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This article is from the WeChat public account: Supersymmetry (gh_124b62b52fa3) , author: supersymmetry team, from the title figure: Figure worm

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“Have the ability to do three-point work and seek twelve-point growth.” Under the guidance of Huang Ye’s strategic thinking, Pinduoduo’s ongoing 10 billion subsidy is a strategic tactical action intended to pass violently Subsidies have penetrated into users in first- and second-tier cities, established consumer trust between these users and the platform, and on the basis that the sinking market has established a foothold, Tmall Jingdong has snatched the first- and second-tier city markets. So has this strategy achieved the effect of “twelve-point growth”?

Taking the tens of billions of subsidies on December 11th as the analysis sample. The total number of subsidized SKUs was 8,565, with 805 brands. As of the 11th statistical period, the cumulative total GMV was 4,566,694,934 yuan, the cumulative total subsidy amount was 893,068,699 yuan, and the subsidy rate was 19.5%.

We set up a market-wide exclusive PDD 10 billion subsidy database to answer the three questions the market cares about most:

1) How much did the PDD 10 billion subsidy cost?

2) How effective is the PDD 10 billion subsidy?

3) What is the impact of Aliju’s cost-effective 10 billion subsidies on PDD?

The overall framework of the database is as follows:

Our core conclusion:

1) The PDD 19Q4 GMV is around 370 billion, the GMV of 10 billion subsidized products is about 35 billion, and the total subsidy is 5 billion. Assume that the subsidy rate of 10 billion yuan subsidies remains unchanged in 19Q3 and 19Q4 platforms. Compared with Q3’s 10 billion yuan subsidy, Q4’s incurred expenses will increase by about 1.2 billion yuan.

2) In the observation interval, (2019/12 / 05-2020 / 12/31) GMV has a strong pull function and has a good effect on acquiring new merchants to supplement new SKUs. Observations need to be continuously followed.

3) The cost-effective tens of billions of subsidies have a certain impact on Pinduoduo, and the daily average GMV of Pinduoduo will decline by up to 35%.

Our investment perspective on PDD is: long long short short. (Declaration: This does not constitute any investment advice, nor is there any interest relationship between supersymmetric technology and PDD)

Why long?

1) Still firmly optimistic about Pinduoduo’s underlying business model with consumer demand as the starting point and “province” as the core;

2) Ten billion subsidies contributed about 10% of the total GMV to more than 9,000 commodities, and the growth was still strong and stable. Pinduoduo still has a lot of room for growth in this volume.

3) Ali GMV is 6-7 times that of Pinduoduo, and the cost of tens of billions of subsidies is much greater than Pinduoduo.

Why short-term? Alibaba’s cost-effective tens of billions of subsidies in the short term will have a certain impact on Pinduoduo ’s customer acquisition and GMV growth. We have observed from data that the average daily GMV of PDD and the GMV of tens of billions of subsidized products after the Double Twelve Decline. It is expected that under the impact of the cost-effective tens of billions of subsidies in 20Q1, PDD GMV will be under greater pressure.

How much did the PDD 10 billion subsidy cost?

In order to study the real situation of PDD 10 billion subsidies, our database tracks from three dimensions.

1.1.1 Total GMV and subsidized GMV for 1.1.1 billion subsidy products

Total GMV and subsidy GMV of PDD 10 billion subsidies (Definition of subsidy GMV: total amount of subsidies of 10 billion subsidized products) reflects the 10 billion subsidies The overall situation and the corresponding PDD costs. Super symmetry is estimated that the total GMV of Pinduoduo ’s 19Q4 billion subsidy products is about 35 billion, and the total GMV subsidies is about 5 billion.

According to the observation of supersymmetric technology, the GMV generated by the PDD 10 billion subsidized products in the 19 days from 2019/12/05 to 2019/12/25 was 6.97 billion yuan. After that day it was 332 million yuan. Subsidized GMV accumulatively totaled 1.03 billion in the 19 days from 2019/12/05 to 2019/12/25, and the average daily subsidy GMV was 46 million per day after deducting the double twelve days.

