The two major domestic e-commerce giants are torn apart overseas!

Look at the excitement!!Pinduoduo, which has made the e-commerce market extremely involved, has stirred up trouble in the overseas market again. This time, it is directly competing with our domestic seed players

Look at the excitement!!

Pinduoduo, which has made the e-commerce market extremely involved, has stirred up trouble in the overseas market again. This time, it is directly competing with our domestic seed players.

Let's see what's going on.

On July 14, Temu, the cross-border e-commerce platform of Pinduoduo, filed a lawsuit to the Federal Court in Boston, USA, accusing SHEIN, the domestic dark horse cross-border e-commerce platform, of violating the anti-monopoly law of the United States.

In the indictment, Temu said that SHEIN had a 75% share of the Fast fashion market in the United States by 2022, and "used market dominance to force garment manufacturers to sign exclusive agreements with them, lock the supply chain, and prevent them from cooperating with Temu".

Simply put, Temu believes that SHEIN requires suppliers to sign an exclusive agreement - that is, once merchants settle in SHEIN, they cannot open stores on Temu to sell goods.

*Image: Temu official website

And Temu also provided specific numbers:

As of May, SHEIN has requested 8338 manufacturers to sign exclusive distribution agreements.

What is the concept of over 8000 manufacturers?

Temu also calculated a percentage for fear that everyone would not know: this is 70%~80% of the total number of businesses capable of supplying Fast fashion.

I can see that Temu's resentment is very deep!

After all, from Temu's perspective, SHEIN is using its first mover advantage in the US market over the years to monopolize merchant and customer resources through traffic.

SHEIN also gave a strong response to this: "There is no basis, we will actively respond to the lawsuit.

Bringing the commercial war to court must have been an irreconcilable conflict, and it has not been determined which is right or wrong. However, the two giants' recent battles and tough confrontations have indeed made the e-commerce industry at home and abroad look good.

Everyone in Pinduoduo should be familiar with it. Relying on the "cut a knife" campaign and low price strategy, it has forged a bloody path in the competition between Alibaba and JD, becoming the third pole of the e-commerce market.

*Image: SHEIN official website

If you are not familiar with SHEIN, please don't worry. Sister Fox will introduce you to this e-commerce platform that focuses on Fast fashion and low prices.

SHEIN was founded in 2008. Fourteen years later, with 229 million annual downloads, SHEIN has become the largest shopping app in the world, and has achieved a revenue of about 23 billion dollars, as well as the latest financing valuation of up to 66 billion dollars, leading the American women's Fast fashion market.

*Image source: Ai Media Consulting

SHEIN founder Xu Yangtian is well versed in the importance and tactics of traffic. Through social media and advertising promotion, he redirects public domain traffic from popular social media platforms such as Facebook and YouTube to his own independent website.

In addition, SHEIN has the advantages of low price, fast product updates, and the use of algorithms to capture user needs and precise recommendations.

Social marketing, low prices Is this routine a bit familiar?

Yes, it is very similar to Pinduoduo who killed everywhere in those days, so many people also call SHEIN "Pinduoduo in North America".

The rise of SHEIN has sparked a wave in the once stagnant cross-border e-commerce market.

Cross border e-commerce has long been a new term. Around 2013, a large number of start-ups emerged in China, and in the past decade, there have been ups and downs. Many established enterprises such as Siku and Yangma have also had brilliant experiences,

However, the old brand enterprises have been repeatedly rumored to have operational crises recently, and no one strong enough to form a monopoly pattern has emerged. Although such e-commerce giants as Ali and Pinduoduo have never stopped exploring and layout the overseas market, it can be seen from the financial reports that people still regard the domestic market as the main position.

*Figure: Excerpt from Alibaba's Q1 financial report for the 2023 fiscal year

However, with the peak of domestic internet traffic dividends, expanding business lines and markets is a direction that giants have to turn around. The rise of SHEIN and its ability to attract funds have allowed giants to once again understand the potential and importance of overseas markets.

For example, Alibaba has identified globalization strategy as the most important growth strategy for Alibaba in the next decade or two. Byte has launched multiple platforms such as Dmonstudio and Fanno to test overseas e-commerce.

Last year, Pinduoduo was also rumored to have set up a sea going project team. At that time, the outside world believed that the first stop of Pinduoduo's sea going would be Southeast Asia.

First, because Jitu Express, which is deeply bound with Pinduoduo, originally rose in the Southeast Asian market, and has a strong logistics network and business resource foundation in Indonesia and even the whole Southeast Asia, it is undoubtedly a powerful ally of Pinduoduo in the early development of Southeast Asia.

