On the evening of November 28, “Pinduoduo’s market value is approaching Alibaba” became a hot topic on social media. As of the close of the U.S. stock market, Pinduoduo’s market value has not yet surpassed Alibaba’s, and many netizens are waiting to “witness history.”
After the release of its third-quarter financial report, Pinduoduo’s share price surged 18%, with a market value of US$184.6 billion, only one step away from Alibaba’s US$194.7 billion. People all over the circle of friends lamented: "Four or five years ago, who would have thought that Pinduoduo's market value would surpass Alibaba? It's so sad." Some people even assert that the e-commerce industry has undergone drastic changes and that a "new king will be established" in the Internet industry. As of now, Pinduoduo has become the third listed Internet company in terms of market value (after Tencent and Alibaba). If it surpasses Alibaba, it means that it will become an Internet giant after Tencent.
Why is Pinduoduo so powerful? In the third quarter, Pinduoduo’s revenue was 68.84 billion yuan, a year-on-year increase of 93.9%; it achieved an adjusted net profit of 17.027 billion yuan, a year-on-year increase of 37%; it achieved a US GAAP net profit of 15.54 billion yuan, with a net profit margin of 22.6%. After releasing the 2022 Q4 financial report, Duan Yongping, who focuses on Pinduoduo, once said that Pinduoduo’s “financial report looks quite profitable, which shows that developing the international market is not a big burden. I have the impression that the previous financial reports always said that profits are temporary. (roughly this meaning), I feel like we may get a glimpse of it later, but it seems that we have been making money for several consecutive quarters, right?"
From Q2 of 2021 to Q3 of 2023, Pinduoduo has been profitable for 9 consecutive quarters. What’s even more incredible is that its basic revenue of tens of billions can still maintain double growth, which is unique in the entire Internet industry.
Why is Pinduoduo’s growth data “so beautiful that it’s hard to believe”? There are many analyzes on the Internet about the rise of Pinduoduo. Some say it is because Pinduoduo focuses on everything. Compared with Internet giants of the same size, Pinduoduo only focuses on e-commerce; some say it is because Pinduoduo has a strong team and insists on doing difficult but right things, such as supply chain; some say that Pinduoduo implements "user first" and truly puts the interests of users first. I think these are the reasons for Pinduoduo’s success, but in-depth analysis revealed that it is more than that.
Pinduoduo has truly achieved "consumer-centeredness"
If today we still use the logic of downgrading consumption and sinking the market to analyze Pinduoduo, it will undoubtedly be very outdated. As early as June 2021, Pinduoduo's annual active users reached 849.9 million, with an average of more than 100 million packages in transit every day. It was the e-commerce platform with the largest number of users in mainland China at that time. In terms of user scale and composition in the mainland Chinese market, Pinduoduo is no longer much different from Alibaba’s Taobao. But it is undeniable that Pinduoduo, which started in the sinking market, still has strong user advantages in the corresponding areas.
Pinduoduo serves the same users as Alibaba and JD.com, and it implements "consumer-centered" into practice. For e-commerce platforms, the relationship between users, merchants and the platform (and Taobao anchors) was once a question of balance, but Pinduoduo chose to be "user-centered" in an extreme way. users are focused on nothing more than "more, faster, better, and cheaper" when shopping. Pinduoduo first launched "tens of billions of subsidies" around popular categories such as the iPhone to strengthen price power and at the same time continue to enrich categories, optimize supply, and improve services. , to better meet user needs. The needs of consumers are diverse. They will not only look at single indicators such as brand, price or service when making decisions, but based on comprehensive experience.
For consumers, the primary reason for choosing Pinduoduo is simple: the price is really good. is cheap and is not only loved by users in the so-called sinking market. In 2023, JD.com and Taobao all emphasized that price power is actually a return to nature - you may not have noticed that retail giants such as Walmart have been talking about price advantage for many years. Today there is no consumption downgrade, but consumption upgrade under consumption stratification. User consumption needs are becoming more and more diversified. If possible, everyone wants better goods and services while paying less cost.
Based on this insight, while maintaining its price competitiveness advantage, Pinduoduo continues to go deep into the supply side to integrate good products and improve good services. "More benefits" and "good services" have become its two major engines of development in recent years. . When releasing the financial report, Pinduoduo Group Chairman and Co-CEO Chen Lei once again emphasized their basic judgment: "With the implementation of a series of consumption-promoting policies, the demand for consumption upgrades is becoming increasingly strong. At the same time, we have learned from user behavior We also see that consumption upgrading is about both quality and price. It is the optimization of 'quality-price ratio' and consumers' ultimate pursuit of good products at good prices."
