Author/ Author of "Finance and Economics" Weekly Shi Yuanwen
Editor / Chen Fang
On March 21, Pinduoduo released its financial report for the fourth quarter and full year of 2021. In 2021, when the e-commerce market is not very peaceful, Pinduoduo still maintains a relatively stable growth.
For the whole year of 2021, Pinduoduo's revenue was 93.9499 billion yuan, an increase of 58% over 2020, which was a huge contrast with the low double-digit growth of its peers. As of December 31, 2021, Pinduoduo's cash, cash equivalents and short-term investments were RMB92.9 billion.
According to the financial report, under gaaps, in the fourth quarter of 2021, Pinduoduo's operating profit was 6.907 billion yuan, compared with an operating loss of 2.0478 billion yuan in the same period of 2020. Net profit attributable to common shareholders was RMB6,619.5 million.
For Pinduoduo, which is increasingly pursuing high-quality development, it is important to make money, and it is more important to spend money. In the next step, according to the plan for August 2021, the profit in the fourth quarter will also be invested in the "10 billion agricultural research project". On January 15, Pinduoduo also launched the "2022 Duoduo New National Tide" action, uniting more than 100 domestic brands such as Midea, Shanghai Jahwa, and Libai, claiming that it will also give tens of billions of subsidies.
Pinduoduo began to move from virtual to real, no longer pursuing high-speed growth as in the past, but pursuing high-quality growth.
From heavy marketing to heavy research and development
For Pinduoduo, 2021 is a handover year. Chen Lei took over Huang Zheng as chairman, and Pinduoduo also ushered in a major change, from "heavy marketing" to "heavy research and development".
In the fourth quarter of 2021, Pinduoduo's R&D expenditure was 2.0226 billion yuan, and the annual R&D expenditure reached 8.9926 billion yuan, an increase of 30% year-on-year, mainly due to the recruitment of more experienced R&D personnel.
At the other end of the scale, marketing spending fell 23 percent year-over-year, largely due to decreasing spending on promotions and advertising campaigns.
"In the year I took over as chairman, we moved from 'marketing' to 'R&D'. I'm glad to see this shift going forward as expected. This will lay a solid foundation for our long-term development. On the evening of March 21, Chen Lei, chairman and CEO of Pinduoduo, sighed on the conference call.
In recent years, the scale of mobile Internet users has peaked, and the slowdown in e-commerce growth has become an established fact. According to QuestMobile data, as of December 2021, the scale of mobile Internet users in China has reached 1.174 billion. In this context, it is more and more difficult than ever for e-commerce platforms to add a new user, and the cost is getting higher and higher.
In this regard, Chen Lei said that compared with performance growth, Pinduoduo pays more attention to strategic and structural optimization, and Pinduoduo began to adjust its development strategy last year, paying more attention to scientific and technological investment and pursuing long-term high-quality development. "The growth rate of business development and adjustment process may be affected to a certain extent, but the business cycle and the financial reporting cycle are not smooth."
Liu Jun, vice president of finance of Pinduoduo, said, "If there is a significant slowdown in revenue growth, in a sense, it shows that we have not met the needs of users very well, and user needs are diversified and constantly changing, and we need to respond quickly." If this can be done better, I think the future revenue growth can still be done very well. ”
However, even if the growth rate slows down, Pinduoduo still uses data to prove its ability to make money. Under GAAP, Pinduoduo's operating profit in the fourth quarter was 6.907 billion yuan, which has been profitable for three consecutive quarters.
Liu Jun explained, "This is due to our proper control of cost expenditure. ”
The user Living Water also entered the market in another low-key manner. In the fourth quarter of 2021, the number of monthly active users of Pinduoduo was 733.4 million, an increase of 2% year-on-year, and the number of annual active buyers was 868.7 million, an increase of 10% year-on-year. The growth rate of these two data is not high compared with peers, but the annual expenditure of each active buyer is very interesting, reaching 2810 yuan, an increase of 33% year-on-year.
For Pinduoduo, this is a stage from heavy growth to repeated purchases, allowing the platform to enter connotative high-quality development. Pinduoduo's annual order volume is 61 billion pieces, and the annual active buyers are 868.7 million, with an average of 70 orders placed on the platform in a year, which is equivalent to placing orders nearly six times a month.
