In the past few years, although it has been said every year that the e-commerce industry has entered the stock competition, and the growth rate will slow down year by year, Pinduoduo's financial reports are unique and eye-catching, constantly boosting the confidence of the entire industry.
On March 20, Pinduoduo released its financial results for the fourth quarter and full year of 2023, continuing to maintain high growth far exceeding the entire industry.
Pinduoduo Group (Nasdaq:PDD) reported revenue of RMB88.9 billion in the fourth quarter of 2023, up 123% year-on-year, and net profit of RMB23.28 billion, up 146% year-on-year, and full-year revenue of RMB247.6 billion in 2023, up 90% year-on-year, and net profit attributable to ordinary shareholders of RMB60,026.5 million, up 90% year-on-year.
Zhao Jiazhen, executive director and co-CEO of Pinduoduo, mentioned in the financial report that the reasons for the revenue growth are: first, due to the recovery of consumption, and second, the direct and effective measures to promote consumption implemented by Pinduoduo. And said in a low-key manner, "This is also the natural result of Pinduoduo constantly creating more value for consumers and merchants." ”
In the earnings conference call, Chen Lei, chairman and co-CEO of Pinduoduo, emphasized: "In the eight years since the establishment of Pinduoduo, we have always focused on our main business, and the performance we have achieved today is not only the short-term effect of the three quarters of promotional activities, but also the return on long-term investment in the past. ”
This article will combine the financial report data and Pinduoduo's measures throughout 2023 to deeply analyze how Pinduoduo can achieve such rapid performance growth in 2023 when the e-commerce industry tends to be fiercely competitive.
Affordability and good service are the foundation
As Chen Lei said, compared with Ali and JD.com, Pinduoduo does only focus on the main business of e-commerce.
The core of e-commerce is still the essence of retail, that is, to help users save money and help merchants make money.
From the user's point of view, which retailer or e-commerce platform can provide more affordable goods and good services, it will vote with its feet to the retailer or e-commerce platform to buy goods stably for a long time.
The user's long-term stable purchase can make the merchant's sales growth certain, and the natural merchant can also make money, and then the platform can grow and profit.
This is a very simple and simple principle in the retail e-commerce industry, but it is not easy to do this, and it is even more difficult to adhere to it for a long time after doing it.
According to the long-term research of "Zhuang Shuai Retail E-commerce Channel", Pinduoduo has been insisting on providing users with more affordable goods and simpler and faster good services in the past 8 years, constantly strengthening its price advantages and service advantages, and innovating tens of billions of subsidies, refund-only and other promotional forms and service standards that have become industry standards.
As long as competitors benchmark Pinduoduo with tens of billions of subsidies and refunds only, the more vigorously publicized and reported, it will further deepen the impression of Pinduoduo in terms of price and service and strengthen the user's mind.
In other words, the more intense the volume price and volume service in the e-commerce industry, the more Pinduoduo will benefit.
Q4 of 2023 is the peak season for e-commerce (Double 11, Double 12), and all mainstream e-commerce platforms in the entire industry are fully benchmarking Pinduoduo in terms of price and service, and fierce competition is launched, but Pinduoduo's financial report data can still maintain such an excellent performance, which is a very important reason.
On the basis of multi-benefit and good service, the combination of tens of billions of subsidies and characteristic live broadcast has become an innovative marketing model for Pinduoduo's differentiated competition, and continues to win the recognition of users in first- and second-tier cities and low-tier cities.
During the 11.11 promotion period, which coincided with the 6th CIIE, Pinduoduo, together with CCTV host Ren Luyu and reporter Wang Bingbing, held a conference on the banks of the Huangpu River in Shanghai with the theme of "Spell out a better life." Enter the 10 billion subsidy live broadcast of "Enjoy the Silk Road", introducing 104 high-quality products from 18 countries including the United States, the United Kingdom, France, Australia, Chile, Argentina, South Korea, Italy, New Zealand, and Thailand, setting off a round of order craze.
According to the financial report data, in the first three days of the 11.11 promotion last year, the scale of Pinduoduo's 10 billion subsidized users exceeded 620 million, the number of orders for users in first-tier cities increased by 113% year-on-year, and the amount of orders placed in fourth- and fifth-tier cities increased by 167% year-on-year.
The "three highs" strategy and tens of billions of agricultural research have achieved quality and efficiency
When the entire e-commerce industry began to comprehensively benchmark Pinduoduo, Pinduoduo put forward a high-quality development strategy at the beginning of 2023, and invested tens of billions of funds in technology research and development in one year on the solid foundation of "more affordable and good service", forming a "three high" system of high-quality consumption, high-quality supply and high-quality ecology, and building a higher and higher moat.
