Market Reaction Of Pinduoduo And Other E-Commerce Companies From The Data

All the way to burn money, the rush of pinduoduo slowed down.

On the evening of November 26, pinduoduo released a three quarter report that disappointed the market, mainly because two core indicators were significantly lower than market expectations:

Q3, pinduoduo's revenue was 21.505.8 billion yuan, up 51% year on year, far lower than the market forecast of 26.47 billion yuan; As of September 30, pinduoduo had 867 million active buyers annually, and only 17.4 million new buyers were added in a single quarter, lower than market expectations.

In the past, pinduoduo has been making great progress, which is the pronoun of vigorous growth. Its growth logic is to burn money crazily, stimulate the rapid growth of the number of users and active buyers, and at the same time continuously improve their repurchase rate and customer unit price, thus continuously expanding the Gmv, revenue and profit of the platform.

However, the revenue and user growth rate of pinduoduo Q3 are not ideal, whether compared with the market expectation or compared with the past self.

In contrast, the giants of Internet e-commerce are all rushing forward. Ali, Jingdong, meituan, which wants to make a big retail business, will add code to live e-commerce's shaking tone and quick hand, without exception.

What's more, pinduoduo announced at this time that it would change its thinking of growth. Instead of relying on marketing and sales Investment for growth, it switched to increasing investment in technology and agriculture for growth.

Pinduoduo Q3 financial report and the signals released by the management indicate that its high growth myth is no longer.

As a result, after the Q3 financial report was released, investors with collapsed beliefs fled. Pinduoduo's shares plummeted 20% in the session and ended with a drop of nearly 16%.

What happened behind the collapse of pinduoduo's growth myth? Who is fighting for more? Is it a good way out for pinduoduo to add weight technology and agriculture?

The myth of growth is broken

It is inevitable that pinduoduo's growth rate will slow down. Although the ceiling of China's user scale is high, there is also a ceiling.

According to the data of the National Bureau of statistics, by 2020, there are 989 million Internet users and 986 million mobile Internet users in China's 1.4 billion population.

As of Q3 this year, the number of active buyers of pinduoduo has reached 867 million. The ceiling is close at hand.

In fact, the slowdown in the annual growth of active buyers did not come from Q3. This year, the growth of active buyers in Q1 has declined significantly, and the growth in the first three quarters of this year is slowing down.

Data source: pinduoduo financial report

The steep growth curve of pinduoduo's quarterly revenue scale peaked in Q4 last year. In the first three quarters of this year, the growth rate on a month on month basis was not significant, while the growth rate on a year-on-year basis showed a cliff like decline, falling from 239% to 51%.

Data source: pinduoduo financial report

Pinduoduo's revenue mainly comes from online marketing (business advertising) and commission income (transaction draw). In the case of slow growth of customer unit price and repurchase rate, it is inevitable that the growth of superimposed users will slow down, and the scale of pinduoduo's revenue will decline.

Similarly, Gmv growth will slow down. However, starting from Q1 this year, pinduoduo will no longer disclose Gmv data to the public.

Data source: pinduoduo financial report, Changqiao dolphin research

According to the proportion of business payment / Gmv payable by pinduoduo, Longqiao dolphin investment research estimated that the Gmv of pinduoduo in the first three quarters of this year was 508.8 billion yuan, 5111 yuan and 569.9 billion yuan respectively. Q3's Gmv increased by 30% year-on-year, lower than the 45% generally expected by the market.

Giant encirclement and suppression

Pinduoduo started in the "Five Ring Road", a large number of low-end city users are pinduoduo's basic user disk.

But competing for the sinking market is the growth hope of Internet giants and a small number of start-ups in recent years.

Internet companies are "bayonet meet" in the sinking market. The two main battlefields in the past two years are community group buying and live e-commerce.

Whether it's the old e-commerce giants like Ali and Jingdong, or the players who have entered the e-commerce market by live broadcast of short video, or the service giant meituan, which has entered the retail business midway, they are all fighting for the market.

In the first three quarters of this year, Ali, Jingdong and meituan are all expanding users, with considerable growth. Compared with the three, pinduoduo has the least number of new annual active buyers in the first three quarters of this year.