Therefore, in the whole year of 2021, the multi-year turnover (GMV) of Pinduo was 2,441 billion yuan, an increase of 46% year-on-year, and the growth rate far exceeded that of its peers.
Agriculture-related orders increased significantly
Pinduoduo is still deeply engaged in agricultural science and technology as always.
"Profits in the fourth quarter will also be used in the field of agricultural research and technology, and continue to deepen Pinduoduo's efforts in agricultural digitalization to promote more agricultural production areas and farmers' direct connection to the digital economy." Chen Lei stressed.
In the whole year of 2021, the Pinduoduo platform generated a total of 61 billion orders, an increase of 59% year-on-year. Liu Jun revealed that under the "zero commission" of agricultural products and the strategy of re-investment in agriculture, the increase in agriculture-related orders on the platform is particularly significant.
Going back in time, the origins of Pinduoduo and agriculture are more than that. When Pinduoduo was born in 2015, it relied on fruit groups to take over a huge traffic pool and gained a firm foothold in the field of e-commerce with a determined pattern. Even the flower names of the early employees were mostly taken from fruit and vegetable names.
At the front end of the industrial chain, Pinduoduo promotes the development of planting standards, sales standards, large farmers and farmers' cooperatives, and improves the efficiency and quality of the agricultural supply chain. The AI planting technology promoted by Pinduoduo can increase strawberry production by 196% compared with traditional planting methods, and the input-output ratio is 75% higher than the average.
The "Duoduo Agricultural Research Institute" launched by Pinduoduo is also constantly providing new cases and new experiences for the field, promoting the landing of smart agriculture, and making full preparations for the development of the next five or even ten years.
In terms of terminal service capabilities, Pinduoduo has continued to invest heavily in the construction of cold storage, fresh cold chain logistics system and other infrastructure across the country, and initially created a set of efficient agricultural product logistics system, which reduces losses while improving circulation efficiency, and directly connects it to more than 1,000 agricultural production areas, driving more than 16 million farmers to participate in the digital economy.
Not long ago, Pinduoduo was also selected as one of the "Top Ten Innovative Logistics Supply Chain Companies in 2022" by the world-renowned business magazine "Fast Company" for its initiatives in innovative logistics. In the shortlist, Pinduoduo is the only Chinese company.
Asked about the reasons for insisting on investing in agriculture, Chen Lei said on the conference call that compared with the categories that were online earlier and had a higher online rate, the online rate of agriculture is still very low, and many of the needs of users have not been met under the existing fulfillment experience. "In an environment of intensified competition, Pinduoduo will continue to be user-oriented, improve user satisfaction, and continue to increase investment in agriculture."
A reality is that rural e-commerce is becoming a blue ocean that has yet to be tapped, reaching a broader market for Pinduoduo.
According to the "2021 New New Farmer Growth Report" released by Pinduoduo, the "new new farmers" represented by the post-95 generation have become a new force to promote the upward trend of agricultural products. As of October 2021, the number of "new farmers" on the Pinduoduo platform has exceeded 126,000, accounting for more than 13% of agriculture-related businesses. Among them, women accounted for more than 31%, reaching 39,060 people; post-00s accounted for more than 16%, reaching 20,160 people.
Over the years, with the continuous increase of investment, Pinduoduo has become the largest upward platform for agricultural products in China. As a big agricultural country, the agricultural development of the mainland has huge room for development in the core key technology fields such as agricultural sensors, agricultural models, core algorithms, and intelligent agricultural machinery and equipment.
New national brands have more than tripled
In 2022, the new national tide has become another new engine for pinduoduo's "digital-real integration".
On January 15, riding on the festive atmosphere of the coming Of the Lunar New Year, Pinduoduo launched the "2022 Duoduo New National Tide" action, saying that it will unite 100 industrial belts in the next year, help at least 1,000 national tide brands, cutting-edge brands, and long-established brands embrace new consumption, and will invest tens of billions of "support resource packages" to cultivate 10 billion new national tide brands and 100 billion national tide brands, and explore a new model of digital and real integration.