Behind Pinduoduo's high-quality development strategy is an in-depth insight into rational consumption and consumption grading.
The emergence of rational consumption, on the one hand, depends on the factors of China's development stage, the entire economic structure and various industries with the deepening of reform and opening up, there are more advanced international brands into China, making the competition increasingly fierce. Chinese businesses have to upgrade their management models, marketing ideas, channel layout, product research and development and other levels.
On the other hand, the rapid development of content platforms, the maturity of content platforms such as Douyin and Xiaohongshu, allows users to obtain more information for shopping decisions, not only the willingness and ability to compare prices have been greatly enhanced, but also the information on brands, commodities and e-commerce platforms can also be obtained and understood in a timely manner, and consumers are gradually becoming rational in shopping.
Consumption grading means that users will buy different products according to multiple dimensions such as lifestyle, work nature, and usage scenarios, rather than just consuming products in the same price band or of the same type and grade.
In this context, Pinduoduo combines the foundation of "more affordable and good service", and the high-quality development strategy is broken down into specific high-quality consumption, high-quality supply and high-quality ecology.
"2024 will be an important year for Pinduoduo to deepen its high-quality development strategy. ”
Zhao Jiazhen said, "This performance also inspires us to make long-term investment in high-quality development more actively and firmly, and continue to increase investment in terms of 'multi-benefit' and 'good service' to help consumers achieve high-quality consumption upgrades." ”
According to the understanding of "Zhuang Shuai Retail E-commerce Channel", high-quality consumption actually allows users to buy, buy well and buy with confidence on the Pinduoduo platform.
That is, the goods should be rich enough, the quality should be good enough, the cost performance should be necessary, and the platform and merchants should be guaranteed in terms of service.
Judging from the financial report data, during the 11.11 period in 2023, Pinduoduo's seckill channel will provide an incremental engine for more than 100,000 small and medium-sized businesses, and more than 40 sub-categories such as agricultural goods, domestic products and global good goods will double their growth.
In addition, the number of agricultural and domestic products merchants with subsidies of 10 billion yuan has increased by more than 2 times year-on-year, and 21 of the top 100 brands in the global shopping business have achieved a year-on-year growth of more than 300%, and 59 single products with single-day sales of more than one million have reached 59.
As the main goal of Pinduoduo's high-quality growth strategy, high-quality consumption is working with agricultural products as the core category, continuously increasing the high-quality supply of domestic brand goods, imported goods, special commodities, etc., and forming an efficient and coordinated "three-high system" through the platform governance of the "No. 1 Project" and the high-quality ecology formed by the "10 billion ecology" investment.
In terms of high-quality supply, since the fourth quarter of last year, Pinduoduo has continued to provide traffic and subsidy support through a number of live broadcasts with the theme of "domestic product team building" and domestic product festivals, helping manufacturing brands increase sales and expand brand influence. For example, during the National Goods Festival, the average daily sales of a brand's laundry soap products increased by more than ten times, the factory capacity increased from 4 tons to 40 tons per day, and the number of workers on the shop tripled.
In recent years, more and more overseas brands have embraced Pinduoduo with top-notch goods. Taking beauty and skin care brands as an example, dozens of well-known brands such as Oronnasur, Anna Sui, Shiseido, Evian, Kerun, and Avène have settled on the Pinduoduo platform in the past two years and opened official flagship stores, launching multi-category products to meet the diversified needs of consumers.
In terms of high-quality ecology, Pinduoduo has continued to invest in platform governance since last year, actively identifying risks and improving the response speed of the platform through technical means, and investing in the systematic governance of goods and stores through a number of special projects for the protection of minors, copyright protection, product compliance, etc., to create an e-commerce platform with green, healthy consumption and healthy competition.
Zhao Jiazhen said that in the past year, the implementation of Pinduoduo's "high-quality development strategy" has shown initial results, and he is full of confidence in the overall strategic direction. In the future, we will continue to do simple and direct promotions in product categories and price segments to give back to consumers.
In addition to putting forward a high-quality development strategy and forming an efficient and collaborative "three highs" system, technology investment has played an increasingly central role in Pinduoduo's efforts to improve quality and efficiency.
E-commerce is a technology-driven retail model, and Pinduoduo has attached great importance to the investment in technology from the beginning, which has a lot to do with the main category of Pinduoduo's operation - agricultural products.
Compared with industry, agriculture has always been an industry with weak technology input, which makes it difficult to improve the quality and standardization of goods.
