Figure: Figure worm
Source: 21tech
Author: Yi Jiaying, Tao Li, Yang Qingqing
Editor: Lin Hong
Near the end of March, with the release of Pinduoduo's 2021Q4 financial report, at this point, the e-commerce "big three" four-quarter report was released.
According to the financial report, Pinduoduo achieved revenue of 27.231 billion yuan during the reporting period, an increase of 3% year-on-year, the lowest growth rate since listing; but the net profit attributable to common shareholders reached 6.620 billion yuan, a year-on-year turnaround. For the whole year, Pinduoduo achieved annual profit for the first time, with a net profit attributable to common shareholders of 7.769 billion yuan in 2021. However, the total revenue in 2021 was 93.950 billion yuan, an increase of 58% year-on-year, compared with the year-on-year growth rate of 97% in 2020.
In the same period, Alibaba's revenue was 242.580 billion yuan, an increase of 10% year-on-year, and net profit was 44.624 billion yuan, down 25% year-on-year. JD Group's net income for the fourth quarter of 2021 was RMB275.9 billion, up 23% year-on-year, and net loss attributable to common shareholders was RMB5.2 billion, compared to RMB24.3 billion in the same period last year.
Judging from the situation in this quarter, JD.com ranked first in total revenue, Ali ranked second, and Pinduoduo ranked third. The gap between Pinduoduo and the former two is obvious. However, in terms of revenue growth, Ali ranked first, JD.com ranked second, and Pinduoduo ranked last, with a growth rate of only single digits.
Correspondingly, the "transformation" declaration of the heads of each family. Daniel Zhang, chairman and CEO of Alibaba Group, stressed on his earnings call in the latest quarter that the focus of the future has shifted from user growth to user retention and growth in ARPU value. Xu Lei, president of JD Group, stressed in a conference call after the release of the earnings report that JD.com does not pursue the rapid growth of a single indicator, but pays attention to the health and sustainability of the overall business growth.
Whether it is the "low growth rate" of the "big three" revenue, or the frequent talk of various executives, abandoning the transformation of high growth to high-quality growth, it is undoubtedly declaring that the domestic digital retail e-commerce market has entered the stock era. "Three e-commerce companies have reached a situation where they must change." Shao Ming, deputy director of the E-commerce Research Center of Fudan University, pointed out in an interview with the 21st Century Business Herald reporter that "the original business model has reached a certain ceiling, and platform enterprises must find new transformations in the future model, profit point and development path." ”
Just last week, Alibaba announced that it would continue to expand its buybacks, expanding the total share repurchase program to $25 billion, which is about one-tenth of Alibaba's market value and the largest repurchase record in the history of Chinese stocks.
Zheng Zhigang, a professor of finance at Chinese Min University, said in an interview with the 21st Century Business Herald that Alibaba's recent repurchase of shares has positive significance for the industry. "On the one hand, consumers' willingness to spend is decreasing, and on the other hand, the epidemic has brought some new potential demand. These are both challenges and opportunities for the e-commerce industry. E-commerce is still the engine of China's consumer economy, in the future, the improvement of China's economy, must rely on scientific and technological innovation, and scientific and technological innovation still comes from the head of the enterprise. No matter in which industry, the head enterprise is used as a locomotive to drive the development of the entire economy, which is a very important factor. ”
Hinterland clashes
As Daniel Zhang pointed out on the performance conference call, "With 1 billion high-quality AACs, we have basically covered the vast majority of users with spending power in China." "As of December 31, 2021, the Alibaba ecosystem has approximately 1.280 billion annual active consumers worldwide. Of these, 979 million consumers came from the Chinese market and 301 million from overseas.
Pinduoduo, which once competed with Alibaba in terms of the number of users, had 868.7 million active buyers by the end of 2021, an increase of 10% year-on-year, and about 1.4 million new in a single quarter. The number of active purchase users of JD.com in the past 12 months was about 570 million, an increase of 20.72% year-on-year, and 70% of the new users came from the sinking market.
According to the Statistical Report on the Development of China's Internet Network, as of December 2021, the number of mainland Internet users reached 1.032 billion, and the Internet penetration rate reached 73.0%. Obviously, in addition to JD.com's large space for user growth, the Internet traffic dividend has peaked, while the growth of the consumption environment has slowed down, and the e-commerce industry has shifted from incremental competition to stock competition.
"It's not cost-effective to compete for that little bit of incremental, and it may cost more." Shao Ming further pointed out, "It is worth paying attention to the dependence of young consumers, especially after 95 and 00, their consumption habits, path dependence, and the consumer experience and sense of participation they value. New formats should be constantly changing, and they should develop in this direction. ”
Not only has the traffic peaked, although Ali has made money, the growth rate of revenue and profit has declined year-on-year. Alibaba's Q4 year-on-year revenue grew by only 10%, the slowest growth quarter in the past few years. In addition, net profit was RMB19.224 billion, down 75% year-on-year, and even excluding factors such as goodwill impairment, Alibaba Q4's net profit also fell by 25%.
In contrast, the other two, JD.com has the highest revenue growth rate year-on-year, but it is also the only e-commerce company that has experienced losses. The main reason for this is the sharp decline in investment returns and the continuous injection of funds and resources on emerging businesses in order to build more growth curves. Although Pinduoduo's revenue growth rate is the slowest year-on-year, it has achieved a significant increase in net profit.