Data source: company financial report, public information. Note: Alibaba's Q4 financial report in fiscal year 2021 corresponds to the data in 2021q1 of natural year, and so on.

In particular, Ali and meituan, the former can not afford to lose in new business such as community group buying, and this year Q3 has added 35 million active buyers; The latter is determined to get new business, with the strongest growth. Q3 has added nearly 40 million active buyers.

Their new users and pinduoduo users are highly overlapped. According to questmobile, as of June 2021, 78% of Alibaba's taote users coincided with pinduoduo.

The short video platform, Shuo Yin and Kuaishou, cut into e-commerce in the way of live broadcasting, and have grown rapidly in terms of user volume and Gmv.

In the first three quarters of this year, Gmv of express e-commerce reached 118.6 billion yuan, 145.4 billion yuan and 175.8 billion yuan respectively, with a year-on-year growth rate of 219%, 100% and 86.1% respectively; Among them, the proportion of transactions from fast shops reached 90% in Q3.

Data source: quick financial report

Byte skipping has not been released yet, and there is no official data of tremolo Gmv. According to late latepost and other media reports, in 2020, the annual Gmv of Shuo Yin e-commerce will exceed 500 billion yuan, more than three times that of 2019; In 2021, the annual Gmv target of Shuo Yin e-commerce is 100 billion yuan.

Data source: late latepost and other media reports

Fast hand + shaking tone, the two were not rivals before. At present, the total amount of e-commerce Gmv has been forced to fight Duoduo. Most of their users are also highly overlapped with pinduoduo users.

Live e-commerce has been in full swing in recent years, and it has changed from marketing mode to standard retail mode.

Taobao live broadcast, shuoyin and Kuaishou, the three major platforms of direct broadcast business, have developed from building a benchmark anchor to self broadcasting by businesses and small and medium-sized anchors everywhere.

Wei Ya and Li Jiaqi rose from Taobao live. At present, they have reached a scale of 10 billion yuan in Gmv of double 11, which is the absolute head of domestic e-commerce anchors. Luo Yonghao is the benchmark of the tremolo e-commerce, while the Simba family has long occupied the head position of the fast hand live e-commerce.

Photo source: new list

At the beginning of last year, pinduoduo officially launched Duoduo live broadcasting, but so far its momentum is limited. Compared with several other platforms, it is much inferior in live e-commerce.

Behind the rapid growth of Ali, Jingdong, meituan, shuoyin, kuaihou and Gmv of e-commerce, it is their active attack and large-scale continuous investment.

Data source: company financial report. Note: Alibaba's Q4 financial report in fiscal year 2021 corresponds to the data in 2021q1 of natural year, and so on.

In the first three quarters of this year, pinduoduo, which has been burning money and shouting "10 billion subsidies", is gradually reducing the sales expense rate. In contrast, Jingdong, Ali and meituan are increasing their firepower.

Ali and meituan, in particular, are frantically "throwing money".

In Q3, Alibaba's sales expenses increased 86% year on year, reaching 27.6 billion yuan; Ali burned 26.2 billion yuan last quarter.

The sales and marketing expenditure of meituan Q3 was 11.4 billion yuan, accounting for 23.3% of revenue from 16.5% in the same period last year. In the last quarter, meituan's sales and marketing expenses exceeded 10.8 billion yuan, accounting for 24.8% of the total revenue, an increase of 0.4% over the same period in 2020.

Meituan optimization has become the head player of community group buying. It is very happy with pinduoduo and taote.

However, judging from the current status of community group buying, the stage of horse racing enclosure is basically over. Meituan has begun to pursue single volume and Gmv growth to control costs and profit.

At this time, pinduoduo announced that it would adjust its growth model and reduce its investment in sales expenses. It should shift from the mode of burning money for scale to focusing on technology and agriculture to seek endogenous growth.

Is this the initiative to change ideas, dislocation competition, or after being encircled and suppressed, abandon the city to escape? Only pinduoduo knows best.

How good is the bet on R & D + agriculture?

How does pinduoduo's management see the competitive pattern of online shopping and how much influence does the e-commerce business of other players have on pinduoduo?