However, agricultural products are high-frequency consumption categories, and driving the consumption of low-frequency categories through high-frequency categories has been proven to be a very successful business model. And the reason why Pinduoduo can establish a more affordable and good service user mind is also closely related to the investment related to agricultural products.
According to the financial report, Pinduoduo Group's R&D expenses in the fourth quarter of last year were 2.9 billion yuan, and the R&D expenses for the whole year of 2023 will reach 11 billion yuan.
The technological investment of tens of billions of funds has further raised the competitive threshold of the platform in the category of agricultural products: first, to accelerate the development of new quality productivity of China's agriculture, second, to help the revitalization of rural industries and employment growth, and third, to enhance the platform's high-quality consumption and supply of agricultural products.
In 2023, Pinduoduo launched the Agricultural Cloud Initiative, which went deep into the main agricultural belts of many provinces and cities, provided local merchants with special training on e-commerce operation and one-on-one directional operation guidance, and helped the revitalization of rural industries and employment growth, and was rated as a "Typical Case of National County Revitalization" by the China Center for Urban and Small Town Reform and Development of the National Development and Reform Commission.
In the fourth quarter, Pinduoduo actively supported the holding of the Science and Technology Academy Competition, and gave flow and subsidy support to the science and technology agricultural products that the Science and Technology Academy focused on research and development, so as to improve the conversion rate of agricultural scientific and technological achievements and accelerate the development of new agricultural productivity.
"Zhuang Shuai Retail E-commerce Channel" understands that in 2024, Pinduoduo will increase investment in key agricultural projects such as agricultural cloud action and agricultural research competitions, and continue to promote the creation of more resilient digital agricultural belts in various regions to help rural revitalization and farmers' income increase.
Chen Lei also said on the earnings call, "This year, we will maintain our investment to explore and cultivate new quality productivity for high-quality development, and improve the support capacity of cutting-edge technologies in agriculture and manufacturing." ”
At the same time, the rapid development of the cross-border e-commerce platform Temu has become the second growth curve of Pinduoduo Group.
Up to now, Duoduo Cross-border has penetrated into more than 100 manufacturing industrial belts in Guangdong, Zhejiang, Shandong, Anhui and other places, and promoted high-quality manufacturing products to enter more than 50 countries and regions such as North America, Oceania, Europe and Asia. More and more foreign trade factories and businesses rely on Duoduo to go out across borders to "sell globally", get back profits and the right to speak, and reach more overseas consumers.
Temu's success in such a short period of time in overseas markets, mainly in the United States, is due to its innovative fully managed and semi-managed models, as well as its supportive measures for brand merchants and differentiated innovative marketing and platform operations.
These are mainly due to the Pinduoduo team's focus on the e-commerce industry, the precipitation of supply chain resources and the cultivation of professional teams.
Of course, opportunities and challenges always coexist. As a Chinese company, Temu's overseas conquest will inevitably face a more complex and volatile environment than in China, as well as fierce competition from e-commerce platforms and retailers from different countries.
At the earnings call, Chen Lei also admitted that Temu is still in its early stages, and there will be many changes and challenges in the future, "In response to these unknowns, what we can grasp is to continue to cultivate internal skills, with a sincere attitude of learning from consumers and the market, and actively explore more technology and model innovation to meet market competition and various challenges." ”
In 2024, expectations outweigh challenges
Looking forward to 2024, as Douyin e-commerce strengthens its shelf mall and announces that it will join price competition at the beginning of the year, Kuaishou achieves profitability and e-commerce GMV exceeds one trillion yuan, Alibaba subtracts and focuses on the main business of e-commerce, JD.com gives full play to its self-operated procurement and sales and logistics advantages to strengthen its price and service advantages, and the three new e-commerce forces of Xiaohongshu e-commerce, video account e-commerce and Baidu e-commerce will also continue to increase investment......
"Zhuang Shuai Retail E-commerce Channel" believes that the competitive environment at home and abroad will be further intensified, but for Pinduoduo, in adhering to the high-quality development strategy based on the "three highs" system, and continuing to strengthen the user's mind of Pinduoduo's "more affordable and good service", the challenges from external normal business competition are not too great, but there will be some uncertainties in cross-border business beyond business competition.
What is more worth looking forward to is that its domestic and foreign businesses are gradually forming a situation of mutual promotion and growth: the main agricultural products category of the domestic platform and the full category and imported goods of the cross-border business will complement each other, and jointly promote the continued rapid growth of domestic and foreign business.
For Pinduoduo in 2024, the expectations are greater than the challenges!