Second, the Southeast Asian market has a large population, and the consumer group also focuses on cost performance, which is more suitable for Pinduoduo to replicate its development experience and business model in the domestic sinking market.

However, Pinduoduo did not play cards according to the routine, and set the first stop to go to sea in the United States, which has become extremely involved. To be honest, when she saw this news, Sister Fox admired Pinduoduo's courage.

Because there are not only native giants such as Amazon and Wal Mart in the American market, but also SHEIN, which has made a reputation in the local market, as a direct competitor.

However, judging from Huang Zheng, the founder of Pinduoduo, who has always played the game of "dare to be the future", this operation is not surprising.

For example, in the early days of Pinduoduo, the WeChat community group buying applet Kuantuantuan learned how to connect groups, and the community group buying Duoduo and buying vegetables learned how to optimize prosperity.

The same is true for offshore projects, where SHEIN, although a competitor, is also an almost perfect learning object.

At that time, SHEIN was deeply involved in many problems such as poor environmental protection, squeezing supply chain employees, style plagiarism, etc., which was a good time for Pinduoduo to "steal".

As long as it's from SHEIN, it's okay

Previously, some media reported that Pinduoduo continued to recruit employees who had left SHEIN and hoped that these members with successful experience in sailing would be included in its sailing project team.

*Image: Huang Zheng

It is also rumored that Pinduoduo has set up an office near the SHEIN Building in order to facilitate the recruitment of people. Both are headquartered in Wanbo, Nancun, Panyu, Guangzhou.

From this perspective, Temu was destined to have inevitable conflicts with SHEIN at the time of its birth, or rather, to rush to seize SHEIN's territory.

Sure enough, at the initial stage of landing in the US market, Temu, while replicating the domestic "cut a knife" strategy to attract new users at low prices, was also offering preferential conditions to grab suppliers and "poach" SHEIN employees at high prices, and soon became the "popular Crispy fried chicken" in the US e-commerce market.

Feeling hostile, SHEIN is also very vigilant, not only launching promotional activities in the important stage of Temu's recruitment, but also constantly monitoring Temu's attacks in other dimensions.

For example, in December last year, three months after Temu was officially launched in North America, SHEIN filed a lawsuit against Temu in the Northern District Court of Illinois in the United States.

SHEIN believes that Temu made "false and deceptive remarks" towards SHEIN through social media influencers and deceived customers into using "fake" social media accounts to download Temu applications.

The first direct confrontation between the two outside the mall has begun.

From the rapid development of Temu, Hu Mei believes that direct or indirect confrontation with SHEIN will continue for a long time.

According to data released by market intelligence company Sensortower, Temu's download volume in Q4 2022 in the United States exceeded 12.7 million, second only to TikTok and far exceeding SHEIN's download volume during the same period.

Bloomberg Second Measure pointed out that Americans' spending on Temu in May was nearly 20% higher than SHEIN.

Now, bringing the conflict to court again is also a direct manifestation of the business conflict and intensified competition between the two.

But objectively speaking, Temu and SHEIN are at different stages of development. The former is still in the state of burning money and growing savagely. Relying on the strong cash flow of Pinduoduo, they hold high the banner of low price performance while channeling through social media and advertising.

For example, in February of this year, Temu heavily invested 30 seconds of advertising on the Super Bowl in the United States, and the marketing expenses spent on social media and internet celebrities were even more incalculable.

We have also done video analysis on this matter before.

In comparison, SHEIN, which has passed through a period of rapid growth, is in a relatively stable period of transformation and improvement. For example, it has expanded its category from women's clothing to daily necessities, home furnishings, etc., and has also begun to adjust its brand positioning. By recruiting local sellers to increase its platform nature, SHEIN is transitioning from an independent platform to a platform.

*Figure: SHEIN Official Statement

In other words, it changed from a towering tree to a forest.

Obviously, Temu's sudden entry and highly targeted measures have disrupted the pace of SHEIN, and have to devote energy to flow marketing, Pricing and supply chain resources again.

Two years ago, Alibaba received a skyrocketing penalty of 18.2 billion yuan due to its monopoly of "accepting either option", which made everyone realize the rarity and importance of fair market competition.

Although the List of courts of the United States has not yet ruled on the dispute between Temu and SHEIN, it is certain that no regulatory authority in any country will allow such behavior, and every enterprise should focus on improving the quality of products and services.

Finally, Hu Mei still wants to say that they are all Chinese enterprises. Can we unite and unite with the outside world!

References:

Zaker: This time, Pinduoduo may tell a story about the dark horse's counterattack

Alphabet list: "Temu Dou Fa" SHEIN

Moment of Business: "SHEIN and Tume are pinching again, this time because of 'either or not'

Edit:Egg Milk Star

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