By counting the data of China's six major e-commerce platforms in the three dimensions of GMV, users and merchant scale, as well as comparing the total social retail sales and Chinese population data released by the National Bureau of Statistics, the number of registered retail enterprises counted by the industrial and commercial departments can basically be clear:China's e-commerce industry has indeed entered the stock market stage.
In the stock market stage, it is normal for the industry as a whole to grow at a year-on-year rate of less than 20%. If the revenue of an enterprise is higher than 20% year-on-year, it must be at the beginning of its establishment to predict the changes in future market competition and consumption trends, and make corresponding strategic planning and system design as early as possible.
Pinduoduo is obviously such a company, starting from the first group link in the WeChat group in 2015, this new e-commerce platform, which was established less than 9 years ago, once surpassed Alibaba in market value after releasing its 2023Q3 financial report.
On November 28, the 2023Q3 financial report data released by Pinduoduo showed that the revenue reached 688400 million yuan, an increase of 93 million yuan from 35.5 billion yuan in the same period last year9%, almost doubled. 522 from the second quarterThe net increase of 8.1 billion yuan in a single quarter also reached nearly 16.6 billion yuan, exceeding market expectationsAchieved GAAP net profit of 155400 million yuan, with a net profit margin of 226%。
Since the third quarter is after 618 and before Double 11, it is the off-season for e-commerce, and the financial report data in the third quarter truly tests the comprehensive strength and strategic determination of major e-commerce platforms.
Duoduo cross-border will recreate multiple Pinduoduo
There are three major advantages of China's e-commerce platform in the rapid development of overseas in recent years:First, it can take advantage of the flexible chain of low cost and rapid response of China's manufacturing industrySecond, the low-cost customer acquisition model of the U.S. Internet through social platforms is converging with ChinaThird, the overseas layout of Chinese logistics enterprises is becoming more and more mature.
In addition to these three advantages, Duoduo Cross-border has also carried out cross-border business model innovation, helping Chinese merchants solve the problem of differences in policies and consumption Xi in different countries through "full custody", and reducing the difficulty and high cost of overseas customer acquisition, operation, product selection and fulfillment.
Another advantage of the "fully managed" model is that it can use the platform to quickly organize larger-scale merchants and products, and then quickly expand to multiple countries to achieve rapid growth.
As of the end of the third quarter, Duoduo Cross-border has penetrated into more than 100 manufacturing industrial belts in Guangdong, Zhejiang, Shandong, Anhui and other places, and promoted high-quality manufacturing products into more than 40 countries and regions such as North America, Australia, Europe and Asia.
More than 400,000 parcels are exported every day, with an average daily cargo weight of about 600 tons, more than half of which are destined for the U.S. market. In the U.S. market, there are more than 2 million SKUs on the line, and it is expected to reach 4 million categories this year.
The scene of the Duoduo cross-border booth at the 2nd Global Digital ** Expo. Photo by Zheng Yu.
For Duoduo Cross-border, which was only launched in September last year, being able to achieve such a scale shows that the innovative model of "full custody" has obvious advantages. However, compared with Pinduoduo's open "light" platform model, Duoduo cross-border has actually become heavier, the requirements for team capabilities have increased, and the operating costs of enterprises have also risen rapidly in the early stage, resulting in a decline in profit margins.
According to the financial report, the total cost in the third quarter was 268300 million yuan, a year-on-year increase of 262%. In this regard, Pinduoduo explained in the financial report that the increase mainly came from the increase in fulfillment fees, payment processing fees, maintenance costs and call center fees.
Overall operating expenses were 2535.4 billion yuan, a year-on-year increase of 44%. Of this amount, sales and marketing expenses were 217RMB4.9 billion, a year-on-year increase of 55%, mainly due to the increase in spending on advertising activitiesOnly general and administrative expenses compared to last year's 9100 million yuan decreased to 75.8 billion yuan.
Duoduo cross-border is still increasing investment and expanding to more countries and regions.