In 2023, every platform is talking about price power and quality. In terms of price/performance, it is said that "users come first". Judging from the financial report, Pinduoduo has indeed achieved it. In the past few years, Pinduoduo’s pioneering services such as “use now, pay later” and “quick refund” have made users truly feel that they are valued by the platform, and these are becoming standard features on other platforms. But for Pinduoduo, “user first” cannot be implemented with just one or two services.
For example, on the point of "more benefits", Pinduoduo not only emphasizes price power. Zhao Jiazhen, executive director and co-CEO of Pinduoduo Group, said when releasing the financial report that Pinduoduo “will continue to improve the accessibility of more benefits and good services.” Note about , the focus is on "ease of availability" , what does it mean? Pinduoduo’s price power is available around the clock, instead of requiring users to wait until around 11.11 every year to shop or stock up. It is affordable all year round, which is a means to improve accessibility. In addition, Taobao continues to promote live broadcasts by Internet celebrities to bring goods. It is true that the lowest prices may be found in the live broadcast rooms, but users need to spend a lot of time to "snatch discounts". Pinduoduo does not do this because it will reduce the "discount" of more users. Affordable and easy to obtain", and will cause chaos in the price system within the platform, seriously damaging the platform's price power.
The "No. 1 Project" that Pinduoduo's internal executives directly focus on is also based on user experience. For example, in the third quarter, Pinduoduo deepened special activities such as the protection of minors, the management and protection of books and other copyrighted goods, and started from account identification. , search browsing and shopping order restrictions, positive content guidance and other dimensions to upgrade the protection of the legitimate rights and interests of minors. At the same time, stricter promotion of book shelf review and punishment of counterfeit shops are all aimed at solving platform problems that have received a lot of feedback from users and continuously improving user experience.
Deeply cultivating the supply chain has allowed Pinduoduo to make great achievements
Pinduoduo’s price power is not conjured out of thin air. Merchants need to make money, the platform needs to share money, and users need benefits. Pinduoduo’s price of the same product is lower, which must be improved in some aspects. Efficiency reduces costs and “excavates” profit margins.
The core of Pinduoduo’s ability to maintain its “price power” lies in its unique “fighting” model. On the user side, a large number of orders can be gathered through "fighting". I have always said that Pinduoduo is actually a group purchasing platform for physical goods . Internet celebrities rely on live broadcast rooms to gather orders and ask merchants for the lowest price. Pinduoduo’s demand gathering ability is ten times or a hundred times that of Internet celebrity live broadcast rooms. On the product side, the scale effect of large orders of reduces the production cost of the product, and the source can make profits. At the same time, many intermediate links have been eliminated, the efficiency of commodity circulation has been improved, and costs have been further reduced.
So we see that Pinduoduo focuses on "direct supply from the source" when it comes to "goods". It either goes deep into the fields to promote the commercialization, branding, and standardization of agricultural products, and promotes the upward trend of agricultural products; or it goes to factories. The workshop conducts C2M to promote the upgrading of the industrial belt, allowing good products from the source to reach consumers directly. TEMU, the cross-border e-commerce platform launched by Pinduoduo over the past year, has become the second growth curve. It still uses a familiar formula: factory-supplied white-label products directly to overseas consumers, with unbeatable prices.
When some people misunderstood Pinduoduo by saying "Pinduoduo's goods are not wanted by Taobao", they ignored that Pinduoduo has been going deep into the deepest end of the supply chain to upgrade the supply side. And high-quality supply is the root of Pinduoduo’s product quality-price advantage.
For example, agricultural products are on the rise. Pinduoduo has actually been the largest e-commerce platform for agricultural products for a long time, and agricultural products are also one of its core advantage categories.
Agricultural products have a long production cycle, production capacity is difficult to control, and poor planning will result in unsaleable products. The C2M direct procurement model completely solves the fatal problem of traditional agricultural product sales, because Pinduoduo’s model can gather demand in advance, allowing the production areas to accurately plant and produce. . Now Pinduoduo is still consolidating its category advantages in agricultural products.
In the third quarter, the “Agricultural Cloud Action” launched by Pinduoduo successively entered Jiangsu hairy crabs, northwest fruits and other agricultural production areas, helping local areas create a more resilient and competitive digital agricultural production belt. At the same time, Pinduoduo invests in science and technology from the source of agricultural production, promotes the transfer of advanced technology to the countryside, the transformation of scientific research results, and the promotion of high-quality agricultural products. For example, it promotes the planting of some potential new varieties, builds origin brands of some agricultural products, and continues to Increase the yield per mu of land, increase farmers' income, and help rural revitalization.
Another example is cross-border industrial products. third quarter financial report Pinduoduo did not release separate data on TEMU, but there are many outside reports. For example, Reuters believes that "Temu's rapid development is boosting Pinduoduo's performance to exceed expectations." Some Wall Street analysts predict that this year from Temu's revenue has exceeded $16 billion. Since Temu was launched in the United States, its business scope has covered sales in 48 countries and regions, including the entire Europe, the Middle East, and Southeast Asia. There is no doubt that TEMU has become Pinduoduo’s second growth curve, making Pinduoduo’s long-term rival Amazon instead of Alibaba.
