There are two core values provided by “e-commerce” platforms, transaction and discovery.
If you know what you want, search in Taobao, and put an order, Alibaba provides the “transaction” value.
If you just want to order McDonald’s food delivery, Meituan also provides the “transaction” value.
What shopping mall provides and what Taobao used to be famous for is that consumers are just wandering around / 逛 – this is how the “discovery” value can be provided.
“Discovery” is deserved to earn higher, and almost as a cut to final sales – businesses believe they win this incremental order because of you. In “transaction” mode, businesses believe they have already had the order; thus transaction providers can only earn the fulfillment fee.
In the transaction mode, the lowest transaction cost provider will naturally win more busines.
In the discovery mode, the provider that can generate more “new sales” can win more business.
So Tencent mini-program / mini-shop is good for luxury brands as the they just need a place to list. Consumers almost already know these brands. The lower than transaction cost the better.
Douyin, Xiaohongshu are better in discovery mode as users spend a lot of time in their app “wondering”. The apps are more likely than others to create incremental demand – users don’t know they want it until they see it.
Previously, transaction mode and discovery mode are served in the same place like Taobao.
This is also true for Meituan in food delivery or in-store dining. Chinese consumers scroll Meituan app for look for food delivery or dining ideas. Even if they are already in the restaurant or know what to order, they also go to Meituan to make related transaction.
Meituan also provides pre-defined sets for many in-store dining – this is tricky. Is this discovery mode? Consumers don’t know what to eat even they are already in the restaurant.
But I think it’s still more transaction mode. Think about the fixed tasting menus provided at a Michelin restaurant. Meituan doesn’t help create incremental demand here if I browse and purchase the $199 set via the app – the value is transaction or like credit cards.
All I want to say is that if Meituan will be like Taobao, competition will be from two fronts – one is by providing lower transaction cost, another is by stealing the discovery cake.
拭目以待