Pinduoduo, the 'top student', doesn't want to follow the old path anymore

Outstanding results in the first quarter

After adjusting the organizational structure, Pinduoduo submitted a transcript that exceeded market expectations.

On May 26th, Pinduoduo Group released its financial report for the first quarter of 2023. According to financial report data, in the first quarter of 2023, Pinduoduo recorded a total revenue of 37.64 billion yuan, a year-on-year increase of 58.2%, exceeding the previous market expectation of 31.981 billion yuan.

Against the backdrop of a general slowdown in growth among peers, Pinduoduo's transcript is quite impressive. Affected by this, before the US stock market on the same day, Pinduoduo's stock price rose by nearly 10%. As of the close, its stock price closed at $71.42 per share, an increase of 18.99%, with a market value approaching $100 billion.

This quarter, Pinduoduo's different categories have shown strong demand. From the current perspective, the company's long-term strategy of high-quality development has begun to pay off, "said Chen Lei, Pinduoduo's chairman and co CEO, at the performance briefing that night.

The official announcement of the new CEO, supplemented by eye-catching financial report data, is undoubtedly familiar to Chen Lei. Three years ago, when he took over the power baton from Huang Zheng, he also turned in his transcript of "revenue growth of 89% year-on-year". Now, a similar plot is unfolding on the new co CEO Zhao Jiazhen.

For many people, Zhao Jiazhen suddenly appeared in the public eye. On April 4th, when Pinduoduo's latest personnel appointment was announced, many people made efforts to search for words related to it in their memory and online. No wonder the outside world is curious, after all, Zhao Jiazhen is the third manager to hold the title of "Pinduoduo CEO" after Huang Zheng and Chen Lei.

Subsequently, many pieces of information pieced together to create Zhao Jiazhen's past: one of the builders of the "agricultural land cloud consolidation" agricultural product upward model in Pinduoduo, one of the pioneers in the first pilot cities of Duoduo Buying Vegetables, and the first pioneer to go to the United States to wave flags and attract investment for Temu

According to the personnel appointment, this' 80s generation veteran of Pinduoduo 'will serve as the executive director and co CEO of Pinduoduo, partnering with Chen Lei to jointly manage the company's affairs. Specifically, in terms of division of labor, the former is responsible for supply chain management and Chinese business operations, while the latter focuses on globalization.

Now, from behind the scenes to in front of Zhao Jiazhen, there is a Pinduoduo moving towards "high-quality development" in front of her.

According to the financial report data for the first quarter of 2023, Pinduoduo's revenue growth is mainly driven by two major business sectors: online marketing services and transaction services. The former's revenue increased by 50% year-on-year to 27.2 billion yuan, while the latter's revenue increased by 86% year-on-year to 10.4 billion yuan.

Pinduoduo has achieved large-scale profitability since 2022. On the one hand, the platform based business itself is not heavily invested, and on the other hand, because the company has a clear idea and the business is sufficiently focused. "E-commerce expert and founder of Dolphin Society, Li Chengdong, told the" market ".

At the same time, under the "light asset model", Pinduoduo not only refreshed its revenue but also performed well in terms of business performance.

In the three months ended March 31, Pinduoduo's net profit attributable to shareholders was 8.1 billion yuan, an increase of 212% from 2.6 billion yuan in the same period last year; The net profit under Non GAAP was 10.126 billion yuan, an increase of 141% from 4.2 billion yuan in the same period last year. At the gross profit level, due to Pinduoduo's revenue far exceeding expectations, its overall gross profit reached 26.5 billion yuan, also higher than the market's expected 23.8 billion yuan.

At the same time, the weight of the word 'research and development' within Pinduoduo is also increasing.

According to financial report data, in the first quarter of 2023, Pinduoduo's investment in research and development increased by 6% year-on-year to 2.507 billion yuan, with a month on month growth rate of 4.2%. It is reported that as of now, the R&D team of Pinduoduo accounts for half of the total number of employees in the company.

Pinduoduo positions itself as a 'technology oriented company'. On the one hand, the company hopes platform merchants to improve their operations and achieve greater commercial success through Pinduoduo's technological innovation; on the other hand, it also hopes to unleash the potential of different vertical fields and categories through research and development. "At the performance briefing, Chen Lei emphasized the word 'research and development' several times.

Behind Pinduoduo's long-term development strategy of "re research and development" is the company's ambition to build a platform ecosystem and develop towards high quality.

From "quantitative change" to "qualitative change"

Although Pinduoduo achieved rapid growth in the first quarter, it has decided to shift towards high-quality development.

