After fully embracing the new stage of "high-quality development", Pinduoduo once again delivered an amazing report card.
On November 28, Pinduoduo Group released its third quarter performance report for 2023 as of September 30. The financial report shows that Pinduoduo Group’s revenue in the third quarter of this year was 68.84 billion yuan, a year-on-year increase of 93.9%; it achieved a net profit of 15.54 billion yuan according to U.S. GAAP, with a net profit margin of 22.6%. Revenue and net profit once again exceeded expectations.
The third quarter is the off-season for e-commerce, and Pinduoduo’s rapid revenue growth just demonstrates the surging power of its next growth engine. Pinduoduo’s cross-border e-commerce business, Duoduo Cross-border (Temu), was launched in September last year and has now entered more than 40 countries and regions including North America, Australia, Europe, and Asia. Currently, Duoduo cross-border exports exceed 400,000 parcels per day, with an average daily cargo weight of about 600 tons.
In this regard, Pinduoduo Group Chairman and Co-CEO Chen Lei said in the earnings call: "Although our business outside China is still very new, it has also achieved considerable development in the past year."
In an era where new economies are embracing globalization, how has Duoduo Cross-border soared all the way?
The word innovation explains Duoduo’s unique cross-border speed
If there is any big dividend of the times for the e-commerce industry, it is undoubtedly cross-border e-commerce.
In 2022, my country's cross-border e-commerce import and export scale will exceed 2 trillion yuan for the first time. In the first half of 2023, cross-border e-commerce continued to grow, with total import and export volume reaching 1.1 trillion yuan, a year-on-year increase of 16%, of which the export growth rate was as high as 19.9%.
The large market and high growth rate of the cross-border e-commerce industry have allowed e-commerce giants seeking growth certainty to participate in this feast of global trade. Duoduo Cross-border, a subsidiary of Pinduoduo, is undoubtedly one of the best. According to 36Kr, Temu’s sales in the third quarter of this year have exceeded US$5 billion. Especially in September, on the first anniversary of its launch, the single-day GMV even reached US$80 million.
So, how did Duoduo Cross-border achieve scale and efficiency in just over a year?
The author believes that the uniqueness of Duoduo Cross-border is that it develops a high-quality development route from both supply and consumption ends through altruistic value innovation.
On the supply side, Duoduo Cross-border has changed the cross-border trade model of domestic enterprises, allowing more enterprises to leverage the platform to embrace the international market.
Adapting to the differences in rules and environments between different markets is a necessary condition for enterprises to successfully go overseas. This poses a test to the company's operations, logistics, after-sales and other links. Especially in the process of transforming to digital trade, most small and medium-sized enterprises and traditional foreign trade factories face dual problems of cost and technology.
Understand the pain points of enterprises. On the one hand, Duoduo Cross-border has opened up a "full-link" cross-border channel, allowing thousands of factories in China's industrial belt to directly connect with consumers, shifting from exporting products overseas in the past to more High-value brands go overseas. For example, Duoduo cross-border cooperates with world-famous shipping companies such as Matson, Zim, CMA CGM, Maersk, and COSCO Shipping to open up shipping channels to stabilize the rising air freight prices and reduce logistics costs. cost.
On the other hand, Duoduo Cross-border is the first in the industry to launch innovative models such as "full custody" and "flexible supply" to help enterprises eliminate complex intermediate links, reduce costs and improve efficiency. Up to now, most cross-border e-commerce platforms have deployed a fully managed model. The learning from peers is a recognition of the innovative value of Duoduo’s cross-border model.
As of the end of the third quarter, Duoduo Cross-border has penetrated into more than 100 manufacturing industry belts in Guangdong, Zhejiang, Shandong, Anhui and other places to promote high-quality manufacturing products overseas. In the US market alone, the number of SKUs online on the platform has exceeded 2 million varieties. , is expected to reach 4 million categories this year.
On the consumer side, Duoduo Cross-border has further revolutionized the overseas user consumption experience based on the large supply of high-priced products from China.
Since March this year, Duoduo Cross-border has continued to hone its basic skills, continued to expand its warehouse layout, increase the number of days for stocking, and improve its supply capacity. At the same time, on the basis of perfect global logistics and commodity supply, Duoduo cross-border uses high quality and price ratio as a breakthrough to accurately penetrate the minds of global consumers. For example, during the "Black Friday" promotion, Duoduo continued to launch price subsidy strategies across borders, allowing overseas consumers to buy millions of cost-effective products.
As a new type of digital foreign trade, Duoduo cross-border has promoted a win-win situation for China's manufacturing industry and global consumers through multi-dimensional innovation. Temu APP downloads have long been at the top of the Apple App Store and Google Play download lists, and more and more Temu sellers are posting screenshots of popular sales on social media.
Various signs indicate that Duoduo’s cross-border business has not only become a “super engine” for Pinduoduo’s growth, but has also injected new potential into the development of the entire e-commerce industry.
