Whether or not more high-value services can be ran out of the Pinduoduo platform value network after a large number of merchants and users are settled, this may be the core difference that determines the competition between Pinduoduo and Ali and JD in the next 5-10 years.
Editor’s note: This article comes from the WeChat public account “A Fat World” (ID: we_the_people) , author Liu fat.
Last Friday, Pinduoduo released its first quarter earnings report for 2020. On the same day, in the context of a general decline of 5% -10%, its stock price rose by 15%. However, immediately afterwards, there were many voices of doubts and bearish fights.
This is divided into two parts. In the first part, some investors believe that the market value of Pinduoduo has increased a lot in the short term, and the actual business development and future expectations of the company during the epidemic have certainly not been as fast as the stock price. The stock price itself has its own laws of volatility, and there are no stocks in the world that only go up and down, so the stock price of Pinduoduo did drop in the following two trading days.
On the other hand, some investors believe that the data of Pinduoduo are fraudulent, so we have a beautiful financial report for another quarter under the epidemic, which leads to a bearish behavior towards Pinduoduo. In these interpretations of Pinduoduo’s data fraud, there are actually many misunderstandings and many common-sense mistakes.
For example, some analysis believes that Ali, JD.com and Pinduoduo are inconsistent with the GMV algorithm, but in fact, from the perspective of the financial report announcement, the three home appliance merchant platforms have adopted the same GMV definition. The caliber of this GMV was first developed and implemented by Alibaba.
Perhaps, many data items of Pinduoduo for many ordinary individual investors, if you only observe from your daily life environment and experience, there are many difficult to understand, which may lead to some unreasonable Speculation and questioning.
First, about GMV and Take Rate
After Pinduoduo ’s annualized GMV exceeded 1 trillion at the end of last year, this time it increased by 108% year-on-year, and it still maintained a three-digit growth during the epidemic. However, the quarterly monetization rate of Pinduoduo dropped to its lowest point in the past two years, only 2.2%.
Take rate has not increased synchronously with GMV, which makes many people question whether Pinduoduo has moisture in GMV data, such as counting orders that have not been paid (but not yet canceled), so that the number is done As the denominator becomes larger, the revenue does not keep up, so the Take rate drops.
First of all, the number of GMV itself, in fact, will not be written into the three tables of official accounting, that is, it is not a number that must be announced in annual or quarterly financial reports.
However, the announcement of GMV has become the practice of most e-commerce platforms, because this data can prove how much transaction value the platform as a whole can drive.
The current GMV calculation method adopted by the Chinese e-commerce platform is exactly the same, and this calculation method was first adopted by Alibaba. It is accurately defined as, “refers to the value of goods and service orders confirmed on our trading platform (regardless of how consumers and sellers settle and whether transactions are settled)”.
Therefore, from this definition, (1) whether it is Alibaba, JD, or Pinduoduo, the GMV calculation includes unpaid orders; (2) Alibaba and JD GMV also include proprietary Business data, such as Tmall supermarket, Hema, etc.
However, as GMV increases, Take Rate does not necessarily increase with it.
The key to the rise and fall of Take Rate is whether for the e-commerce platform, after the transaction size is large, the above merchants will be charged more. Here can be the advertising fee for marketing activities or it can be Commission for actual transactions.
The decrease of Take Rate during the Pinduoduo epidemic is essentially related to the reduction of the burden on the merchants. First of all, it reduces the traffic cost of the merchants, that is, the advertising and marketing expenses I mentioned earlier. Strategy, this is the strategy that Taobao used in the early battle against eBay, because Ma Yun shouted the slogan of no charge for three years.
This 0-commission strategy is more competitive. Now the platform and the development stage of the ecology are bigger, because it is more friendly to small and medium businesses, especially the early small and medium businesses, so that they can grow their businesses with peace of mind. The ecological prosperity of small and medium-sized businesses is more important to Pinduoduo than making money.
In the long run, the platform needs to slowly adjust the relationship between GMV and Take Rate according to its own ecological development plan.
Second, about monthly and active buyers
In the financial report released by Pinduoduo, the number of monthly activities is lower than that of active buyers. Many people question the data. Should n’t the people who look at it have more people than those who buy it? This is of course true, except that the monthly activity of Pinduoduo announces quarterly data, while active buyers calculate the annual, that is, the past 12 months. If you know the definition of this data, you will not be confused.
In fact, if we take Ali as an example, the quarterly monthly activity on its platform is indeed more than the annual buyer. However, this represents that after the platform has passed through the early days and has a larger user base, it is still very hungry for new traffic. Therefore, Ali will create new traffic sources such as Youku and UC through investment and self-building, but this way, at the same time, it will also cause the ratio of conversion to actual buyers must be lower than in the early days.
