Production | Tiger Sniff Business Group

Author | Fang Yu, Tiger Sniffs

Title Map | Visual China

If you want to test a person’s judgment on current Chinese business trends, Pinduoduo is probably the best touchstone, not even one. Pinduoduo is considered a representative company that sinks the market and increases the number of new consumers. Recently, judging around the trend of this company, there have been obvious differences in the industry, and some securities analysts have even fought about it. Its background is the performance of Pinduoduo’s 2019 third quarter report, which disappointed the capital market slightly. In the third quarter of 2019, Pinduoduo lost 2.3 billion yuan, and the customer acquisition cost for the quarter was 108.63 yuan, which was higher than the 80 yuan in the previous quarter. On the other hand, there are still many people who are optimistic about the market.

In the question-and-answer session of the Tiger Sniffing FM Festival that ended recently, Mr. Wei Zhe, the former Alibaba CEO and founder of Jiayu Fund, said in response to the question on the spot that his mother, who had previously rejected e-commerce, also used it because of Pinduoduo. Online Shopping. Wei Zhe believes that Pinduoduo ’s contribution is that “the last group of people in China (without e-commerce) is brought to the e-commerce arena by social methods.” But he also pointed out, “Who can capture the non-mainstream Chinese population I believe that Pinduoduo is a very good one, but it does not mean that non-mainstream Chinese people have been caught by Pinduoduo. “And once entering the world of e-commerce, users will also start to contact other e-commerce platforms and start new ones. Compare.

It can also be said that Pinduoduo has not yet formed the cognitive monopoly of users’ minds.

How to treat the barriers of user scale is the core contention of Pinduoduo. In the third quarter, the number of active buyers for many years reached 536.3 million, a net increase of 150.8 million year-on-year, a net increase of 53.1 million compared with 483.2 million in the previous quarter, the largest single quarter increase since listing. Today, with more than 500 million users, do you really have your own moat, and is this moat solid? These questions are enough to test a person’s trend in the Chinese market.

The author believes that sinking users and low prices are the two core entry points for researching Pinduoduo. From this, we can see whether Pinduoduo has real barriers. In general, I think that on the one hand, we must recognize the huge growth space of Pinduoduo. But on the other hand, today’s fights are many and have not yet formed a real moat.

Is low price a capability?

In Guosheng Securities’ 95-page bearish report (“Pinduoduo, or less than three years old”), which attracted much attention, put forward a view that the low price of PDD is due to discounts. In other words, discounts are not cheap, not cheap. The low cost is caused by the improvement of supply chain efficiency.

“Pinduoduo is cheaper. We think it is cheaper. Pinduoduo’s products are not essentially different from other e-commerce platforms such as Ali Jingdong. And compared with Ali Jingdong, the competitiveness of Pinduoduo is the weakest. Most of Pinduoduo ’s “explosive” products actually have the same goods on Ali Jingdong and are also being sold. And some of the merchants behind Pinduoduo ’s products are also the same merchants of Ali Jingdong, but the reverse is not the case. Ali Jingdong ’s Many “explosive models” are not sold on Pinduoduo. We believe that the price of Pinduoduo’s products is not substantially different from that of Ali and Jingdong. Currently, the two-way subsidies are used to make the price slightly lower. Instead of less cost.

The report also finds that Pinduoduo ’s “explosive” products are not much special. Their products have a high degree of overlap with Ali and JD. Most of the “Popular” Pinduoduo ’s “explosive models” are sold by Ali Jingdong. In other words, there is no difference in customization. The report also has a core assumption. If the same product has the same price on several major e-commerce platforms, does Pinduoduo have an advantage?

Based on this, the report also draws a conclusion:

Pinduoduo’s product itself does not reduce costs at the manufacturing end. Instead, Pinduoduo changed the channel cost ratio and transferred a large part of the cost to itself, so that merchants can maintain a similar level of Ali Jingdong for a period of time. cost. In addition, most of the merchants welcome a new traffic platform, so there will be a part of the concession, which makes the price of many products less than the actual cost of Ali and

The core question here is whether low prices constitute a core competence for today’s Pinduoduo. It is still just a phenomenon caused by large subsidies.