In the third quarter, Duoduo Cross-border continued to launch the first-class subsidy strategy during the Double 11 promotion of the U.S. retail e-commerce industry this year - "Black Friday". At the same time, it will lay out overseas consumption nodes such as Halloween and Christmas in advance, and continue to compete for market share in the global market through Chinese-style e-commerce promotions.
In addition, since March this year, Duoduo Cross-border has continued to expand its warehouse layout, enhance its receiving capacity and increase the number of days of stocking, and improve its supply capacity. At the same time, it has cooperated with world-famous shipping companies such as Matson, ZIM, CMA CGM, Maersk, COSCO Shipping, etc., and opened up the shipping express channel to stabilize the soaring air freight and reduce logistics costs.
Of course, with the growth of scale, the "full custody" model needs to balance the relationship between the profitability of the platform and the profit and competitiveness of merchants.
The advertising revenue of this model is very low or even almost zero, mainly commission.
At this stage, according to Zhuang Shuai retail e-commerce channel from the merchant to learn that some merchants used to sell a product only a few cents of profits, through Duoduo cross-border can now earn dozens of hundreds of times the profit, settled in Duoduo cross-border merchants, not only re-found orders, profits have also generally increased.
From the perspective of the platform, Pinduoduo's transaction service revenue (commission income) in the third quarter was as high as 2915.3 billion yuan, compared with only 70 percent in the same period last year2.2 billion yuan, if estimated according to the average growth rate of the domestic e-commerce stock market, the commission can reach more than 10 billion yuan at most. The year-on-year growth rate of transaction service revenue in the third quarter was as high as 315%, which is a great contribution to Duoduo Cross-border according to the timeline and the operating data publicly available to Duoduo Cross-border.
According to **, the annual target of Duoduo's cross-border sales this year is US$15 billion, and in 2024, it has set a GMV target of US$30 billion (about more than 210 billion yuan).
Extrapolating from the commission income, Duoduo Cross-border may have exceeded the GMV target for the whole year of 2023 in the third quarter, and may even reach the GMV target for 2024!
According to this growth rate, the time for Duoduo's cross-border GMV to reach 1 trillion yuan will even be faster than that of Pinduoduo, and there are more than 150 countries and regions in the world, and Duoduo's cross-border expansion is only less than a quarter.
Referring to the United States, Amazon now only operates in 18 countries (there is no Chinese market), and the market value has reached 1$51 trillion (Amazon's market capitalization includes e-commerce, hardware, Amazon Cloud, film and television, e-books and other businesses).
Counting the market value of Amazon's global e-commerce business alone, Pinduoduo is now 1883There is still a lot of room for growth in the market value of $1.1 billion. After all, according to the existing model and growth rate, with reference to the domestic competition situation, Duoduo cross-border has every opportunity to recreate multiple Pinduoduo in the world.
High-quality development of domestic business
The overseas business is soaring, and Pinduoduo's domestic business has not slackened in the face of the competition for the stock market, and has put forward the "three highs" high-quality development strategy of high-quality consumption, high-quality supply and high-quality ecology last year.
For the high-quality development strategy, in fact, it is still based on the underlying system of Pinduoduo's rich commodity supply and screening out the products with the highest "quality-price ratio" to accurately match consumer demand.
Zhuang Shuai retail e-commerce channel research found that Pinduoduo established a "first-class as the core dimension" in the early days of its establishment, combined with the "quality" of goods and the "service" of merchants and other dimensions of the commodity library, the number of goods in this commodity library should be rich enough and ensure long-term availability, so as to screen out the "qualitative ratio" of the highest goods, and then accurately match the larger and larger scale of users and stratified needs, so as to form a long-term and stable "** advantage."
This system and logic has changed the business logic of traditional e-commerce platforms based on stores and the profit model based on advertising revenue, and the requirements for the number of products are very large. Therefore, Pinduoduo initially focused on agricultural products and factory white-label goods, and then acquired a large number of users quickly and at low cost through social fission from the sinking market to achieve large-scale sales.
