Just yesterday, Pinduoduo released a quarterly financial report, directly taking down the homepage of the critics.
In the first quarter, revenue increased by 131% year-on-year, and adjusted net profit increased by 202% year-on-year.
Pinduoduo has exceeded market expectations for five consecutive quarters now, and its market value speaks for itself. Many are well aware of this trend.
After the data was released, there was a wave of people joining in the excitement. Many netizens expressed their surprise, with comments like "I never expected this," and jokes such as "I used to ignore Pinduoduo, now I can't afford it" gaining popularity.
Under the topic of "Pinduoduo's first-quarter revenue of 86.81 billion yuan," some netizens promptly commented on current events: "No showing off wealth."
In short, Pinduoduo has really caught everyone's attention this time, but I also noticed that people's comments on Pinduoduo seem to be getting more and more polarized.
Although the Criticism Squad quickly looked up some information and carefully studied Pinduoduo's recent business activities, they did find some substance to it.
However, today I don't intend to follow the trend of praising how much money Pinduoduo has made or how much its stock price has risen. Instead, I want to take a different perspective and encourage everyone to look at Pinduoduo's short-term performance fluctuations rationally and objectively.
It cannot be denied that Pinduoduo has indeed made some right moves in the past half year, achieving significant success on its domestic platform.
During the Chinese New Year period, Pinduoduo went all out with its Spring Festival marketing, launching events like the "New Year Shopping Festival" and "Spring Festival Never Closes." With billions in subsidies and features like group discounts and team purchases, the focus was on helping consumers celebrate the Lunar New Year without breaking the bank.
To be honest, Yours Truly also bought a lot of New Year goods on Pinduoduo during that time. So, did our purchases contribute to their first-quarter revenue?
I also noticed that Pinduoduo recently introduced a "Free Shipping to Xinjiang" service, where deliveries reach even remote villages free of charge. With this, the traditional free shipping areas like the "Jiangsu, Zhejiang, and Shanghai" region might soon include "Xinjiang, Zhejiang, and Shanghai."
Considering the potential growth in orders from western regions like Xinjiang, this could not only boost revenue for the first quarter of this year but also in the future.
Apart from the domestic market surge, Pinduoduo's overseas version, known as Temu, has made a mark by expanding into over fifty international markets in less than two years. They recently launched a semi-managed model in the past two months, likely aiming to further establish themselves in the cross-border e-commerce arena.
However, the critic believes that we should still pour cold water on Pinduoduo, as mentioned earlier, not only Temu is offering the semi-managed model.
For those friends who are not familiar with e-commerce jargon, let me briefly explain. Temu's fully managed model means the platform takes care of everything from product operations, logistics to after-sales service, while merchants only need to provide good products and send them to Temu's domestic warehouse.
With Temu's semi-managed model, merchants have more things to worry about.
Image Source: Hugo Cross-border
Take logistics, for example. Temu used to operate on a fully managed model, handling both cross-border and last-mile logistics. However, this led to not only a sharp increase in logistics costs but also a lag in fulfillment capabilities compared to Amazon.
Therefore, the semi-managed model shifts the burden of warehousing and logistics to the merchants. The original intention was not to impose more pressure on the merchants but to attract those with the ability to ship locally and internationally, while expanding their own product categories, such as large household appliances.
As a result, logistics costs have decreased, delivery times have improved, and a wider range of SKUs can be offered.
Having innovative ideas is always good, but now platforms like AliExpress and Shein are adopting the semi-managed model for cross-border e-commerce. It's hard to say for sure which platform merchants will prefer under this model in the short term.
Image Source: Pexels-Kelly Lacy
Cross-border e-commerce is no longer the untapped goldmine it used to be. Among the "Four Little Dragons of Going Global" and Amazon, none of them are pushovers.
Take the recent example of AliExpress launching its "Billion Subsidy Brands Going Global" plan online, which is seen as encroaching on Amazon's territory.
Amazon has also been ramping up its logistics in recent years. According to Amazon's report, in the first quarter of this year, as many as 60% of Amazon Prime orders in 60 U.S. cities were fulfilled on the same day or next day.
