Fatal Pinduoduo

Author: Penguin Ecology, public account ID: qieshengtai.

Pinduoduo announced its Q3 financial report today. As an e-commerce platform that has emerged rapidly from the Tencent ecosystem, Pinduoduo is also the one with the most exaggerated growth among domestic listed Internet companies.

[Penguin Ecology] also read it carefully and felt that there are still many interesting things in it. I will interpret it according to my own understanding:

1. Pinduoduo is still able to show several times growth in its financial report

Data show that Pinduoduo’s Q3 revenue was 3.3724 billion yuan, a year-on-year increase of 697%; the net loss was close to 1.1 billion yuan, a significant increase from 221.4 million yuan in the same period last year.

What is rapidly expanding at the same time as net losses is Pinduoduo’s overall scale. Pinduoduo’s annual GMV in Q3 was 344.8 billion yuan, an increase of 386% from 70.9 billion yuan in the same period in 2017.

The number of annual active consumer users was 385.5 million, an increase of 144% compared with 157.7 million in the same period of 2017. The average annual consumption of a single buyer was 894 yuan, a year-on-year increase of 99%.

Of course, Pinduoduo’s growth rate will definitely not be maintained forever. On the one hand, Pinduoduo has initially touched the ceiling of domestic e-commerce platforms; on the other hand, Pinduoduo is moving from “outside the Fifth Ring Road” into the territory that Alibaba and JD.com have operated for many years. The next step is a tough battle.

2. Compare JD.com to see who is the second largest e-commerce platform in China

JD.com also announced its Q3 financial report yesterday. Its single-quarter GMV was 394.8 billion yuan, a year-on-year increase of 30%. The annual active consumer users as of Q3 were 305.2 million, a decrease of 2.74% from the 313.8 million active users as of Q2.

For comparison, Pinduoduo’s total number of buyers has exceeded JD.com’s 80 million; GMV is JD.com’s lead of nearly one trillion, and the gap is close. However, there are differences in the statistical methods of GMV in various aspects. In addition, Alibaba’s total annual buyers during the same period was 601 million.

Due to the huge differences in statistical methods, it is difficult to directly compare the e-commerce revenue scale of JD.com and Pinduoduo. However, it is obvious that Pinduoduo’s current commercialization capabilities are insufficient. Of course, you can also interpret this as having great commercialization potential.

After the release of the financial report, Pinduoduo’s stock price bucked the trend and rose by more than 10% before the market opened, and its current market value has reached around US$23 billion; while JD.com has plummeted for two consecutive days, with its market value reaching US$28 billion. Perhaps within Q4, we will see an update in the order of China’s e-commerce platforms.

3. Pinduoduo is stepping out of WeChat and has an App with 200 million monthly active users

Data show that Pinduoduo’s own e-commerce App currently has 231 million monthly active users, a year-on-year increase of 226%. After emerging from WeChat QQ in the form of social fission, Pinduoduo is also building its own platform.

It is not easy to build an App with 200 million monthly active users in a short period of time. According to Alibaba’s second fiscal quarter report, the combined monthly mobile activity of all Alibaba’s retail platforms over the years is 666 million.

4. For Alibaba and JD.com, a deadly Pinduoduo has entered the city from the Fifth Ring Road

At the same time as the Q3 financial report was released, Pinduoduo also adopted a set of data in the official press release. According to statistics from Questmobile, the number of overlapping users of Pinduoduo, mobile Taobao and JD.com has reached 95.8 million and 63.51 million respectively. A year ago, the number of overlapping users of Pinduoduo, mobile Taobao and JD.com was only 40 million and 11 million respectively.

In other words, after crossing the threshold of 300 million buyers and 200 million self-owned App users, the overlap between Pinduoduo’s users and JD.com’s Taobao is getting higher and higher.

If we talk about the development in the past three years, Pinduoduo has found hundreds of millions of new e-commerce users from outside the Fifth Ring Road. So next, if Pinduoduo wants to go further, it can only grab users from JD.com and Alibaba.

Judging from the overlap of this data, Pinduoduo not only has a direct competitive relationship with Taobao, but also has an obvious competitive relationship with JD.com.

And because JD.com’s buyer base is already 300 million smaller than Alibaba’s, it is more vulnerable to impact. In JD.com’s Q3 financial report, JD.com’s total annual buyers did indeed drop from 313.8 million in Q2 to 305.2 million, a decrease of nearly 10 million people.

5. Huang Zheng said that Pinduoduo’s cleanup of negative merchants has been completed

In addition, when Pinduoduo went public, the public complained about it and caused regulatory disturbances. At the analyst meeting after the Q3 financial report, Pinduoduo CEO Huang Zheng’s statement can be summed up as “We have it figured out.”

According to Sina Technology’s translation, Huang Zheng said: After listing, Pinduoduo has been named by the media and the public for more than 50 brands that are imitating copycats and fake famous brands. Careful investigation revealed that more than 20 of them have never appeared on the platform. The platform has completed the cleanup work for the remaining 30 or so products involving fakes and imitations of famous brands.

Huang Zheng said: Pinduoduo is constantly trying innovative technical means to strengthen platform governance, such as using algorithmic models and image recognition technology to combat "famous brands." Even if consumers enter copycat words in the search box, they can only find legitimate brands, forcing "famous brand" merchants to retreat. ”