On this basis, the development of urban users will be upward. With the increasing demand of users for brand products, how to ensure that users are continuously and accurately matched with the brand products with the highest "quality-price ratio" without changing the original system design?
In 2019, Pinduoduo's innovative "10 billion subsidy" model was born, which was perfectly combined with the original system and once again established an unbreakable "quality-price ratio" advantage. In 2022, Pinduoduo proposed that the strategy of high-quality development is still based on this underlying system.
Therefore, in the current stock market stage and economic cycle, when the entire e-commerce market emphasizes the "best advantage", the greater the benefit of Pinduoduo.
Of course, Pinduoduo also continues to innovate in business models and technologies, such as Duoduo Grocery and Kuaituan Tuan in the community** model, as well as the 10,000-person group, Duoduo** live broadcast and various unique ** activities opened by the platform.
On this basis, in the third quarter, Pinduoduo also continued to promote the high-quality development of domestic business from four levels.
The first level: the two engines of "more affordable" and "good service".
Pinduoduo has formed a rich "quality-price ratio" of "first-class quality and service" in the two engines of "multi-affordable" and "good service", and then continues to promote high-quality consumption through the construction of a high-quality ecology, so as to achieve a positive cycle of high-quality development.
The specific performance is that Pinduoduo first boosted consumption by increasing festivals in the third quarter, and in late September, it united 100 domestic and time-honored brands to launch a more than one-month "domestic product festival" promotion. During the period, it cooperated with CCTV Finance and Economics to invite 58 high-quality domestic brands to the live broadcast room of 10 billion subsidies for "team building" to introduce high-quality products and the stories behind the brands to platform consumers.
According to the data of the Pinduoduo platform, since the domestic goods festival, the sales of domestic brands on the platform, especially daily chemicals, beauty products and other products, have increased significantly. Some domestic brands even said that thanks to the platform's initiative to lead high-quality consumption, it has achieved a 40-fold growth in the past two years.
In addition to the National Products Festival, the third quarter is the period of "Reading Month", and this year two new sections of "Editor's Recommendation" and "Travel Reading Room" have been added. And starting from September 26, we will continue to invest 100 million yuan in official subsidies, superimpose the key resources of the "10 billion subsidy" channel, and unite hundreds of well-known domestic publishing houses and book companies to send 1,200 kinds and 6 million affordable genuine books to nearly 900 million users.
At the same time, Pinduoduo also continued to increase investment in agriculture, investing 1 billion yuan in resource packages during the harvest festival in the third quarter, and jointly launching the "Duoduo Harvest Hall" with 300,000 agricultural-related businesses on the platform and more than 1,000 agricultural production areas across the country to help farmers increase production and income, and promote the quality and efficiency of the agricultural product industrial belt.
During the harvest festival, Pinduoduo accelerated the upward movement of Huili pomegranates and promoted the villagers to increase their income and become rich. Photo by Li Li.
Secondly, increase the expansion of all categories and brand merchants. In the third quarter, Pinduoduo's "Agricultural Cloud Action" successively entered Jiangsu hairy crabs, Northwest fruits and other agricultural production areas, helping the local area to build a more resilient and competitive digital agricultural belt.
In addition to agricultural and sideline products, categories such as beauty and care, digital home appliances, sports and outdoor have all achieved varying degrees of growth, and the consumption boom of domestic brands continues to heat up.
With the implementation of a series of pro-consumption policies, the demand for consumption upgrading is becoming increasingly strong. At the same time, we also see from user behavior that consumption upgrading is not only about quality, but also about quality, is the optimization of the 'quality-price ratio', and is the ultimate pursuit of consumers for good prices and good things. Chen Lei, chairman and co-CEO of Pinduoduo Group, said.