To seize market share, companies are pulling out all the stops, so Pinduoduo's overseas business isn't going as smoothly as one might think.
However, with economic recovery being the overarching trend, the financial reports of various domestic giants in the e-commerce sector during this period are worth discussing. If they fail to capitalize on the current momentum, these giants may need to reflect on their strategies.
Returning to Pinduoduo's financial data this time, it's rather dull to excessively focus on the short-term performance fluctuations, praising it when it rises and criticizing it when it falls...
It is undeniable that financial data can indeed reflect a company's operational status. However, setting aside growth and reexamining Pinduoduo's value from a long-term perspective may be more helpful for us to understand this company.
During the recent earnings call, Pinduoduo's Chairman, Chen Lei, said the following: "Do not overly focus on performance fluctuations, focus on enhancing intrinsic value."
Honestly, my initial reaction to this statement was that I couldn't understand the world of the big shots. It's like someone coming up to me and saying, "The thing I care about the least is money."
But as I delved into more information and read some compilations, I am ready to retract what I just said.
Pinduoduo's investment in agriculture is a typical example.
Previously, the Criticizer often saw news about Pinduoduo's efforts to help farmers, but to be honest, I didn't pay much attention to it.
Because I feel that this kind of superficial effort to add luster after becoming prosperous is something anyone can do, just like Xia Hei Pang saying that if he won a billion yuan lottery, he would definitely donate five million. I believe this statement, provided that he actually wins.
However, I discovered that Pinduoduo didn't just start subsidizing farmers after becoming successful. On the contrary, when it comes to agriculture, Pinduoduo is a staunch advocate of long-termism.
From the beginning, Pinduoduo relied on agricultural products to establish itself. Even in the first shareholder letter in 2018, the "Pinduoduo" model was mentioned, emphasizing its help in the circulation of agricultural products. Since then, every time they release their performance reports, agriculture is always an unavoidable topic.
Over the years, Pinduoduo has launched initiatives like the "Agricultural Cloud Action" and the "Billion Agricultural Research Fund," not only focusing on the agricultural supply chain but also delving into agricultural technology.
For example, they provided subsidies of billions to Xinjiang's agricultural products, which not only helped Xinjiang farmers address their needs but also allowed everyone to enjoy affordable Xinjiang fruits.
Recently, the concept of "Banana Green Ban" that was trending on a certain platform has caught on, and Pinduoduo has capitalized on this trend. With billions in subsidies and a dedicated flash sale channel, discounts on both apples and bananas have surged, boosting sales of these fruits on the platform.
According to publicly available data from Pinduoduo, searches for "Banana Green Ban" have increased by 70% on a weekly basis, with orders rising by approximately 30%.
In addition to agriculture, Chaping Jun found that Pinduoduo has been fond of mentioning a term in the past two years: high-quality development.
This term sounds impressive, but it's not that mysterious. Last year, after the first-quarter financial report was released, Pinduoduo launched a "hundred billion ecosystem," not to protect the ecological environment, but to build a merchant ecosystem.
In simple terms, it aims to regulate some platform merchants who do not follow the rules. For example, implementing real-name purchases for "non-kitchen knives," and dealing with those involved in feudal superstitions and pornography.
With a focus on agriculture and regulating the platform ecosystem, looking back now, does Pinduoduo really only care about prices?
The "intrinsic value" mentioned by Chen Lei this time has actually been mentioned since the first shareholder letter of Pinduoduo until now.
Perhaps it helps users get the best value for their money when buying what they want, or maybe it improves the quality and efficiency of the agricultural supply chain. Whatever it may be, from the current perspective, these long-term investments have indeed helped them achieve their current level.
In the end, the critic believes Pinduoduo is a company worth studying.
After all, some think it pursues genuine long-termism; some say it only plays the pricing game, while others argue it has created a new business model...
Whether you believe it or doubt it, whether Pinduoduo's actions are right or wrong, I think in the not too distant future, there will be a clearer answer.