And Zhao Jiazhen walked from behind the scenes to the front stage with some mission of "opening up for high-quality development of Pinduoduo".

Several industry insiders have expressed similar views to the "market": if Huang Zheng leads Pinduoduo from 0 to 1, laying the foundation of Pinduoduo's basic model and values, Chen Lei promotes the company from 1 to 100, achieving profit turning, and building barriers around the upward trend of agricultural products, then Zhao Jiazhen shoulders the burden of high-quality development and stable development of Pinduoduo.

Nowadays, Pinduoduo has nearly 900 million users and about 14 million platform merchants, which are deeply related to many industries. Some industry insiders say that the current topic of Pinduoduo is no longer limited to its own growth, but rather to addressing the demands and interests of all parties. "Only by managing the platform ecosystem well and shaping an environment where good coins drive out bad ones, can high-quality merchants gain more growth opportunities and users gain more incremental value.

From this perspective, Zhao Jiazhen, who has been deeply rooted in the frontline for a long time and excels in decision-making and execution, is undoubtedly the best candidate.

In the past two months or so, Zhao Jiazhen has indeed sacrificed three sharp axes.

The first is to carry out a special action on the protection of minors. In the past period, Pinduoduo has taken various measures such as a comprehensive ban on the sale of "nitrite" and the sale of "non kitchen knives" under real names, aiming to protect the safety of the underage population.

At the same time, special actions on book governance and copyright protection are also being carried out simultaneously. Pinduoduo aims to quickly establish a complete loop of platform governance and protection by reducing the rights, blocking, delisting, deleting, and banning pirated and illegal products and stores.

Secondly, it is to resist feudal superstitions and pornography. It is reported that Pinduoduo is removing such products and businesses from the platform ecosystem, in order to allow law-abiding and compliant businesses to obtain more orders and cut more shares from Pinduoduo's platform cake.

If the blade is inward, in order to create a platform atmosphere for Pinduoduo to "drive out bad currency with good currency", then from the Agricultural Cloud Action, the 10 billion yuan subsidy consumption season, to continuously upgrading the "good service" capability, launching services such as upgrading shipping within 48 hours, offering after-sales service to elderly and remote consumers, and providing only refunds for consumers with damaged interests, Pinduoduo promotes the establishment of a healthy, orderly The determination of sustainable platform economy.

After Zhao Jiazhen took office, the three fires he burned all revealed Pinduoduo's determination to transform from "quantitative change" to "qualitative change". If Chen Lei's takeover of Huang Zheng two years ago was seen as a significant transformation of Pinduoduo from "heavy marketing" to "heavy research and development", then Zhao Jiazhen's takeover conveys Pinduoduo's determination to continue optimizing its structure.

Zhao Jiazhen's resolute approach is also expressing to the outside world that Pinduoduo's goal will no longer be radical growth, but to shift from pursuing high growth to pursuing high-quality development, and establish a healthy, orderly, sustainable and more socially responsible platform ecosystem.

CITIC Construction Investment once pointed out in its research report that "the e-commerce industry has shifted from a traffic era dominated by user scale to a stock era dominated by user stickiness. According to the China Internet Development Report (2023), as of June 2022, the number of Chinese internet users reached 1.051 billion, but the growth rate has significantly slowed down. Against this backdrop, Pinduoduo's user growth has also entered a bottleneck period. After the first quarter of 2022, Pinduoduo no longer disclosed user data. Prior to this, the number of monthly active users also slowed down to single digit growth.

On the other hand, Pinduoduo's proud low-cost moat is also facing huge challenges. Previously, e-commerce giants such as Jingdong and Taotian surrounded the low price mentality, and then new e-commerce platforms such as Tiktok and Kwai gave strong support to small and medium-sized businesses. Under such fierce survival of the fittest, the low price advantage once created by Pinduoduo is also being divided by brutal industrial competition.

In the face of numerous crises, for Pinduoduo, which already has a large user base, pursuing high-quality development internally is the path that Pinduoduo must choose in the future. Turning to high-quality development can also make it go further and more steadily.

However, before each rebirth from the cocoon, there is inevitably a painful experience. Not long ago, the "store bombing" incident in Pinduoduo sparked controversy, and Zhao Jiazhen responded publicly in a conference call for the first time: "The current e-commerce industry is fiercely competitive, and some competitive behaviors have exceeded the normal business scope. We immediately provide protection for businesses with damaged interests, and also upgraded our attack and defense strategies, quickly restoring normal business order." However, even in the face of malicious attacks, He also interprets it with goodwill and believes that competition can better drive platform growth, thereby adhering to self-improvement and promoting higher quality development of the platform.

