Executive Producer |He Xi typesetting |Ye Yuan.
No one thought that the pattern of China's e-commerce would change so quickly.
On December 29, Pinduoduo's market value surpassed Alibaba, which has been the top domestic e-commerce company for many years, and became the largest Chinese concept stock in the United States. From this time on, China's e-commerce began to "fight" the era.
Why can Pinduoduo surpass Alibaba?What is the fundamental driving force for Pinduoduo's valuation surge?
This article will start from Pinduoduo's Q3 financial report and talk about some of my views on Pinduoduo.
Pinduoduo surpasses Alibaba's momentum
On November 28, Pinduoduo announced its Q3 2023 quarterly performance report. According to the data, revenue increased by 94% year-on-year to 68.8 billion yuan, compared with 35.5 billion yuan in the same period last year, a year-on-year growth rate of 94%, almost doubled. Net profit attributable to common shareholders of Pinduoduo was 15537.1 billion yuan, a year-on-year increase of 47%;Non-GAAP net income attributable to common shareholders of Pinduoduo was 17027.1 billion yuan, a year-on-year increase of 37%. With both revenue and profit soaring, the cash amount of Pinduoduo's operating activities rose by nearly 1 percent compared with the same period last year8 times to 325300 million yuan.
Pinduoduo's impressive performance in Q3 also directly promoted Pinduoduo's "skyrocketing" in the capital market. After the earnings report, Pinduoduo's U.S. stock price rose by more than 18%, making its overall market value once surpass Alibaba, which has 200,000+ employees, and become the largest Chinese concept stock in the United States.
Pinduoduo's Q3 financial report is so dazzling, which naturally attracts great attention in the industry. Experts and industry professionals from the fields of finance and e-commerce have taken out "microscopes" to try to find the root of the "skyrocketing" market value in a piece of data.
Judging from the breakdown data, Pinduoduo achieved rapid growth in Q3 revenue segments, mainly including advertising and transaction commissions. Among them, advertising revenue was 39.7 billion yuan, a year-on-year increase of 39%, exceeding market expectations by nearly 1 billion yuan. Although Pinduoduo's advertising revenue soared this quarter, it was not the reason for the "skyrocketing" of Pinduoduo's stock price. Because Pinduoduo's revenue in the quarter increased by 93% year-on-year9%。
A closer look at Pinduoduo's financial report will find that it has a high of 291The transaction commission income of 500 million yuan has increased by an astonishing 315% year-on-year, which is quite "explosive" in the whole industry.
Obviously, compared with the 39% growth of **advertising, the record growth of transaction commission income is the biggest driving force for the overall rise of Pinduoduo's Q3 core indicators**.
It is worth noting that Pinduoduo's trading commissions in Q3 mainly include Duoduo's grocery commission income, TEMU income and some commissions of tens of billions of subsidies, and the market generally believes that the rapid growth of Q3 financial reports is driven by Temu.
So far, we can probably conclude that Temu's huge success overseas is a new variable that has led to a significant increase in Pinduoduo's commission income, and it is also an important driving force to promote Pinduoduo's market value to rise sharply, surpassing Alibaba.
Temu's contribution to Pinduoduo's Q3 financial report also refutes the so-called "Temu burns money" in the market. Previously, there was a view in the industry that Temu had paid too high costs in marketing and customer discounts in order to achieve rapid expansion, which brought a heavy burden to Pinduoduo itself. The latest financial report tells everyone with facts that TEMU is not only not a burden of "burning money", but has begun to become the ** of Pinduoduo's "blood supplement".
Power sourcetemuWhy is it so fierce?
When TEMU became an important driving force for the "skyrocketing" market value of Pinduoduo, we can't help but ask, why is it so fierce?
Let's take a look at the history of temu.
Temu is a cross-border e-commerce platform launched by Pinduoduo on September 1, 2022, and it has only been 15 months since its launch. Although it has not been launched for a long time, temu has grown rapidly around the world. In the past year, Temu has been at the top of the Apple App Store and Google Play in the US market**. According to data from mobile insight consulting firm GWS, since January 2023, Temu has added nearly 10 million new users per day, and this growth rate shows no signs of slowing down.
As of October 2023, temu has become an important e-commerce shopping platform in many overseas countries. According to the latest report by market analyst Insider Intelligence, Temu is currently the fourth most visited e-commerce platform in the United States after Amazon, Walmart, and eBay.
As of the end of the third quarter of 2023, temu has penetrated into more than 100 manufacturing industrial belts in Guangdong, Zhejiang, Shandong, Anhui and other places, and successfully promoted high-quality manufacturing products into more than 40 countries and regions such as North America, Australia, Europe, and Asia. At present, Temu exports more than 400,000 parcels per day, with an average daily cargo weight of about 600 tons, more than half of which are sent to the US market. Temu has launched more than 2 million SKUs in the U.S. market and is expected to expand to 4 million categories this year.
Seeing this, you should know how fierce Temu is in the overseas market. So, why is temu so fierce overseas?
Brother Xi believes that the main reason for the rapid development of TEMU in the overseas market is that it has a strong matrix, which belongs to the product of Pinduoduo's deep cultivation of the ** chain and the whole link of e-commerce. The key to the success of the temu platform lies in the integration of cross-border e-commerce + industrial belt, or in other words, it has opened up a cross-border "full-link" ** chain channel for merchants, so as to maximize the efficiency of commercial circulation. Looking at the development process over the years, it is not difficult to find that this deep cultivation of the efficiency of the first chain actually runs through the whole process of the Pinduoduo platform itself. From the beginning of the platform's launch, Pinduoduo has insisted on going deep into the first chain, and has successfully built a set of efficient transaction and performance system for agricultural products through years of refined operations in transportation, distribution, payment, merchant management, return and exchange, etc., ensuring the direct connection between the agricultural product industry belt and end users.
