** Naughty e-commerce.
Author: Feng Huakui cover image** pexels
one
The earnings report exploded again
On the evening of November 28, Pinduoduo released its third quarter 2023 performance report. According to the financial report, in the third quarter of this year, Pinduoduo achieved operating income of 688400 million yuan, a year-on-year increase of 94%, significantly exceeding the market estimate of 548700 million yuan, the second quarter revenue increased by 66%, which has been called explosive in the industry, and it almost doubled in the third quarter, greatly exceeding Wall Street expectations. 
Broken down, ** marketing services and other revenues were 396900 million yuan, a year-on-year increase of 39%;Transaction services revenue was 291500 million yuan, a year-on-year increase of 315%. Cost of revenue was 26830.2 billion yuan, a year-on-year increase of 262%;Overall operating expenses were 25354.1 billion yuan, a year-on-year increase of 44%;Sales & Marketing expenses were 217RMB48.5 billion, up 55% year-on-year, mainly due to increased spending on advertising campaigns. Achieved GAAP net profit of 155400 million yuan, with a net profit margin of 226%。As of September 30, 2023, Pinduoduo's cash, cash equivalents and short-term investments were 202.8 billion yuan. After the earnings report was issued, the major investment banks collectively raised the share price of Pinduoduo, and Pinduoduo's U.S. stock rose by more than 18%, with a market value of $184.7 billion, while Alibaba's market value was $194.7 billion, a difference of only $10 billionOn the 29th, Pinduoduo rose 4%, Ali fell 2%, and the market value of Pinduoduo once surpassed Ali, but in the end, it was surpassed by Ali more than one billion US dollars, and the industry thought that Pinduoduo surpassed Ali to become the first e-commerce company in China by market value It would take a year or two, but I didn't expect it to be realized in a day or two. In the face of Pinduoduo's explosive financial report, Zhao Jiazhen, co-CEO of Pinduoduo, has always emphasized at the financial report meeting that it is the result of the platform's full implementation of the high-quality development strategy. After Zhao Jiazhen took office, he has been mentioning high-quality development, which is a little different from the outside world's perception of Pinduoduo's success. Why do you say that?
II. II. II
In the story of Pinduoduo, we see the essence of hard discounts
Hard discount is a new direction of retail that has become popular in China this year, which means that retail enterprises can reduce intermediate circulation links by directly facing manufacturers for procurement or customization, and make it more cost-effective on the basis of ensuring the quality of big brands.
To give a recent very popular example, there are a lot of UNIQLO replacement products on Pinduoduo, UNIQLO was originally a high-quality replacement brand in Japan, and in China, consumers still feel expensive, so many businesses have played the concept of UNIQLO substitution, once launched in Pinduoduo, it has become a new trend for young people, no wonder the industry says that young people have become "spelling" believers, and agree with the law of Pinduoduo true fragrance. In fact, in developed countries, hard discounts are the inevitable direction of the development of retail formats, and the development of Europe, America, Japan and South Korea has reached a certain stage, and consumers have begun to be vigilant about the brand, and they are more in pursuit of the use value of the product itself, that is, to beat the brand premium and let the brand disenchant. This is a manifestation of rational maturity of consumption, not the consumption downgrade mentioned in the industry, let alone a low-desire society, mature consumers pay more attention to the feelings that the goods bring to themselves, rather than the evaluation of the outside world. Japan's Uniqlo, Muji, Germany's ALDI, and the United States' Costco are typical representatives, all of them were born at the moment of maturity in developed countries without exception, and China's current consumption concept has also reached this stage. But they still acted too late, Pinduoduo said that it was a combination of Disney and Costco, but at the time, everyone didn't understand it too much, and now, after 8 years of Pinduoduo, we finally see the similarities between it and Costco's typical hard discount model. Many people think that their similarity is not based on the ultimate cost performanceThe ultimate cost performance is only a necessary condition, not a sufficient condition, there are many affordable platforms, but why have some platforms failed to persevere, either failed, or alienated, or just to create a low-cost mentality rather than a revolution in the model, why only Pinduoduo succeeded?Such a question has also been asked in the retail industry, why can't everyone learn the hard discounts of ALDI and Costco?There are two core reasons: first, from the outside, the focus on the ultimate cost performance, which has been adhered to for decades, will not change due to economic fluctuations, its own profits, and changes in the competitive situation. For example, ALDI knows that their consumers are the most sensitive, so they try their best to achieve low prices, for this reason, they do not do seasonal discounts, which is completely different from the practice of giving discounts only in China, but Pinduoduo is every day Double 11, every day "discount". For example, in order to lower prices, they do not please all customers, do not expand categories, do not provide value-added services, but it is not that they do not do services, Costco's after-sales policy is that consumers are not satisfied with the goods they want to return, similar to Pinduoduo's refund service (slightly different). At the financial report meeting, Zhao Jiazhen, co-CEO of Pinduoduo, said, "Don't look at what competitors are doing, but look at what consumers need", this sentence seems very simple, but many companies have become alienated in the competition, and