How to move towards high-quality development?

During the conference call, a detail caught everyone's attention. Pinduoduo's slogan for users has changed from "more affordable, more fun" to "more affordable, better service". This means that Pinduoduo needs to make efforts in user service to create a better shopping environment for consumers. For example, the vast majority of products on our platform have upgraded from being shipped within 72 hours to being shipped within 48 hours, "said Zhao Jiazhen.

In addition to improving services in express logistics, Pinduoduo also provides users with generous benefits through activities such as the May 5th Shopping Festival. It is understood that this year's "May 5th Shopping Festival" is the most intense event since its holding. Pinduoduo will integrate its subsidiary businesses such as 10 billion yuan subsidies and Duoduo Cai Cai, investing 4 billion yuan in consumption subsidies. At the same time, Duoduo Cai will also release 60 million special consumption vouchers for purchasing vegetables in the Shanghai area to assist residents in consumption.

In April, Pinduoduo's "Duoduo Reading Month" also continued to bring a wave of high-quality consumption to users. In the "Duoduo Reading Month", Pinduoduo collaborated with mainstream domestic publishing houses and book brands to directly supplement some books at the source, investing hundreds of millions of yuan in total. The subsidy quantity exceeded 5000 types, with over 20 million copies. The low-priced and affordable book prices also sparked the "Pinduo Movement" on the internet.

For Pinduoduo, high-quality development not only means bringing higher quality consumption to users, but also means stricter platform governance, a more standardized business ecosystem, and a higher quality supply chain. These measures do not mean that Pinduoduo will abandon small and medium-sized businesses in the future. On the contrary, the purpose of transformation is to better serve all businesses.

The agriculture that Pinduoduo relies on for survival remains an important foothold for Pinduoduo to achieve high-quality development.

It is understood that since the establishment of the 10 billion yuan agricultural research project in 2021, Pinduoduo has achieved fruitful development in agriculture. In recent years, Pinduoduo has not only participated in agricultural development competitions such as the "Pinduoduo Cup" Science and Technology Academy Competition and the Duoduo Agricultural Research Technology Competition, promoting research through competitions and continuously promoting the transformation of agricultural technology achievements. It has also allowed special teams such as the "Agricultural Cloud Action" and Duoduo Cross border to conduct in-depth visits to various high-quality agricultural and manufacturing industry belts in China, improving the efficiency of agricultural products and assisting Chinese manufacturing to go overseas, Continuously promote the digital upgrading of traditional industrial chains. In the future, Pinduoduo will continue to increase investment in agricultural research and development.

Not only that, Zhao Jiazhen emphasized, "We will continue to invest heavily in the construction of physical supply chains, stabilize and strengthen the chain, supplement and extend the chain, so that more industrial and agricultural industries can take root in local leaders, and lead local industries to enter the national and even global markets

At the mid-stream level of the industrial chain, Pinduoduo also announced its third billion dollar project - the "billion dollar ecological" project - on a conference call, following the billion dollar subsidy and the billion dollar agricultural research. It is understood that this project will tilt resources towards high-quality merchants and products, promote the growth of small and medium-sized enterprises and high-quality merchants, and improve the service efficiency and quality of platform merchants. This will mean that Pinduoduo will continue to deepen its relationships with small and medium-sized businesses. "Through the billions of ecological projects, we will support high-quality sellers and provide them with multi-party support," said Zhao Jiazhen.

For manufacturing enterprises, Pinduoduo has spared no effort to provide support. After the official launch of the cross-border e-commerce platform TEMU last year, Pinduoduo has fully opened up to brand merchants, small and medium-sized enterprises, and source factories in the domestic manufacturing industry. It also provides preferential policies such as zero commission and zero deposit for merchants who settle in, as well as support policies such as traffic support and resource subsidies, which have successively promoted the smooth sailing of tens of thousands of domestic manufacturing enterprises.

It is not difficult to see that Pinduoduo fully embraces high-quality development, and its fundamental purpose is to help manufacturers and businesses solidly, empower them through technology, and enable them to go abroad and participate in international competition.

For the long-term development of an ecosystem, it is not a long-term solution for bad currencies to drive out good ones. The purpose of Pinduoduo's transformation and high-quality development is also to promote a win-win situation for the platform ecosystem in a positive and positive way. Of course, in the process of transformation, there will inevitably be problems, obstacles, and attacks. These pains are the price that must be paid on the way to thrive, and crossing them will be vast.

Author|Li Dan, Zhang Jikang

Edit|Chen Fang

Operations|Jia Tianyu