Behind the "billion-point shock" of textbook-level growth, Pinduoduo understands "high quality"
In the second half of 2023, downward pressure on the global economy will still exist, and global commodity trade will still face certain challenges. Recently, the World Trade Organization (WTO) "halved" its forecast for global trade growth in 2023, predicting that global merchandise trade volume will grow by 0.8% this year, less than half of its April forecast (1.7% growth).
However, Pinduoduo’s commission income doubled from 14.4 billion yuan in the second quarter to 29.2 billion yuan in the third quarter. In this regard, Citi analysts pointed out that the rapid improvement of Temu's performance is the main reason.
Based on Pinduoduo’s supply chain capabilities and team efficiency, the outside world has expectations for Duoduo’s rapid cross-border development. However, its growth has always been in a state of “exceeding expectations” and has even withstood the e-commerce off-peak season and the economic environment. challenges, explaining what sustainable, high-quality growth is.
In the current global trade environment, the rapid development of Duoduo cross-border is obviously worth pondering: There is no shortage of stories in globalization at any time and in any context. The key is what is the "development key"?
In fact, the answer lies in the riddle: “Pinduoduo conscientiously implements high-quality development strategies, focusing on high-quality consumption, high-quality supply, high-quality ecology and other aspects, promotes the implementation of various tasks, achieves real results, and creates benefits for consumers and society. Incremental value.”
First, Pinduoduo understands the "common needs" of consumers around the world, thereby promoting high-quality consumption growth.
In an era of diversified consumption channels and scarce attention, how to accurately meet consumer demands will determine whether companies can seize the important window for global market growth. Looking at the global market, there are regional differences in consumer habits, but there are also common features in consumption, which is the ultimate pursuit of good products at good prices.
In this regard, Chen Lei, Chairman and Co-CEO of Pinduoduo Group, said: "We have also seen from user behavior that consumption upgrading is about both quality and price. It is the optimization of 'quality-price ratio' and consumers' appreciation of good products at good prices. The ultimate pursuit.”
As the most successful platform for cost-effective thinking, Pinduoduo works from the supply side and leverages the supply chain foundation accumulated over the past years to provide global consumers with channels to purchase directly from factories and provide a more flexible and personalized supply chain. and a more cost-effective comprehensive shopping experience. Based on this, in the first three quarters of this year, Temu attracted a total of 120 million people to browse products, and shipped an average of 1.6 million packages every day, achieving remarkable results in "high-quality consumption".
Secondly, Pinduoduo promotes the quality and efficiency of the industrial chain, creating long-term positive value for overseas companies while also releasing the value of high-quality supply.
Behind the high growth of Duoduo Cross-border is the desire of hundreds of thousands of merchants for incremental market. At present, there are more than 100,000 domestic cross-border e-commerce entities, and the proportion of foreign trade in the import and export scale of cross-border e-commerce goods has increased from less than 1% five years ago to about 5% today.
For the long-term development of overseas companies, e-commerce platforms must not only help merchants sell more high-quality goods, but also guide the upgrading of the industrial chain and enhance the competitiveness of Chinese manufacturing in the global market. As Zhang Jianping, deputy director of the Academic Committee of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, said: "The development of cross-border e-commerce platforms must not only cultivate the growth points and new drivers of foreign trade, but also cultivate our independent brands and innovative development drivers. Nurture it.”
Starting from the needs of high-quality development of enterprises, Duoduo cross-border uses the platform's traffic and various resources to promote industry upgrading. Based on its in-depth understanding of China's supply chain, Duoduo Cross-border plays a "multiplier" role in the overseas development of China's manufacturing industry.
Some merchants used to only have a profit of 5 cents from selling a product. Through Duoduo Cross-border, they can earn dozens or hundreds of times the profit. Merchants who have settled on Duoduo Cross-border have not only regained orders, but their profits have also generally increased.
To benefit others is to benefit oneself. Aspiring companies will naturally choose platforms with "quality" for growth, and the gathering of China's high-quality supply chain resources has also become the foundation for Duoduo to achieve high-quality cross-border supply.
Ultimately, Pinduoduo has created a new model of high-quality development in the global market, reflecting a different future for the global e-commerce industry.
Conclusion
In a year when competition in the domestic e-commerce industry has intensified and global consumption has declined, Pinduoduo’s “determination” and “motivation” for growth have become particularly prominent, especially since Duoduo cross-border has emerged in the global market in just over a year.
Duoduo’s cross-border development not only outlines the upward trajectory of Pinduoduo’s second growth curve, but also brings more inspiration to China’s foreign trade transformation, upgrading and innovative development:Duoduo Cross-border is essentially the global extension of Pinduoduo’s “high-quality consumption” and “high-quality supply”.
Pinduoduo has created a new blueprint for the high-quality development of cross-border e-commerce by innovating from both the supply and consumption ends to create a business ecosystem that is “beneficial to others as well as to ourselves”. And by reconstructing its own growth model, changing the development pattern of the industry, and gradually becoming a new driving force for the recovery of global consumption, Pinduoduo’s story has also opened a new chapter.
Source: US Stock Research Institute