gradually no longer focus on core competitiveness to meet all the needs of all users and customers. The second point is that from the inside, the hard discount is a chain revolution, which is only external, the core depends on management ability, and the real low price must be done both internally and externally. The private label of hard discount retail enterprises occupies more than 50%, and with large-scale procurement to reduce costs, they will not accumulate goods everywhere, and they will not do anything on fire, so they will knock off the brand premium and speculation. British retail expert Richard Hyman once said of ALDI: "When you leave the store, ALDI makes sure you don't think you're paying anything for the aesthetics of your goods. "Therefore, the establishment of the best chain advantage is not to contact the manufacturer or brand side is called the first chain revolution, but to establish the best chain that can create the ultimate cost-effective goods is called advantageous, all large platforms are directly supplied by manufacturers, but not all platforms have achieved the ultimate cost performance. To create the ultimate cost-effective chain, it is not a slogan, nor is it to take out part of the traffic subsidy, but to form a fundamental mechanism through the algorithm to ensure that the ultimate cost-effective goods provided by the chain can get enough traffic, so as to form a stable and cost-effective chain like aldi and costco, rather than like other platforms, just to let the extreme chain establish a low-price image for itself, which is an essential difference. Pinduoduo co-CEO Chen Lei also said at the financial report that the reason why their overseas e-commerce Temu has developed to more than 40 countries a year is because, "Our global business philosophy is to use the expertise accumulated over the years to create a new channel and shopping experience that directly connects factories with consumers......Currently, consumers from countries with different cultural backgrounds can buy goods directly from high-quality factories through our services. "The ultimate **, the ultimate ** chain, from beginning to end through the hard discount model of Pinduoduo, so that the ultimate cost performance and high-quality consumption are increasingly balanced and more collaborative.
Three
Tens of billions of subsidies drive high-quality consumption
From the above, we can see that the industry's popular hard discounts, Pinduoduo has been doing it for eight years, and tens of billions of subsidies have been done for four years, so that 6200 million people enjoy high-quality consumption.
In order to continue to create high-quality consumption, Pinduoduo invested 1 billion yuan in a resource package for the harvest festival in the third quarter of this year, and launched the "Duoduo Harvest Hall" with 300,000 agriculture-related businesses on the platform and more than 1,000 agricultural production areas across the country, and included agricultural and sideline products such as rice, flour, grain and oil, meat, poultry, eggs and milk, vegetables and fruits into the 10 billion yuan subsidy. 
As we all know, the commodities that can enter the subsidy of 10 billion yuan must be of high quality, such as Xinjiang seafood subsidized for the first time, as well as high-quality local specialties such as Anqing rice, Huili pomegranate, Huangshan stinky mandarin fish, Zhouzhi kiwifruit, Luochuan apples, Anyue lemons, and Pinghe pomelo that have been continuously supported for many years. Direct supply from the origin + 10 billion subsidies bring real hard discounts. However, hard discounts not only include origin and industrial belt goods, but also brand goods, in the tide of wealth and wealth of old domestic products in September, Pinduoduo and Yili, Anta, Galanz, Yanghe, Yu Meijing, Wufangzhai, Xinghualou and other 100 domestic products, time-honored brands opened more than a month of "domestic goods festival", and in the CCTV financial cooperation 10 billion subsidy live broadcast room "domestic products group building", introducing the stories behind 58 high-quality domestic brands such as Shanghai soap, 361°, Kong Fengchun, Hongxing Erke, etc.
The old domestic products came up with hard discounts, which drove the sales skyrocketing: the single-day sales growth of Yumeijing Children's Cream reached 230%;The sales of Vitality 28 have skyrocketed by more than 10 timesThe sales volume of bee flower care products increased by 50,000 orders in a single dayThe sales volume of Hua Loria's eyebrow pencil increased by 20,000 orders in a single dayTime-honored brands such as Xie Fuchun and Kong Fengchun have also doubled;Individual brands have even achieved a 40-fold increase. No wonder other platforms have issued financial reports saying that consumers are now stocking less goods, but Zhao Jiazhen, co-CEO of Pinduoduo, said, "The current demand and trend of consumer upgrading on our platform is obvious, and we have formulated a high-quality development strategy around this trend." "Pinduoduo's high-quality development includes high-quality consumption, high-quality supply, and high-quality ecology, and the three work together to promote Pinduoduo to become the largest hard discount platform.
Four
Pinduoduo has reaped the dividends of the next consumer trend
Nowadays, hard discounting is not a retail format, but a consumer trend. The development of retail formats, there are certain rules to follow, the economic boom period, everyone flocks to the brand, in the economic wave development, zigzag forward, we will let the brand disenchantment, return to the value of the commodity itself, therefore, the development of Western retail to a certain stage, do cost-effective ALDI, Costco has become the mainstream, but in China, the development of e-commerce retail is faster, Pinduoduo grabbed this track, and got the trend dividend of mature and rational consumption. Under this megatrend, Pinduoduo's growth, sustainable and scalable, is bringing high-quality consumption to the world.
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