Pregnant Peak: Taobao blocks the traffic and transactions brought by WeChat. Although not surprising, what perspective should we use to interpret it?
Deep Throat: Strive for the downstream. This is a principle you've mentioned before. Whoever is at the most downstream can continuously receive nourishment from upstream. If someone wants to become my downstream, which means replacing me as the most downstream in this chain, they should be immediately blocked.
Pregnant Peak: Communities are weak relationships, IM (Instant Messaging) is a strong relationship. The most valuable strong relationships that gradually accumulate in weak relationships eventually end up in IM. This is QQ's advantage at being downstream, and the reason why QQ receives "subsidies" from upstream communities.
Guidance is a weak relationship, buying and selling is a strong relationship. This is why sellers spend money on advertisements everywhere to bring traffic and users to Taobao, because Taobao is where the final transaction occurs. However, the question is, WeChat also provides guidance, it is upstream, and Taobao is still where the transactions occur, making it downstream. Why is Taobao afraid?
Deep Throat: Today, WeChat provides guidance and brings traffic to Taobao, but tomorrow it will be CRM management, a place where sellers maintain long-term relationships with old buyers. What sellers do today on WeChat is marketing, but tomorrow they will complete the entire chain from opening a store to payment and after-sales service on WeChat. These, relative to a single transaction on Taobao, will become the real downstream. "Downstream" is a concept that continues to extend. Before QQ, BBS was the downstream of internet user relationships. With QQ, it became the new downstream.
Pregnant Peak: As the IPO approaches, more issues of Taobao have been raised. Sellers are competing on price and advertisements; with advertisements comes traffic, without advertisements there is no traffic. It benefits Taobao, but sellers are exploited. Last week, the leader of Taobao said that in the future, they would do "SNS" (Social Networking Service), allowing sellers to establish long-term relationships with buyers, gaining transactions through maintaining old buyers rather than relying on advertisements.
Deep Throat: Taobao is a model of product aggregation, unable to achieve so-called "small and beautiful" e-commerce, because sellers are constantly involved in price comparison, and product innovation gets copied. WeChat e-commerce naturally solves this problem. Here it is decentralized, without a centralized main page like Taobao, sellers independently manage their own accounts and buyers. Sellers and brand manufacturers advertise on Taobao to attract new users, then transfer users to WeChat public accounts, directly transacting with sellers. This will lead to a significant portion of Taobao's share moving to WeChat. WeChat has become a real downstream of Taobao.
Pregnant Peak: While Taobao blocks WeChat, its cooperation with Sina Weibo has also emerged. This is essentially one matter. Maintaining long-term relationships between buyers and sellers is a trend, so Taobao supports Weibo. And to confidently support Weibo, Taobao previously invested in Weibo. Step by step, missing one step could mean losing everything.
Deep Throat: For Taobao, Weibo is not only for driving traffic, but also for CRM management. For Weibo, Taobao is not only for advertising, but also for completing transactions and after-sales service loops. Replacing Weibo with WeChat, the same logic applies. Without this logic, Weibo wouldn't join forces with Taobao to counter WeChat. Taobao needs Weibo to avoid being marginalized, but Weibo's essence lies in social networking, over-development could harm users. Now it is boldly experimenting. WeChat seems slower, but it is catching up in areas related to e-commerce such as payments and scanning barcodes, laying a solid foundation. It will make a move.
The disadvantage for Taobao in blocking WeChat is that it harms the needs of sellers, but sellers won't give up because of this, thus giving them greater motivation to set up camp on other platforms. Taobao's action is similar to forcing suppliers to choose between Tmall and JD.com, which is monopolistic. Therefore, Liu Qiangdong keeps saying that if you are monopolized by Taobao, Jack Ma will always be the boss, if you are 50% on Taobao and 50% on JD.com, then you will be the boss of both Jack Ma and Liu Qiangdong.
Pregnant Peak: Even if Taobao blocks WeChat, Tencent has Paipai and online shopping, which also involve merchants. This process may take longer and be more difficult, but it will still happen.
Deep Throat: Once a pivot point is found, the earth can be moved. Consider how Taobao defeated EachNet back in the day. EachNet charged transaction fees, collecting a small amount from sellers each time a transaction was made. The reasoning behind this was: as long as buyers are here, sellers won't leave; charging a little per transaction, everyone will profit, and sellers won't mind too much. But Taobao didn't charge transaction fees. This way, sellers started thinking. They encouraged EachNet's buyers to place orders on Taobao, avoiding paying fees to EachNet. The extra profits were shared with buyers. Everyone benefited. In this way, EachNet was emptied bit by bit.
The key point is: Taobao became the downstream, where transactions occurred, while EachNet became the upstream, providing guidance.
Pregnant Peak: So what WeChat is doing to Taobao today is similar to what Taobao did to EachNet back then. Taobao targeted the flaw in EachNet's business model: charging transaction fees. WeChat targets the fatal weakness in Taobao's business model: continuously exploiting sellers through advertisement fees.
Deep Throat: Based on this trend, I am not optimistic about Taobao's market value after its IPO. Your previous practice of peeling off sellers' skin, charging advertisement fees, and demanding tolls will no longer work. You either succeed WeChat, succeed Weibo, or change yourself. WeChat will figure it out on its own; Pony Ma's layout in e-commerce is solid. Whether Weibo will be dragged down by Taobao is uncertain, and Weibo is not fully controlled by Taobao. Transforming yourself this way is quite challenging.
It is rumored that Taobao wants to go public quickly, possibly because these adverse trends have affected data, directly impacting valuation. That is to say, Taobao is going public at the peak of its model, yet during a period of great change. I wouldn't dare buy its stock.
Pregnant Peak: What about JD.com?
Deep Throat: Still the same point, strive for the downstream. JD.com's card is logistics. Assuming JD.com's logistics capability truly scales, opens up, and is indeed stronger than other companies, and simultaneously its POP open platform also scales. Would a buyer of Taobao or Tmall have the motivation to place an order on JD.com to enjoy better user experience provided by JD.com's logistics? Moreover, the price might be lower than third-party logistics.
Still the same logic. Previously, completing a transaction was the most downstream, it didn't matter who delivered the goods. But if in the future, transactions can be completed anywhere, with similar product prices and payment convenience, delivering the goods to the buyer via logistics will be the most downstream. What Taobao did to EachNet could also be what JD.com does to Taobao.
Pregnant Peak: That is to say, the downstream is constantly changing. During a certain period, if you have a relatively large advantage, you become the downstream. In the next period, if your competitor fills their weaknesses and introduces new services, they may become the new downstream. In the U.S., Facebook has become the downstream of IM. In China, QQ extended to QQ Zone and Friends Network to prevent Kaixin001 from becoming its downstream. WeChat has evolved into Moments and groups from IM.
Taobao's problem lies in not keeping up with the times. After competitors continuously filled the gaps in information flow richness and payment convenience, they began using differentiated methods such as more convenient mobile shopping, accumulated old customers, CRM management, and logistics to become the new downstream.