It is worth mentioning that Pinduoduo's Q4 marketing expenses fell by 23% year-on-year. Under GAAP, Pinduoduo's Q4 operating profit was RMB6.907 billion, compared to an operating loss of RMB2,047.8 million for the same period in 2020. Liu Jun, vice president of finance of Pinduoduo, said that the increase in profit in the fourth quarter was mainly due to the reduction of marketing expenses and the offsetting of one-time expenses.
From the financial report data of the three companies, it can also be seen that Alibaba is still the largest e-commerce platform in the mainland, but there is no respite from the competition between the giants. At the moment when the traffic peaks, the war of horse racing is nearing the end. In the past two years, Ali has successively launched Taote and Cat Enjoyment, with obvious directions, and it is necessary to start to "grab food from the tiger's mouth" from the two major opponents.
JD.com also quickly introduced third-party sellers, especially clothing and apparel, department stores and other categories, and launched Jingxi, which focuses on the sinking market. Pinduoduo takes the route of rural encirclement of cities, shifting from cost-effective and heavy GMV to heavy high-quality products, heavy selling goods to heavy industrial belt brand construction. Under the stock competition, the three companies are entering each other's "hinterland".
"However, whether it is the three e-commerce companies to consolidate their own advantages, or to make up for shortcomings, compete for the stock market and other measures, they still belong to the improvement of their own ecological system, not an essential breakthrough." In Shao Ming's view, the essential breakthrough still has to start from the level of technology and innovation.
From the perspective of practical actions, the three companies are indeed breaking through in the direction of the digital economy. Pinduoduo proposed to deepen the digitalization of agriculture, while JD.com pushed the omni-channel strategy to drive the digital transformation of physical retail; Alibaba set up two new sections: "China Digital Commerce" and "Overseas Digital Commerce".
Daniel Zhang also clearly pointed out at the recent performance meeting that the process of industrial digitalization in China has just begun, and Ali will be committed to serving the real economy and serving the industrial digitalization process of all walks of life for a long time. This is also the biggest opportunity and foundation for Alibaba's long-term healthy and sustainable development.
Logistics competition
As the ultimate tentacle for e-commerce to reach users, logistics has become the first battlefield of e-commerce platforms. Under the slowdown of the new e-commerce competition pattern, Ali's rookie system, Pinduoduo's jitu and Jingdong Logistics, which rely on the three major e-commerce systems, are also secretly competing.
Previously, Cainiao's operating data was disclosed as part of Ali's "core business" sector, together with Amoy e-commerce, cross-border e-commerce, local life services and same-city retail, while in this financial report, Cainiao was independently divided for disclosure. It can also be seen that with the upgrading of Ali's business strategy, logistics is being regarded as a new value point.
From the data point of view, Cainiao, as the only separate block of business in Ali's core e-commerce, has become one of the few segments in Ali's financial report with a revenue growth rate of more than 15%. In the three months ended December 31, 2021, Alibaba's Cainiao offset pre-segment operating income of RMB19.6 billion, up 23% year-on-year. In terms of profit, Cainiao adjusted EBITA to a loss of 92 million yuan this fiscal quarter, compared with a loss of 241 million yuan in the same period of 2020, which has been a significant improvement.
As early as 2020, Pinduoduo revealed the idea of reconstructing logistics and deeply bound with Jitu Express. In addition, Pinduoduo is also trying to "combine vertical and horizontal". A few days ago, Duoduo Buy Announced that it has achieved system docking with express delivery companies such as Tee Yida, Jitu, and Postal, opened up the signing link, and launched high subsidies to attract collection points to settle in. After the Spring Festival, Duoduo buy vegetables released relevant advertising posters in many cities, in order to quickly attract outlets to settle in, Duoduo Station provided subsidies for the first batch of sites for three consecutive months, 1,000 yuan per month.
It is not difficult to imagine why Pinduoduo is building logistics capabilities. According to the financial report, the average daily order of Pinduoduo in 2021 reached 167 million. It can be seen that the improvement of Pinduoduo's future orders and user experience is inseparable from the continuous construction of logistics performance capabilities. However, in general, due to the limited time for force, the logistics capabilities of Pinduoduo are still difficult to say that the moat.
As the earliest enterprise to invest in logistics, the strength of JD Logistics is far superior to the other two. According to the financial report of Jingdong Logistics, the net income of Jingdong Logistics in 2021 exceeded 100 billion yuan, reaching 104.69 billion yuan, an increase of 42.7% year-on-year, which is 5 times the revenue of Cainiao. Among them, the revenue from external customers was 59.1 billion yuan, an increase of 72.7% year-on-year, accounting for 56.5% of the total revenue.
From the perspective of revenue structure, in 2021, the customer revenue of JD Logistics Integrated Supply Chain reached 71.1 billion yuan, which is the main source of JD Logistics revenue, of which customer revenue from external integrated supply chain increased by 54.7% year-on-year. In addition, JD Logistics operates more than 1,300 warehouses with a total construction area of more than 24 million square meters, which is far more than other players.
"Compared with Pinduoduo and Ali, JD.com's ability lies in the deep cultivation ability of its supply chain." Some researchers in the industry analyzed to the 21st Century Business Herald reporter that "Jingdong's long-term investment and construction in logistics enables it to achieve more effective performance and more deeply combine with the industrial chain, value chain and supply chain to build an integrated supply chain product force." This is also the value increase of JD.com compared with the other two companies. ”
(Intern journalist Wang Yuqi also contributed to this article)
Editor: Lu Taoran