Recently, it was reported that Pinduoduo’s Duoduo grocery shopping is experimenting with instant delivery services, which has sparked speculation about whether it will fully enter instant retail. However, through an in-depth analysis of Pinduoduo’s organizational structure, traffic advantages, user group characteristics and global layout, this article believes that instant retail is not a strategic necessity for Pinduoduo.
There is no “three missing one” on the instant retail table, but there are always melon-eating groups of “media” who are happy to see the instant retail war situation as chaotic as a pot of porridge in northwest Shanxi – they seem to want to see Pinduoduo join the battle group more than Pinduoduo.
Two days ago, LatePost disclosed that Duoduo is testing self-built commodity warehouses in first-tier cities such as Shanghai, and will launch instant delivery services as soon as August this year.
This is a continuation of Duoduo’s optimization of the existing performance timeliness, and Pinduoduo’s caliber for this is “not representing the company’s strategic direction” and “has no intention of joining the instant retail war”.
Rao is like this, and many people still see it as a signal that Pinduoduo will play the next big game in the field of instant retail, rendering that Pinduoduo is “fully entering the trillion-dollar market of instant retail”.
But this may be wrong. I learned from relevant people close to Pinduoduo and Pinduoduo partners that Pinduoduo has not taken out the previous investment in the four battles of e-commerce main station, tens of billions of subsidies, Duoduo grocery shopping (community group buying), and Temu (globalization) to deal with instant retail.
It is not ruled out that Duoduo intends to spill over the advantages of the fresh food supply chain accumulated in the field of community group buying to cover some immediate demand, but this does not mean that Pinduoduo will make a strategic bet on instant retail. Pinduoduo clearly “will not get involved in catering takeaway”, and there is no high-profile shouting, which is proof: you know, catering takeaway is the best incision for instant retail; High-profile is a necessary means for the platform to strengthen the mentality of “everything can be takeaway”.
So, should Pinduoduo take instant retail as a strategic move on the development chessboard?
If you look at Pinduoduo from the perspective of the e-commerce industry, and are pushed away by the chasing outlet thinking of “if you don’t enter the market”, then the answer is of course “should”. But if we look at Pinduoduo from the perspective of Pinduoduo and start from its own advantages and characteristics, it is inevitable to think about a question: Is it really necessary for Pinduoduo to comprehensively lay out instant retail?
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In my opinion, instant retail is not a must-have option in Pinduoduo’s strategic layout – even if many people say that instant retail is “the next growth curve in the retail industry”, Pinduoduo does not have to dance with the wind.
01
First of all, instant retail is a “scalpel” for some platforms to activate organizational vitality, but Pinduoduo does not need it.
After JD.com launched takeaway, it announced its entry into the wine and tourism market; Meituan comprehensively expands flash sale categories, increases the number of Little Elephant Supermarkets, and promotes the transformation and upgrading of preferred; Alibaba merged Ele.me and Fliggy into Alibaba’s China e-commerce business group…… In recent times, JD.com, Meituan, and Alibaba have made big moves one after another, which is to increase the weight of instant retail.
Combined with the organizational restructuring of the three enterprises, it is not difficult to find that instant retail is becoming an important opportunity for their restructuring.
In December 2023, Liu Qiangdong reflected on JD.com’s “current organization is bloated and inefficient” on the intranet; Some time ago, Alibaba’s former employees posted a long article about Alibaba’s lesions and received a reply from Jack Ma, which talked about Alibaba’s “unclear strategy”…… The problem points to the disease of the big factory, and the problem behind the problem is strategic loss.
In this case, it is common practice to use new business as an anchor to calibrate development strategies and reshape organizational vitality.
Alibaba will connect local life services with Tao resources, form a stronger comprehensive combat capability with ecological synergy, and get rid of the slow response caused by the “big and complete” structure in the past; JD.com promotes the coordinated operation of warehousing, distribution, marketing and other departments to avoid the constraints of segmentation…… They are all targeted. It can be said that instant retail has become the entry point for leveraging new businesses to solve old chronic diseases and external competition to drive internal problem governance.
