A few days ago, Pinduoduo released its third quarter financial report for 2019. As the revenue of 7.514 billion yuan (RMB) was slightly lower than the market expectations of 7.65 billion yuan, coupled with the introduction of the 10 billion subsidy, Pinduoduo's operating losses, which had originally narrowed in the second quarter, increased again, resulting in a sharp drop in stock prices.
Faced with doubts, Huang Zheng, the founder of Pinduoduo, had a very stable mentality. At the financial report meeting, he explained that Pinduoduo's "10 billion subsidy" is not a marketing tactic, but a subsidy of 10 billion is really necessary! And said an intriguing sentence: "Sometimes the data performs well, it actually fails to seize opportunities to invest, and sometimes the data performs poorly, it means that you seize opportunities to invest. "
The implication is that Pinduoduo's seemingly bad financial report made him very happy. What opportunity did this seriously drag down the financial performance of 10 billion spent. What kind of opportunities did Huang Zheng seize?
01 Under the siege of all parties, Pinduoduo is still the king outside the Fifth Ring Road
Once upon a time, Pinduoduo seized the crowd outside the Fifth Ring Road with the ultimate low price, breaking the seemingly impregnable e-commerce war situation. According to the financial report, as of September 30 this year, Pinduo's active purchase users have reached 536 million over the years.
Since last year, seeing the success of Pinduoduo’s “rural surrounds the city” route, e-commerce platforms such as Alibaba, JD.com, and Suning have launched similar special-price group buying services to compete for users in the sinking market.
With the increasing number of competitors and the origin of WeChat has repeatedly banned its sharing links, Pinduoduo has maintained its low-tier market.
Analysis shows that in the third quarter of this year, Pinduoduo added 53 million new active buyers, the largest single-quarter growth since its listing. During the same period, Alibaba's new active buyers were only 19 million.
In addition, judging from the financial report, Pinduoduo's new recruitment cost is also far lower than Alibaba.
Since the launch of the 10 billion subsidy plan this year, Pinduoduo has significantly reduced its advertising investment and spent all its marketing costs on specific product subsidies. A iPhone is not verbose, and it directly subsidized three to four hundred yuan. This "strange trick" has a great response among users, causing Pinduoduo's discussion to rise instead of falling. The jokester even summarized the "Pinduoduo's true fragrance law" and was widely circulated on social media.
Facts have proved that the direct stimulation of subsidies on sales, coupled with the increase in user discussion, is more conducive to attracting new new products than the brainwashed advertising songs and the naming rights that dominate the screen, reducing its single-person new products to 130 yuan, which is only one-fifth of Alibaba's.
02 Bet: Will the person who buys iPhones with subsidies come back
Judging from the financial report, Pinduoduo's biggest advantage is its speed . A platform with an annual GMV of 840.2 billion yuan still maintains a year-on-year growth rate of 144%, which is simply unimaginable.
And it is almost certain that in the fourth quarter, Pinduoduo's annual GMV will exceed one trillion yuan. Although the year-on-year growth rate will slow down further, it may still exceed 100%. However, the development momentum brought by the growth of scale must have passed. What should we grow next? It can only be user value.
The financial report shows that since users are mainly novice users in the low-tier market, Pinduoduo's annual consumption amount started very low. In the first quarter of 2017, its annual consumption amount was only 309 yuan. Driven by the tens of billions of subsidies and the category construction of Pinduoduo, this amount was finally increased to 1,567 yuan in the third quarter of this year.
What is the concept of an annual consumption amount of 1,567 yuan?
This means that users currently do not have the awareness and habit of purchasing brand-name shoes, bags, cosmetics, and electrical appliances on Pinduoduo. But these people may not have the corresponding willingness and ability to consume. It is possible that they will buy large items through other channels (including offline) and buy fruits and daily necessities on Pinduoduo. (Pinduoduo’s strategy is to increase the purchase frequency of consumers, rather than the average customer price. )
Moreover, compared with the per capita income-generating ability of Alibaba users, Pinduoduo's exploration of user value is also far behind.
Then, guiding users to purchase all categories of products, especially high-value products, will be the only way for Pinduoduo to switch from a sinking user platform to a value platform.
In order to win this transformation battle, Huang Zheng raised a 10 billion subsidy in the industry. During the financial report conference call, Huang Zheng called the 10 billion subsidy "investment" and was an opportunity for Pinduoduo's growth period.
According to Huang Zheng, during Double Eleven, Pinduoduo's daily active users' entrance "10 billion subsidy" has exceeded 100 million, and 400,000 iPhone 11 and 1,000 domestic cars were sold.
Unlike Volkswagen's previous speculation, 70% of the iPhones were sold to the sinking market. Many users within the Fifth Ring Road who once despised Pinduoduo were also subsidized by Internet celebrity products such as iPhone and Dyson hair dryers, which was so fragrant to Pinduoduo.
By "subsidizing real user needs" rather than "scaling up transaction volume through subsidies", Pinduoduo believes that those who use subsidies to buy iPhones will come back.
03 What will it bring to the industry after becoming a trillion-dollar platform
At present, Huang Zheng's decisions are all right.
If a 10 billion subsidy is not introduced in time, Pinduoduo's share will definitely be eroded when many companies encircle and suppress the sinking market, and high-value products have opened up Pinduoduo's new market space and user space.
The question now is whether Pinduoduo can do a good job in category construction before spending the 10 billion subsidy (it is revealed that its main focus is mobile phones, digital, home appliances, and furniture). In addition, once the subsidies are stopped, will users be lost?
So, there are still too many suspense in Pinduoduo.
However, there should be no big problem with Pinduoduo becoming a trillion-dollar GMV platform this year. The question is, after becoming a trillion-dollar platform, can it maintain a 100% growth rate in 2020?
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