If you look at the data from the early years, in 2015-2016 when Ali just listed, although Taobao has developed for more than a decade, the quarterly MAU is indeed lower than the annualized active buyers. Ali’s acquisition of platforms such as Youku took place in 2017 and beyond.
Later, Ali ’s monthly activity has been higher than the annual active buyers. The relationship between monthly activities and buyers can also represent different stages of the development of an integrated e-commerce platform.
For Pinduoduo, among the indicators of user scale, the growth rate should be the most concerned about. In fact, Pinduoduo’s user growth has been the most dazzling among the three major e-commerce platforms. In this quarter, the MAU of Pinduoduo reached 487 million. In the context of the epidemic, it still increased by 68.2% year-on-year, 12.1% month-on-month, and a net increase of 5.9 million month-on-month; while active buyers reached 628 million, an increase of 41.7% year-on-year. A net increase of 42.9 million from the previous month.
In the early years, the growth rate of Pinduoduo users naturally benefited from the large number of people in the WeChat ecosystem who have not yet been exposed to mobile e-commerce. They formed self-propagation through interactive gameplay such as “cutting a knife”; now Pinduoduo pays more attention to its own Traffic precipitation and retention, by attracting users to pay for their own apps and enhancing user stickiness through “fighting small circles”, Duo Duo orchards, and live broadcast products.
After three or four years, Pinduoduo’s serial play has surpassed JD.com, which was founded more than fifteen years, for monthly activity and buyer data. However, at some point in the future, the growth rate of Pinduoduo’s users will definitely decrease. At that time, it is necessary to look at its user usage time and repurchase data.
Three, the future of Pinduoduo needs to be upgraded
According to the above analysis, the surprising growth rate of Pinduoduo in the past two years is actually in line with common sense and logic.
Even from the perspective of enterprise development, Yiduo Duoduo’s current market value and number of users are no longer startups. Therefore, any flaw in the data may lead to loss of trust and reputation, which is not worth the loss, and is not in line with the basic laws of business.
According to the industry situation, after Ruixing’s thunder, the Chinese stock market has been so closely targeted. If there is any real counterfeit in Pinduoduo, then regardless of the SEC, audit institutions and short sellers, especially It is impossible for Ali to wait for a match, it is impossible to let go of the fight.
But there are other issues worthy of serious consideration and consideration by investors, such as how long will Pinduoduo’s tens of billions of subsidies last, and after that, will Pinduoduo still be competitive for consumers.
For the first question, I think the comprehensive and in-depth tens of billions of subsidies can be made up to at least the number of users to catch up with Ali. At the same time, we also need to see whether the growth and retention of new users brought by tens of billions of subsidies It is expected that if the first- and second-tier high-consumption people have migrated to start a stable repurchase, the phased effect of the tens of billions of subsidies will be little.
However, the tens of billions of subsidies themselves have become a brand similar to Double 11 in the minds of consumers. Pinduoduo should not stop this thing completely, otherwise it would be equivalent to giving it to Ju Bargain or Taobao to continue to undertake.
Subsidies or losses are not a problem in themselves. E-commerce platforms such as Amazon, Ali or JD.com have experienced this stage. Subsidies or losses are not terrible, the key is to have value. The e-commerce platform is a typical value creation business, and it must be able to bring value to the participants in order to gain room for growth and development.
After the normalization of tens of billions of subsidies, it is necessary to observe the continuous improvement of a series of data such as Pinduoduo ’s retention, repurchase, and per-person price per capita every quarter in order to verify Huang Zheng ’s planned user + business model for Pinduoduo. Development effectiveness.
I think that the future of Pinduoduo still needs a “supply chain” upgrade.
Early Pinduoduo used WeChat precipitation traffic + small and medium-sized merchants on Taobao. Both supply and demand gathered on Pinduoduo, a new e-commerce platform. Today’s tens of billions of subsidies can increase the consumption level of Pinduoduo and allow more users in first- and second-tier cities to come in. This requires that Pinduoduo’s supply must keep up.
For example, the recent in-depth cooperation between Pinduoduo and Gome through capital alliances, and the entry of many high-end brand stores in various categories into Pinduoduo are all part of this supply chain upgrade, but at this stage it seems far away Not enough.
In general, the capital market is optimistic about Pinduoduo, on the one hand, of course, because Pinduoduo has achieved a very high user base, and the growth rate is still very fast; on the other hand, it was generally believed that PinduoduoThe users are very low and the unit price is very low. This problem has been gradually solved after the tens of billions of subsidies.
In the future, will it be possible to run more high-value services in the Pinduoduo platform value network after a large number of merchants and users have settled down? This may be the core difference that determines the competition between Pinduoduo and Ali and JD in the next 5-10 years. point.