E-commerce platforms are all going overseas, and there are already leaders such as SHEIN in the market. Why can Pinduoduo TEMU rise in such a short period of time? Regarding the development of TEMU, Pinduoduo CEO Chen Lei has released very little information: “We hope to use the supply chain foundation accumulated over the past many years to provide consumers in different regions around the world with channels to purchase directly from factories, providing more flexibility and personalization. A standardized supply chain and a more cost-effective comprehensive shopping experience." This also shows that the fundamental reason for the rise of TEMU is that Pinduoduo has a strong foundation in the supply chain and has a deep accumulation of new e-commerce models based on "pinduoduo". C2M, factory direct supply, and C2M flexible supply chain have many years of practice.
In Q3 of 2023, Pinduoduo will continue to make efforts in Duoduo’s cross-border business. Through the fully managed model, it will help more than 10,000 factories in more than 100 industrial belts in Guangdong, Zhejiang, Shandong, Anhui and other places to accelerate their overseas expansion, reaching more than 40 countries around the world. Countries and regions. The core value of the
e-commerce platform is not an App or a website, nor infrastructure such as payment and logistics, but the integration ability of the supply side and the satisfaction ability of the demand side. The former needs to go deep into the supply chain, while the latter relies on product experience and price. Advantages, service guarantee, fulfillment and delivery.
In fact, in the traditional retail industry, leaders such as Wal-Mart, Sam's, and Costco have all penetrated into the supply chain very early. It goes beyond the "channel terminal" where goods are sold, and goes deep into the supply side to integrate more "good goods" and thus provide users with more high-quality and price-effective goods. After being traffic-driven and marketing-driven, traditional e-commerce platforms are accelerating to embrace the supply chain-driven development route. Pinduoduo has always been deeply involved in the supply chain, and its high-quality supply now shows full potential. This is the fundamental reason why its growth rate exceeds that of the industry. Someone in the circle of friends said that the Pinduoduo team insists on doing difficult but right things, and the "supply chain" must fall into this category.
Pinduoduo’s approach to simplicity: The concept is simple, but it captures the fundamentals
Today’s e-commerce industry is constantly emerging with new concepts, which is dizzying. Live streaming, community e-commerce, private e-commerce, hobby e-commerce, AI e-commerce... In fact, no matter what kind of e-commerce, it is all buying and selling, all business, and all retail. The meaning of retail is nothing more than to better meet users' shopping needs, and everything else is just a means to achieve this goal.
The things Pinduoduo insists on may not look cool, not new, or even a bit “simple,” but they are also centered around the needs of consumers.For example, the continuous tens of billions of subsidies are to provide users with competitively priced products; for example, in the third quarter, we held a series of activities such as the Harvest Festival, Domestic Products Festival, Duoduo Reading Month, and National Day Promotion, so that consumers can enjoy " You can buy expensive ones, but not expensive ones. Various measures are making "Double 11 every day" a reality, making consumers' "benefits" more "accessible"; another example is "only Controversial platform policies such as "Refund" have been recognized by users in the long run. Merchants who abide by the rules of the game, provide good products, and do business in a down-to-earth manner can also achieve sustained growth.
Today, leading companies are considering high-quality growth and sustainable development as strategies, but how can they achieve high-quality growth? For e-commerce platforms, high-quality consumption, high-quality supply, and high-quality ecology are the three key elements for high-quality growth. This is the direction in which Pinduoduo is working. As for the wave of new technologies such as large models, Pinduoduo's performance is more calm and rational - but you can't question Pinduoduo's technology. At least in the matter of personalized recommendation AI algorithms, its strength is obvious to all. In the third quarter, Pinduoduo continued to increase investment in technology, with platform research and development expenses reaching a new high, reaching 2.85 billion yuan, a year-on-year increase of 5.5%.
Pinduoduo has only been established for 8 years, but its size is already approaching that of Alibaba, which is over 20 years old. Its rapid rise under the eyes of the giants has surprised many people. At the beginning of all things, the great path leads to simplicity, and evolution leads to complexity. With the benefit of hindsight, Pinduoduo did the most right thing by grasping the essence of business, especially retail, based on user value, through innovative business formats, and working with the industry chain to better satisfy users while also successfully It has effectively promoted the upgrading of the industrial chain and achieved a win-win situation for the individual and the greater self.
When people say that the growth of the e-commerce market has stagnated, Pinduoduo’s performance has risen against the trend time and time again. “Question Pinduoduo, understand Pinduoduo, and learn from Pinduoduo” may also become a new way for the industry to alleviate growth anxiety. .