However, Pinduoduo, which is known for its minimalist structure and high efficiency, does not yet have the urgency to reconstruct the organizational system through instant retail.
Pinduoduo is an enterprise with a not so strong “bureaucratic flavor”, and its organizational management model is attributed to “centralized flat management” by the industry, with a short decision-making chain, fast response speed, and good at concentrating resources to fight a “war of annihilation”.
In the context of the existing structure that can support the efficient operation of core business, Pinduoduo’s need to use instant retail as the lead to drive organizational restructuring is not so urgent.
02
Secondly, instant retail is the “Luoyang shovel” for large factories to tap traffic dividends, while Pinduoduo has the advantage of low traffic costs.
A few days ago, Liu Qiangdong said at a small-scale sharing meeting: Although the catering takeaway business is losing money, 40% of consumers will cross-purchase e-commerce products, and its investment is more cost-effective than going to Douyin and Tencent to buy traffic.
Liu Qiangdong’s “high-frequency and low-frequency” model – using high-frequency trading (catering takeaway) to divert low-frequency and high-profit businesses (wine tourism, 3C, etc.) is the core logic of Meituan, Alibaba, and JD.com to lay out instant retail.
Meituan has comprehensively expanded flash sales categories to achieve business expansion from high frequency to low frequency; Alibaba and JD.com put instant retail, e-commerce, and wine and tourism on the plate of “big consumption” to promote multi-directional traffic conversion…… It is based on this point.
▲ LatePost sorted out the product supply, warehouse distribution, and DAU of several platforms.
In this, leveraging traffic leverage and breaking through traffic bottlenecks has become an important purpose of instant retail.
With its unique business model and strong traffic aggregation capabilities, Pinduoduo has formed a significant low-cost traffic advantage in the field of e-commerce.
From an e-commerce perspective, cost-effectiveness is always the most effective secret to traffic acquisition. “How fast and easy to save”, users always seek the optimal solution between “saving” and other elements.
Pinduoduo has obtained a large amount of free traffic by using the “cost-effective” characteristics supported by sellers’ zero commission + ultra-short chain model + subsidies on both sides of supply and demand, plus “social fission” gameplay such as group joining and bargaining.
To this day, its users’ shopping frequency, stay time, and repurchase rate are at the leading level in the industry.
It is true that instant retail can increase user activity, but in view of the high cost of fulfillment and the low gross profit margin of core categories such as fresh food and daily necessities, Pinduoduo will use resources to optimize the monetization efficiency of existing traffic in the case of a relatively abundant traffic pool, which is not a better choice.
03
More importantly, instant retail mainly targets “time-sensitive” consumers in first- and second-tier cities, and it is difficult to cover many “price-sensitive” consumers who account for the vast majority of the total population – this is the main user group of Pinduoduo.
As a time-sensitive home consumption format based on the instant delivery system and characterized by “online ordering, offline 30-minute delivery”, instant retail is born in response to the immediate satisfaction of consumers’ “buy and get” instant needs.
The fact that the fulfillment cost accounts for more than 20% of the order amount determines that instant retail must be based on “high fulfillment cost + high user willingness to pay”. It is like a luxury item in the retail field, targeting some high-tier city consumers who are willing to pay higher prices for faster delivery of goods.
However, it should be noted that the pyramid structure of domestic consumers has not changed fundamentally, and consumers in low-tier cities and rural areas at the base of the tower are still the “basic plate”.
The reality is there: at a time when the gradually improving circulation infrastructure and social fulfillment system have turned the gap in the delivery timeliness of goods into the difference between “half an hour” and “one or two days”, most consumers are far more sensitive to “9.9 free shipping” than “half an hour delivery”, and “the price is 10% cheaper” is more attractive to them than “a few hours faster”.