Some observers pointed out to Tiger Sniff that the reason for the existence of Pinduoduo and the reason it is optimistic is that in today’s economic downturn, the manufacturing capacity of many low-end markets in China is actually underutilized, and the operating rate is not enough. It is possible to realize the utilization of these capacities and let them realize the expansion of reproduction in the form of small profits. This is a multi-mode

Selected “Company Value” by Tiger Sniff pointed out that in the early stage of Pinduoduo, we achieved explosive growth of users through WeChat drainage and user fission, but as the dividend subsided and the user base increased, the growth rate of Pinduoduo users gradually slowed down. Therefore, the biggest problem of Pinduoduo is not user growth, but user retention.

“From historical data, Pinduoduo only received 100 million yuan or less than 100 million yuan in operating expenses for every 100 million yuan of sales expenses. In Q2 2018, Pinduoduo only invested 2.971 billion yuan in sales costs Revenue of 2.709 billion yuan; in 2018Q4, invested 6.024 billion yuan in exchange for 5.654 billion yuan in revenue; in 2019Q1, invested 4.889 billion yuan in exchange for 4.545 billion yuan in revenue. Obviously, Pinduoduo ’s “input-output” Than “very low, this is not sustainable.”

“Pinduoduo’s existing users are largely due to user subsidies. If the subsidy is reduced, user loss will definitely be faced, reflecting that the user stickiness of Pinduoduo is not high. Pinduoduo still needs to invest more after acquiring customers. Large cost (subsidy) to maintain the activeness of existing users. At present, Pinduoduo’s annual active users have reached 483 million. If you want to maintain the activeness of existing users, you need to continue to subsidize (if you lose the subsidy, you will turn to Jingdong and Ali ), Continue to invest in high costs, it is difficult to keep users at low cost. “

In other words, the customer retention cost of Pinduoduo is basically the same as the customer acquisition cost, and Ali Jingdong has reached the time when the retention cost is far lower than the customer acquisition cost. Can Pinduoduo shorten this time difference?

In particular, in the current model, Pinduoduo’s own hematopoietic capacity is also insufficient. According to Tiger Sniff’s research on “Company Value”, Pinduoduo is still mainly maintained by blood transfusion. From 2016 to 2019H1, the net increase in cash and cash equivalents was positive, with a cumulative net increase of 40.423 billion yuan. The increase was mainly due to financing activities, which contributed a total of 27.224 billion yuan in financing activities.

Pinduoduo relies heavily on capital. On the one hand, the platform continues to lose money, its net profit continues to be negative, and its self-generating “hematopoiesis” ability is insufficient; on the other hand, it goes back to the previous point, acquiring and retaining users requires high subsidies.

But some people in the industry have pointed out that for Pinduoduo, which has a huge user base, it is not difficult to get income, it just depends on the current Pinduoduo.

I think we can still look at it from a different perspective. In addition to the huge user scale, what moats do Ali and Jingdong have?

Simply put, Alibaba’s e-commerce platform,In fact, it is a double insurance of user scale + payment tools. It is precisely because of the existence of Alipay that once a user enters the platform, his user assets can easily become financial property assets and have a relatively high viscosity.

In contrast, although Jingdong Mall cannot match Ali and Tencent as a payment tool,’s own logistics and distribution system, which was heavily invested in the early days, has become a strong barrier, forming a “user scale + self There is logistics “double insurance. Through better user experience, user stickiness is increased.

Whether it is a logistics system or a payment instrument, it is currently unknown to the outside world what is the next deployment of Pinduoduo. But there is no doubt that when a single user scale does not form the so-called winner-take-all effect of the Internet, the only moat of Pinduoduo is not wide enough. This new-generation giant that has high expectations from the outside world still has many fortifications. To build.

(The company value selected by Tiger Sniff also contributed to this article)