In this process, Pinduoduo made full use of its experience in chain construction and management successfully accumulated in the operation of agricultural products (Duoduo Grocery Shopping) and industrial products in China for many years, integrated the advantages of transportation, payment, warehousing, distribution and other aspects, and launched the Temu platform. On this new platform, Pinduoduo not only launched a flexible ** model similar to C2B, but also provided cross-border e-commerce operators with an efficient and low-cost operation model with a more innovative full custody model.
After the release of the Q3 financial report, Chen Lei, chairman and CEO of Pinduoduo, said frankly that the temu platform "has stood on the shoulders of the main station and Duoduo since its birth, and has been led by the elite soldiers who have experienced the tempering of the Duoduo shopping business, and the team generally has a deep understanding of the national manufacturing industry chain that has been precipitated since the establishment of the independent station." Chen Lei's heartfelt words clarified that the emergence of the TEMU platform did not come out of thin air, but the reuse and innovation of Pinduoduo's domestic market operation logic.
The birth of temu is based on Pinduoduo's summary of the past business model, so it naturally has the advantage of chain efficiency. Its rapid growth reflects the strong endogenous driving force of the platform, and it is with the help of the accumulation of Pinduoduo platform's many years of chain capabilities, the temu team has been able to quickly transition from domestic business to cross-border business with a Xi cost that is far lower than that of other companies in the industry, and the organizational cost of the chain, so as to achieve the rapid development of the global foreign trade market from 1 to 10 in less than 1 year.
Revaluation Pinduoduo,temuWhat has brought Pinduoduo is not only the increase in market capitalization
When temu becomes an important variable in Pinduoduo's market capitalization, we must ask whether it can provide sustained momentum for PinduoduoThis is related to the entire subsequent development of Pinduoduo, and even the key to people's revaluation of Pinduoduo.
As for whether TEMU can continue to provide momentum for Pinduoduo. Brother Xi's view is that it is still too early to draw conclusions, because Temu is not yet a fully mature platform, but judging from the current development trend of Temu, it is very likely to become a continuous power source for Pinduoduo in the future.
This question depends on two aspects, one is how determined and ambitious Pinduoduo is to develop Temu, and the other is how far Temu can develop itself and how much energy it has. For the first point, Brother Xi said very early on that for the big track of cross-border e-commerce, Pinduoduo will definitely go all out to do it, and Pinduoduo has the determination and strength. For the second point, the cross-border e-commerce track where Temu is located is an infinite market, which can fully meet the needs of Temu and Pinduoduo for energy support. At present, with the rapid development of global cross-border e-commerce, the scale of the global cross-border e-commerce market will also increase. According to the estimation of relevant institutions, the global cross-border e-commerce market will increase from 5785 in 2019$700 million to $2 trillion in 2026, with a compound annual growth rate of 214%。
For temu, cross-border e-commerce is a big gold mine that needs to be developed urgently, and the potential is unlimited. For Pinduoduo, the better TEMU develops, the stronger the momentum it can gain. For investors, temu means new possibilities.
Therefore, Pinduoduo's market value surpassing Ali is just the beginning, how big the cross-border e-commerce market is, how strong Temu's continuous momentum is, and how far Pinduoduo can go.
For the foreign trade import and export industry, the birth and development of TEMU has brought new business opportunities to them. For investors, temu means new possibilities. So we saw that after the release of the Q3 earnings report, Pinduoduo's U.S. stock price "skyrocketed" driven by Temu's revenue surge.
However, in Brother Xi's view, the current increase is only the beginning of Temu's momentum.
As mentioned above, TEMU cross-border has penetrated into more than 100 manufacturing industrial belts in Guangdong, Zhejiang, Shandong, Anhui and other places, and has successfully promoted high-quality manufacturing products into more than 40 countries and regions such as North America, Australia, Europe, and Asia. From the perspective of global commodity supply and demand, consumers around the world are currently growing in demand for China's high-quality and low-cost goods, and the market potential is huge. However, China's industrial belt, as the world's factory, has long relied on traditional offline channels for business development, resulting in low transaction efficiency and high delivery costs, and it is difficult to connect goods to the broader world market, which is undoubtedly a bottleneck that must be solved for China's real economy, which urgently needs to release production capacity as soon as possible and achieve market expansion.
Temu's operation practice in the past year shows that with Pinduoduo's experience in chain management accumulated in the cultivation of the domestic first chain, as well as the efficiency advantages in transportation, payment, warehousing, distribution and other links, it can create a complete set of trading and fulfillment systems suitable for the international market. With the support of this system, the domestic industrial belt, which is plagued by bottlenecks such as market saturation and high international transaction costs, will have the opportunity to use the excellent online platform to show the advantages of high-quality, low-quality and high-quality services to end users in the most intuitive and vivid way, complete transaction matching and delivery at the lowest cost and highest efficiency, and finally realize the entry of China's industrial belt into the global market.
This is where the greater value of temu lies. Just imagine, when TEMU truly becomes a connector made in China and demanded by the world, what kind of energy will it play?What a surging impetus it will bring to Pinduoduo.