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On November 28, Pinduoduo announced its latest quarterly performance report. In the third quarter, the group achieved revenue of 68.84 billion yuan, a year-on-year increase of 93.9%; net profit under U.S. GAAP was 15.54 billion yuan, with a net profit margin of 22.6%. Compared with the market's previous forecast of revenue of 53.77 billion yuan and adjusted net profit of 12.974 billion yuan, the overall performance far exceeded expectations.
Although the third quarter financial report still did not disclose Pinduoduo’s international business revenue, marketing investment and other data, the excellent overall performance reversed the market’s concerns about Duoduo’s cross-border profitability. Some institutional insiders believe that the outside world’s understanding of Temu is most likely wrong. “Since this new business was launched in September last year, Pinduoduo’s gross profit has maintained rapid growth every quarter. This shows that the aggressive momentum of cross-border business not only makes it a new growth engine for Pinduoduo, but may also become a new growth engine for Pinduoduo. The second largest profit center.”
“Although our business outside China is still very new, it has achieved considerable development in the past year. It is based on our accumulation and understanding of the domestic supply chain over the years and has helped many manufacturing companies further expand their markets. , directly facing consumers." In the earnings call on the evening of the 28th, Pinduoduo Chairman and CEO Chen Lei said, "Through our Temu platform, Duoduo's cross-border services have now helped manufacturing companies directly reach 40 consumers in multiple countries.”
As of the end of the third quarter, Duoduo Cross-Border has penetrated into more than a hundred manufacturing industry belts in Guangdong, Zhejiang, Shandong, Anhui and other places, promoting high-quality manufacturing products to enter North America, Australia, Europe, Asia and other countries and regions. Currently, Duoduo cross-border exports exceed 400,000 parcels per day, with an average daily cargo weight of about 600 tons.
Previously, Chen Lei referred to Duoduo Cross-border as Pinduoduo’s third venture in an interview with China Entrepreneur Magazine. But unlike the previous two times, Duoduo Cross-border has stood on the shoulders of the main website and Duoduo Maicai since its birth. It is led by elite soldiers who have experienced Duoduo’s grocery shopping business, and the team generally has the experience of establishing independent websites. A deep understanding of the national manufacturing supply chain has begun to accumulate.
“Duoduo’s cross-border entrepreneurship is from 1 to 10, starting from 1, not 0.” The above-mentioned analysts believe, “Although the management team has repeatedly stated that the international business is still in its early stages, in just one year, Duoduo’s cross-border business has It has launched a series of innovative models targeting the pain points of domestic manufacturing going global, such as fully managed and flexible supply, and has gained momentum around the world. This fully reflects that cross-border business is very suitable for the Pinduoduo team’s past ability accumulation. Although new business needs Learning, but the learning cost of the team and the organizational cost of the supply chain are much lower than other companies.”
It is currently the "Black Friday" promotion. Against the background of the global economic downturn, Duoduo Cross-border is continuing to launch price subsidy strategies to help domestic industrial belt factories seize the peak overseas consumption season, increase order volume, and accelerate sales. At the same time, the platform also cooperates with shipping companies such as Matson, Zim, CMA CGM, Maersk, and COSCO Shipping to reduce logistics costs and provide more development opportunities for domestic cross-border sellers.
The ability to achieve profitability while continuing to subsidize the domestic manufacturing industry is largely due to Pinduoduo’s intensive efforts in cross-border business, especially in the front-end testing process, through efficient interaction with consumers to identify user preferences and determine market trends. This enables rapid matching of production and sales.
"When offline trade is affected, emerging cross-border e-commerce platforms play a key supporting role. Its high efficiency brings new foreign trade growth points." Zhang Jianping, deputy director of the Academic Committee of the International Trade and Economic Cooperation Institute of the Ministry of Commerce It is believed that the proportion of cross-border e-commerce in China's entire foreign trade has increased rapidly, and the growth rate is much higher than that of traditional trade methods. It is a new foreign trade format encouraged by the Ministry of Commerce.
According to Zhi Zhenfeng, a researcher at the Institute of Law of the Chinese Academy of Social Sciences, “Emerging cross-border e-commerce platforms represented by Duoduo Cross-border are willing to grow with small and medium-sized enterprises. This can not only improve employment, but also achieve cultural dissemination, national image shaping, etc. Multi-dimensional functionality is a very meaningful thing.”
The fourth quarter will be the peak season for overseas consumption. If the Temu platform can maintain good development momentum and positive profit growth, there is reason to believe that it will become the "second curve" of performance growth outside of Pinduoduo's main e-commerce website.