In the face of analysts' questions, Chen Lei, the current chairman and CEO of pinduoduo, gave a mild and Buddhist response.

He said that China's e-commerce industry is very large, and it is logical for more and more platforms to join e-commerce; However, the core of enterprise development is to return to itself. Pinduoduo started with agricultural products and paid more attention to meet the needs of users' daily life. This is the difference between pinduoduo and other e-commerce companies.

Pinduoduo, a new e-commerce company that claims to have mud on its legs, is different because of agriculture. Therefore, it should increase investment in agriculture and concentrate more on "farming".

Pinduoduo has reshaped the circulation chain of agricultural products through the mode of "farmland cloud spelling + direct delivery of origin", and replaced the mode of layer by layer distribution with direct delivery of production areas, thus building a high-speed channel for the upward growth of agricultural products.

In 2020, Gmv of agricultural products will exceed 270 billion yuan, doubling the scale year on year; Pinduoduo also announced to become China's largest agricultural (by-product) uplink platform.

In the second quarter of this year, pinduoduo officially established the "10 billion agricultural research" project, with Chen Lei, the chairman and CEO of pinduoduo, as the No. 1 position, and plans to invest 10 billion yuan to promote the progress of agricultural science and technology.

After all Q2 profits were invested in the "10 billion agricultural research special project", Chen Lei announced that all the * * of pinduoduo Q3 would continue to invest in the special project to further intensive farming in agriculture.

R & D is also the direction of pinduoduo to add code.

Both Huang Zheng, the founder of pinduoduo, and Chen Lei, the current chairman and CEO of pinduoduo, are masters of technology background, so there is no blame for attaching importance to technology.

In the past few years, willing to invest in research and development, and spare no effort to recruit technical talents in the industry, is one of the boosters for pinduoduo's rapid rise and catching up.

However, from the financial statements of pinduoduo, the R & D expense rate of pinduoduo in the first three quarters of 2021 is on a downward trend compared with that in 2020.

In the first three quarters of 2020, the R & D cost rates are 23%, 14% and 13% respectively; In the first three quarters of this year, it was basically stable at about 10%.

And the next step to add code R & D, almost all Internet giants agree, but the current level of investment is not the same.

It is worth mentioning that in the first three quarters of this year, the R & D expense rate of fasthand has increased significantly. From 10.8% in Q1 to 20.4% in Q2, and then to 20.6% in Q3.

Agriculture is the advantage field of pinduoduo, but it is not the field of "no one has me". On the contrary, agriculture is an area in which Internet giants have been increasing their size in recent years. The space in this field is large enough, and the key is the direction of policy encouragement.

Ali has been in the agricultural field for many years, and has been the largest agricultural products uplink e-commerce platform in China for many years. In 2019, the trading volume of agricultural products on Alibaba platform will be 200 billion yuan, and the target will be 400 billion yuan in 2022.

There are also many ways to "engage in agriculture" in Ali. In addition to the e-commerce platform, it promotes the upward movement of agricultural products, the e-commerce of agricultural materials, the revitalization of rural areas through science and technology, and the direct delivery of goods; They also promote the digitization of agriculture and rural areas through Alibaba cloud et agricultural brain, HEMA Xiansheng "HEMA village", ant financial services, and nailing digital villages.

Shuo Yin and Kuaishou are also actively engaged in agriculture. In 2019, the "rapid growth plan for agriculture, rural areas and farmers" will be launched to help rural revitalization. "Fast hand agriculture, rural areas and farmers ecological report" disclosed that in 2020, the number of e-commerce transactions of the creators of fast hand platform for agriculture, rural areas and farmers exceeded 50 million. Shuo Yin has a "rich territory plan" to encourage more and more "new farmers" to bring goods live.

Meituan also has movements. For example, the "future food farm" program is one of the important projects of meituan's long-term incubation, and it is an incision in the layout of smart agriculture. In 2018, Wang Xing and Ding Lei, CEO of Netease, jointly established a company with the main business of raising chickens.

Therefore, it remains to be seen how much competitive advantage pinduoduo can be brought by increasing R & D and agriculture.