jingdong have repeatedly charged, and Kwai and Xiaohongshu are eager to try. Will Pinduoduo's sudden brake at this moment, when the situation is still unclear, cause it to fall behind in this war?
It will be shut down in less than a month, so buy more vegetables and "brake hard"
According to Pinduoduo's original plan, Duoduo Maicai should be a key force in its local life business. After its establishment in 2020, Duoduo Maicai became a "first level project" within the company. Pinduoduo invested a lot of material and human resources in it, which allowed it to survive the long and arduous battle.
After defeating the "old three groups" one by one, in the field of "buying groceries", Pinduoduo almost only had Meituan, a evenly matched opponent. According to data from Guojin Securities, as of the first half of 2022, Duoduo Maicai's market share has reached 45%, surpassing Meituan Youxuan, which accounts for 38%.
The cruel money burning game has a tendency to return to the right track after the smoke of gunpowder gradually dissipates. Previously, according to calculations by Zhejiang Securities, in the third quarter of 2021, Duoduo Maicai suffered a loss of about 3 billion yuan, while Meituan Youxuan suffered a loss of about 7 billion yuan. According to media reports, as of June 2023, except for Sichuan, Chongqing, Guangdong, Xiangbei, and Hangzhou, Duoduocai has achieved gross profit conversion in other regions of the country.
This can also be vaguely understood from the financial report data. The second quarter report of 2023 shows that Pinduoduo achieved a total revenue of 52.3 billion yuan in the second quarter, of which the revenue from transaction services was 14.3 billion yuan, a year-on-year increase of 131%, which is closely related to the performance contribution of Duoduo Maicai; In the third quarter, Duoduo Maicai and Duoduo Cross border jointly pushed transaction service revenue to 29.15 billion yuan, a year-on-year increase of 315%.
At a time when Duoduo is approaching profitability, Pinduoduo is betting on the possibility of accelerating its local lifestyle business.
In mid December 2023, Duoduo Maicai tested its local lifestyle business in provinces such as Hainan and Guizhou, recruiting local lifestyle suppliers. The investment projects included in store dining vouchers, in store hotel vouchers, scenic spot ticket vouchers, movie tickets, etc.
A reporter from the Daily Economic News saw on a poster of Duoduo Maicai's investment promotion for the Guizhou market that, regarding the cooperation model and fees, Duoduo Maicai only needs a simple connection between the merchant and the corresponding procurement and sales, and the merchant only needs to pay a deposit to achieve zero commission entry.
Guizhou is an advantageous area for Duoduo to buy groceries and serves as a starting point for investment promotion, but in the end, this local lifestyle business was temporarily suspended before reaching its full month. On January 5th, a reporter from the Daily Economic News learned from the relevant staff of Pinduoduo that the local living business of buying groceries in Pinduoduo has been closed.
Local life recruitment continues, do Pinduoduo fall behind or hide a hand?
From the main website to Duoduo Maicai, and then to Duoduo Cross border, Pinduoduo has always been fierce in three entrepreneurial ventures. Why is Pinduoduo now stepping on the brakes in exploring local business?
Zhuang Shuai, founder of Bailian Consulting, said in an interview with the Daily Economic News that one reason is that the concentration of the local living market is currently high, and Meituan still holds almost the largest market share at present.
According to data from iResearch Consulting, it is expected that by 2025, the scale of China's local life service market will reach 35.3 trillion yuan. Under such a large market temptation, the first position is destined to be coveted by others.
Meituan has clearly felt pressure from others in the local lifestyle field. According to the data released by Tiktok in January this year, the total transaction volume of Tiktok life service platform will increase by 256% in 2023, covering more than 370 cities and more than 4.5 million stores.
Faced with strong opponents, Meituan defended step by step through subsidies and live broadcasts. According to media reports, in July 2023, when the first level entrance of live streaming was first launched, Meituan Live's monthly GMV was about 500 million. By August, this indicator had rapidly increased to 1-1.2 billion. At the same time, in the face of C-end consumers, Meituan shouted the slogan of "limited subsidy, low price for the whole network" to compete with Tiktok for low price.
The cost of low prices is obvious. According to the 2023 Q3 report, Meituan's core local commercial sector (including food and beverage delivery, Meituan flash purchase and in store, and liquor and tourism business) had a revenue of 57.69 billion yuan in the third quarter, accounting for 75.4% of the total revenue. The operating profit of this sector was 10.1 billion yuan, a year-on-year increase of 8.3%, and the operating profit margin was 17.5%, a decrease of 2.6 percentage points from 20.1% in the same period last year. Meituan stated in its financial report that the decrease in operating profit margin is mainly due to higher subsidy rates.
While Tiktok is the main force, Alibaba, Tencent, Kwai and other giants are not idle. Alibaba has reorganized its formations against Ele.me, Gao De, and others; Tencent launched the "Store Delivery" service to join the food delivery battle through the WeChat ecosystem; The local life business of Kwai is also accelerating its expansion, and the current core strategy is still subsidies.
Zhuang Shuai pointed out that compared with Meituan and Tiktok, Pinduoduo has no obvious advantage in expanding local life. Moreover, because Pinduoduo does not have a Tiktok service provider system, it can only build its own team to expand businesses and urban operations, with relatively large investment. "Therefore, the benefits are not obvious. In addition to the increasingly fierce competition in domestic and foreign physical e-commerce business, Pinduoduo needs to focus more on these businesses."
When it comes to Duoduo Maicai, who hastily withdrew troops, Zhuang Shuai believes that Duoduo Maicai's business is currently ranked first in the community group buying market and is very stable. Moreover, the main model is for the team leader to provide the last 100 meters of warehousing services and consumers to pick up goods at the post station. "It is not ruled out that Duoduo Maicai's future benchmark will be Cainiao Station, and the key still depends on Pinduoduo's positioning in the future," he said.
Of course, stepping on the "emergency brake" when buying groceries does not mean that Pinduoduo has completely withdrawn from the local living field.
The Daily Economic News reporter saw on the Boss Direct Recruitment that Pinduoduo is still recruiting local life business BD (Business Development) in Jiaxing, Yinchuan, Haikou and other places. This position is mainly responsible for evaluating and negotiating cooperation with catering, leisure and entertainment, and hotel businesses.
At the same time, what may be easily overlooked by the outside world is that Pinduoduo launched the offline group buying tool "Kuai Tuan Tuan" as early as March 2020, and began recruiting local life service providers in March 2023, low-key promotion of local life business progress.
Since March 2023, Kuai Tuan Tuan has been recruiting service providers in the local lifestyle market. Two months later, some Kuai Tuan Tuan leaders have launched local lifestyle products such as group purchase vouchers in their stores.
Regarding whether the local life business of "Kuai Tuan Tuan" will be affected by the decision of Duoduo Maicai to shut down local life, Pinduoduo staff told the Daily Economic News that these two businesses are independent and have never been approved.
In addition, in July 2023, Pinduoduo launched the "Local Life" portal within the app. The reporter from the Daily Economic News saw that at present, the entrance is deep, mainly selling coupons for Ruixing Coffee, Burger King and other catering brands, as well as recharge and online purchasing services for supermarkets such as Wal Mart.
Screenshot of Pinduoduo APP
In the competition among internet giants, there is no eternal winner, and it seems that a series of hard battles are the norm. In the past competition, Pinduoduo's "bleeding and sweating" has made Duoduo Maicai the top in the industry, and has also greatly promoted Duoduo's cross-border business. But in the competition of local life, Pinduoduo still has to take steps from scratch.
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