Picture: Daily average GMV of 10 billion PDD subsidized products	Picture: The total subsidy amount of PDD 10 billion subsidies per day GMV
Data source: supersymmetric technology	Several phenomena we have noticed: 1) There are obvious “Monday trough” and “super activity day” phenomena in the PDD 10 billion subsidy: the minimum number of participants on Monday, the peak from Friday to Sunday, and the subsidy GMV during Shows particularly large peak fluctuations. This is basically in line with the concept that PDD is a discount day every day, and is fundamentally different from platforms such as Taobao Jingdong. 2) Ali’s cost-effective “ten billion subsidies” have had a certain impact on PDD’s ten billion subsidies since the Double Twelve, and the ten billion subsidies in the second half of December declined. The impact of Aliju’s cost-effectiveness on PDD will be analyzed in more detail in Part III. 1.1.2 Changes in the rate of 10 billion subsidies and subsidies Reflection of changes in subsidy ratesThe discount intensity of PDD subsidies. The discount of the PDD 10 billion subsidy is relatively stable, fluctuating around 15%. The stability of the subsidy rate shows the overall effectiveness of the 10 billion subsidies. 1.1.3 PDD P & L table prediction based on tracking data Based on the tracking of PMD’s overall GMV and tens of billions of subsidized GMV, assuming that the take rate and other expense rates are relatively stable, the P & L table for each quarter of PDD can be predicted. We make a rough prediction of the core data of the P & L table of PDD 19Q4, and then we will adjust the model based on the increase of data samples and granularity optimization to gradually approach the real situation. How effective is the PDD 10 billion subsidy? We analyze the effects of the tens of billions of subsidies into two dimensions: consumer and merchant. 2.1 Consumer-side subsidy effects On the consumer side, Pinduoduo provides tens of billions of subsidies for three purposes: 1) New subsidiesUsers, especially new customers with high unit prices for first- and second-tier customers; 2) Subsidies to establish a brand image and increase the unit price of consumer spending; 3) Subsidize users to form repurchase (LTV> CAC) . 2.1.1 subsidy for acquiring new users In terms of the acquisition effect of new users, we observe the overall traffic situation of PDD by tracking the overall GMV and consumption of PDD; on the other hand, we observe the change of user behavior by tracking MAU / DAU and retention rate. Judging from the overall GMV data of the PDD platform, although the overall growth momentum is still maintained, the growth rate of LTM GMV has stabilized again from the stabilization of 19Q3 billion subsidies. From the overall transaction volume data of the PDD platform, it basically shows the same trend as the GMV, and the growth rate of LTM is more obvious. In 19Q4, the strategy of acquiring new customers through tens of billions of subsidies to increase platform trading volume encountered certain challenges. 2.1.2 Subsidies to establish a brand image Do the 10 billion subsidies really help PDD complete the brand upgrade? In the study of this problem, we define the concept of “trust consumption”-that is, the consumer behavior of spending more than 100 yuan / 500 yuan on Pinduoduo. We believe that from the perspective of consumer psychology and behavior, users who have made large purchases on the Pinduoduo platform are more likely to build trust with the platform and make small amounts of consumption. Therefore, the research on “trust consumption” can reflect the side effects of multi-billion subsidies on brand upgrade. In the observation interval, no significant increase in the number or proportion of “trust consumption” on the Pinduoduo 10 billion subsidies has been found. At the same time, we have seen the impact of the multi-billion-dollar subsidy on Pinduoduo. Specifically, in the observation interval, the average daily transactions of more than 100 yuan in the Pinduoduo 10 billion subsidy products were 2.53 million, accounting for 18%; and the average daily transactions of more than 500 yuan were 1.28 million. Accounting for 9%. In another dimension, the trend of average customer price per user can also reflect the brand image change of Pinduoduo. Because the current observation interval is short, no clear conclusion can be reached, and continuous follow-up observation is required. 2.1.3 Subsidy to increase user repurchase (LTV> CAC) Ten billion subsidies have increased the cost of customer acquisition. Therefore, it is necessary to study whether users will continue to spend on multiple platforms after acquiring users, and then let LTV> CAC. In this issue, we use two data of monthly transactions and monthly transactions to observe. This part of the data needs to be improved. 2.2 Merchant-side subsidy effect The merchant side effect is a feedback and result from the user side. The better the user side effect, the more the merchant side is willing to participate. The purpose of fighting the multi-billion-dollar subsidy on the merchant side is to attract more merchants to settle in and provide a more complete SKU. The effect of merchant-side subsidies is observed from the following four data dimensions: 2.2.1 Total number of merchants and subsidized merchants The total merchant data of Pinduoduo is about 2 million. The number of subsidized merchants is between 140-1700 in December, which keeps a gradual growth trend, indicating that the willingness of merchants to participate in subsidies is increasing. Look at the important factors that will steadily increase. Judging from the growth trend of the total number of merchants, we can also see the effect of tens of billions of subsidies on driving more merchants to open more stores. 2.2.2 Changes in the percentage of subsidized categories The average daily removal rate of Pinduoduo 10 billion subsidy products is 5%, and the average daily update rate is 3.3%. The five categories with the highest proportions were department stores, small appliances, food, mother and baby, and select. 2.2.3 SKU / SPU total and subsidized SKUs The total number of subsidized SKUs for Pinduoduo is stable at 8000-9000 per day, increasing at a slight rate. Compared to the total of nearly 2 million products, the number of subsidized products is less than 0.5%. We expect that with the gradual increase in the total amount of subsidized goods, its role in pulling GMV will further appear. 2.2.4 Number of explosions In the observation interval, the impact of tens of billions of subsidies on explosive products has not yet been clearly seen. Alibaba’s cost-effective tens of billions of subsidies have an impact on Pinduoduo After Ali’s introduction of the cost-effective 10 billion subsidy plan on Double Twelve, we can track the GMV and sales of Pinduoduo’s overall platform and see a certain change. After the 12/13 / 2019-31 / 2019 after Pinduoduo billion subsidies, the average platform sales volume was (excluding the day of Double Twelve) is down 32.9%, while GMV is down 34.4%. The Pinduoduo 10 billion subsidy series products have also been hit by the cost-effective 10 billion subsidies. The total daily average GMV of Pinduoduo 10 billion subsidy products was 30-40% in the last week of December. Picture: Daily average GMV of 10 billion PDD subsidized products Picture: Daily average GMV of the total subsidy of 10 billion PDD subsidies Data source: supersymmetric technology Conclusion Pinduoduo’s total number of products is about 2 million, and the daily average of about 9,000 billion subsidized products, that is, less than 0.5% of the total, contributes about 10% of the total GMV. The tens of billions of subsidies have played a strong role in driving the growth of platform sales and merchants, and are developing steadily. In the long term, We believe that Pinduoduo will further occupy the customer groups of Tmall and JD. The expansion speed will be fluctuated by competitors in the short term. This article is from the WeChat public account: Supersymmetry (gh_124b62b52fa3)