The data shows that instant retail orders mainly come from first-tier new first-tier cities, and the penetration rate in the sinking market is still very low.
In fact, Alibaba Taoxianda and JD.com have long had a layout in instant retail, but the progress has been slow before.
LatePost summarizes the reason as follows: 1-hour delivery is of course better than two-day delivery, but consumers are usually not willing to spend dozens or hundreds of yuan more for this. After several years of investment, the verified instant retail categories are still dominated by fresh food, alcohol, medicine, flowers, etc., and not many people buy other things. “After the subsidy ends, how many consumers can accept instant retail still needs to be verified.”
From the perspective of user experience, it is normal for instant retail to be regarded as “defining the next generation of shopping experience”; However, from the perspective of overall demand, it remains to be seen whether the rise of instant retail is “out of the circle of niche demand”.
Returning to the essence of retail, retail always revolves around dimensions such as “how fast and how saving”. Instant retail is an extreme reinforcement of “fast”, but this does not affect the wider demand for “province”.
Pinduoduo has previously established a comparative advantage in the “province” by compressing the circulation link with the C2M model, replacing centralized warehousing with a distributed supply chain, and improving the scale effect of a single product with explosive logic.
Michael Porter, a professor at Harvard University and the “father of competitive strategy”, once proposed three basic competitive strategies: cost leadership strategy, differentiation strategy, and centralization strategy. Pinduoduo does not need to seize every outlet, when the giants have plunged into the deep sea of instant retail, it can continue the dislocated competition style that came out of the e-commerce consolidation pattern in the past, and continue to use cost-effective advantages to take care of most consumers’ needs for “province”, rather than using high performance costs to meet the needs of a few consumers for the ultimate “fast”.
04
When discussing whether Pinduoduo should focus on instant retail, there is another dimension that cannot be ignored is globalization.
Instant retail, from a domestic point of view, is an incremental expansion – it has made the consumption cake bigger in meeting the demand of “shopping at any time and receiving goods instantly”; From an external point of view, it is still stock mining – the platform will inevitably roll up to grab users.
Since the underlying logic is to look for new additions, there is no need to limit our eyes to China. Compared with the “asset-heavy” track instant retail, which is highly dependent on localized resources and fulfillment capabilities, global business may correspond to a broader market.
In the past few years, Duoduo cross-border has sprung up in overseas markets, and the scale of users is close to Amazon. By the end of 2024, Duoduo Cross-border has covered more than 150 countries and regions around the world, with more than 200 million monthly active users and annual sales of more than $10 billion, which are the most intuitive annotations of its global expansion capabilities.
In the process of globalization, Pinduoduo can reuse the existing supply chain management, cost control and refined operation capabilities, and use the “group + pre-sale” gameplay in China, directly connected to the factory and the C2M small order quick reaction model to adapt to overseas markets and obtain deterministic returns.
Although the “tariff wall” is currently horizontal, under the framework of the “Belt and Road” and RCEP, China’s cross-border e-commerce still has dividends to be discovered, and Duoduo cross-border can still play a leading role in the “Made in China globalization breakthrough battle”.
For Pinduoduo, in the case of globalization and expansion connected to the “sea of stars”, instead of cutting feet and distracting energy for instant retail, it is better to continue to put globalization as a higher strategic priority and make strong investment in advantageous points.
After all, from an endgame perspective, the important thing is not to win the instant retail war, but to find new volume in the new blue ocean.
If instant retail is regarded as a battleground for the giants of the two-dimensional world, then globalization may be the reclamation of the three-dimensional world. Instant retail is a change in the form of retail, and exporting the efficiency of China’s supply chain to the world is another change.
In this regard, Pinduoduo should do Pinduoduo itself, not another Meituan, Alibaba, and JD.com – it can maintain strategic focus, make good use of its own advantages, walk in its own time zone, and follow its own rhythm, rather than following the trend.