Level 2: Project No. 1
On the basis of differentiated after-sales service, Pinduoduo launched the "No. 1 Project" in the third quarter to further strengthen the differentiated service system and improve the level of platform governance.
Project No. 1 will deepen special activities such as the protection of minors, the governance and protection of books and other copyrighted goods, and upgrade the protection of the legitimate rights and interests of minors from the dimensions of account identification, restrictions on search and browsing, and shopping orders, and positive content guidanceStrictly promote the review of books on the shelves and the punishment of counterfeit shops, consolidate basic management, and promote the construction of a green, healthy, and modern platform ecology.
The third level: technological innovation
According to the financial report data, in the third quarter, Pinduoduo continued to increase its investment in science and technology, and the platform R&D expenses reached a new high, reaching 28500 million yuan, a year-on-year increase of 55%。
Pinduoduo's technological innovation is mainly reflected in three aspects: first, agricultural technology, which continues to promote the standardization, branding and digital development of agricultural specialties. The second is the first-chain technology, which involves merchant and commodity management, warehouse and distribution optimization, after-sales service, etc. The third is the platform, including platform governance, recommendation system, operation management, membership system and other related technical investment.
Pinduoduo continued to support the 2nd Science and Technology Academy Competition this quarter, and launched the selection and competition of excellent cases of science and technology to strengthen agriculture nationwide. The competition attracted 96 graduate student teams from all over the country to participate, and Pinduoduo also increased investment in scientific and technological agricultural products supported by Yunnan Chu Orange, Sichuan Danling Orange, Ningxia Tanyang, Shaanxi Meixian Kiwifruit and other science and technology academies.
In the future, we will continue to reinvest in agricultural technology, first-chain technology and overall core research and development, and use technology to create long-term positive value. Chen Lei said.
The fourth level: ecological construction
Pinduoduo started the ecological strategy of 10 billion yuan this year, and in terms of ecological construction in the third quarter, the first is to continue to strengthen platform governance.
First, strengthen the protection of the lawful rights and interests of minors, and optimize product functions and services from dimensions such as account identification, restrictions on search and browsing, and shopping orders, and positive content guidance.
Secondly, it has strictly promoted the review of books on the shelves and the punishment of counterfeit shops, and established a "blacklist database of book business entity qualifications" containing 15,000 licenses, which are prohibited from entering the book market regardless of whether they open stores in PinduoduoImplement the penalty of "joint sitting" of multiple stores, and if one of the stores with a license violates the rules, multiple stores will be punished as the same store, so as to prevent "one shot to change one place".
As of May, Pinduoduo has cooperated with more than 2,000 IP rights holders and a number of third-party professional IP institutions to strengthen IP protection.
On the other hand, it is to help small and medium-sized businesses and high-quality merchants, and continuously achieve the optimal matching of supply and demand in the case of an increasing number of categories and business types.
In recent years, with the help of Pinduoduo, a large number of local "Xingnong people" such as the post-90s finance master, who "don't like investment banks and love agriculture, and return to their hometowns to sell hairy crabs", and the post-85s village director who "helped villagers sell 8 million catties of sweet potatoes in three years", have played a key role in the forefront of rural revitalization.
Judgment on the best competition and future expectations of the e-commerce industry
Based on the third-quarter financial report data and Pinduoduo's affordable mentality, rich supply-consumption matching system with quality-price ratio, and core categories of agricultural products, these advantages will continue to enable it to maintain high growth in the domestic and foreign markets.
The more the entire e-commerce industry emphasizes competition, the better it is actually for Pinduoduo.
With the rapid growth of short-term performance, the Chinese model has achieved phased success overseas, and it is difficult for overseas e-commerce platforms to formulate effective competition strategies in the short term.
As Pinduoduo's third-quarter performance exceeded expectations and its market value reached a new high, the capital market and many partners and merchants have more reason to believe that Pinduoduo will continue to maintain a benign and high-growth momentum for the fourth quarter financial report and expectations for the next few years.