At present, this action has successively united domestic brands such as Midea, Galanz, Libai, Junlebao, Baijiling, Shanghai Jahwa, Mark Huafei, Tan Carpenter, Ailaiyi, Xtep, RIO, Jiuyang, Feiyue, etc., and has successively entered many manufacturing fields such as home appliances, clothing, sports, beauty, daily chemicals, milk powder, and home furnishing.
A month after the release of the event, in the modern intelligent manufacturing base of National Home Appliance Galanz, Pinduoduo brought a live broadcast of Chinese manufacturing traceability to 1.95 million netizens.
According to the person in charge of Galanz's e-commerce, in the past year, many galanz products have become platform hits, and the sales of single products of a single model of mechanical microwave oven alone have exceeded 200,000 units. In addition, Pinduoduo has also carried out full-link cooperation with Galanz to jointly launch customized microwave ovens, which have sold more than 100,000 units in the past year.
▲ 2022 Duoduo New National Tide entered Galanz, a modern factory, so that many netizens directly called "Made in China great".
Jiuyang, which has brought freshly squeezed soy milk to a generation of Chinese people, is also taking this opportunity to amplify the brand potential and bring small household appliances to more young people. Ye Yong, vice president of marketing at Jiuyang, said that the consumer portrait of Pinduoduo is mainly middle-aged and young people in small towns, and their proportion can be as high as 40%. Their consumption habits are still based on just need, pay attention to cost performance, they have demand for product functions, especially technology, "which is very meaningful for us to do product research and development and product marketing publicity." ”
The old domestic Seagull watch, which has a history of more than 60 years, settled in Pinduoduo at the end of November 2021. The person in charge of Seagull Watches said that Seagull Watches has developed a platform special payment for the Pinduoduo customer group, launched a high-quality, cost-effective mechanical watch, and its self-produced movement is comparable to The Swiss high-end watch, and once launched, it has received strong support from platform users.
In 2021, the number of new national brands settled in Pinduoduo increased by 270% year-on-year, and more than 50 long-established brands with more than 100 million yuan and more than 30 new national tide brands with more than 100 million yuan have emerged on the platform. Among them, the sales of Baijiling ranked first among the long-established brands, Shanghai Jahwa ranked among the top three of the old domestic goods group, and Zhang Xiaoquan, Tan Carpenter, HuiLi, and Seagull watches all showed explosive growth.
▲In 2021, the number of new national tide brands settled in Pinduoduo increased by 270% year-on-year.
In addition to bringing users a better domestic product experience, Pinduoduo has a more realistic significance in supporting domestic products. In November 2019, Dada, co-founder of Pinduoduo, revealed in an interview with China Entrepreneur that nearly half of Pinduoduo's users are from first- and second-tier cities, and from the perspective of age distribution, users under the age of 35 account for the highest proportion, close to 70%.
According to the "2022 Duoduo New National Tide Consumption Report" released by Pinduoduo on March 17, among the user groups of new domestic products, rejuvenation happens to be the most significant feature.
The report shows that in the second- and third-tier cities represented by Jinan, Ningbo, Dongguan, Nanchang, Xiamen, Shenyang, Changsha, Wuxi, etc., domestic orders have nearly doubled in the past year, and the order scale is 3.5 times that of the north, Shanghai, Guangzhou, and Shenzhen, and 2.4 times that of the new first-tier cities, which has become a new momentum for the rise of domestic goods. In the vast number of counties and rural areas, the growth of domestic orders is still stable, but the order amount has increased by 130%.
In contrast, when Pinduoduo entered the hinterland of giants such as Taobao and Jingdong, it was another way to break into the huge sinking market by relying on high cost performance.
With the help of the new national tide, Pinduoduo is becoming a new highland for the strong growth of long-established brands. Economist He Fan said that intelligent manufacturing does not have to start digitalization from the production end, but also can gain insight into the real needs of users through the Internet, and then reverse the production process, "Now it seems that the integration of the real economy and the digital economy is undoubtedly a new engine for the further transformation and upgrading of China's manufacturing industry." ”
However, whether it is to help farmers or help domestic goods, at the moment when the Internet industry as a whole is out of the virtual to the real, Pinduoduo, which was once a brisk surprise attack, has also begun to take a steady and in-depth step.
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