The following is the 4q20 financial report teleconference record we pay more attention to user shopping experience community group buying is an important opportunity From Pinduoduo recommended by recordtrend.com. And this article belongs to the classification: Group buying, Electronic Commerce, mobile electronic commerce, Online shopping.
According to the news on March 17, 2021, pinduoduo released the company’s unaudited financial report for the fourth quarter and the whole year up to December 31, 2020. Pinduoduo’s revenue in the fourth quarter was US $4.07 billion, up 146% year on year, and its annual active buyers surpassed Ali. According to the financial report, pinduoduo’s total revenue in the fourth quarter was 26.547 billion yuan (about 4.068 billion US dollars), up 146% year on year: the net loss attributable to common shareholders was 1.376 billion yuan (about 210.9 million US dollars), compared with 1.751.6 billion yuan in the same period last year. Huang Zheng resigned as chairman of the board of directors.
Huang Zheng’s letter to shareholders: Chen Lei, current CEO of pinduoduo, takes over the baton
After the financial report was released, CEO Chen Lei, David Liu, vice president of strategy, Ma Jing, vice president of Finance and other senior executives attended the analysts’ conference call to interpret the financial report and answer analysts’ questions.
HSBC analyst: my first question is about user groups. At present, the number of active buyers has exceeded 788 million, which is very large and has surpassed other companies in the industry. What strategies have the management adopted to achieve such a user scale? What are the strategies to maintain this kind of customer stickiness? The second question is about community group buying. Our management mentioned that community group buying adopts the 3P mode. What is the operation mode of commission? What is the current loss in terms of gross profit? How much more money do we need this year? And infrastructure construction, such as logistics?
Chen Lei: in the past four quarters, we have added 50 million annual active users in each quarter on average. The number of users has increased, and now it is close to 800 million. Therefore, the growth rate of our users will inevitably slow down. But what I want to say is that we have never paid attention to the number of users, but the satisfaction and trust of users. We are committed to providing services to them Users provide good shopping experience and high value products.
To provide users with good services, which ensures that we will continue to grow, and thank them for their trust in pinduoduo. We have always stressed that agriculture is our key area, and we will continue to make more efforts in this area. The other is the increasingly integrated online and offline consumption. In the retail market, the current retail market scale of consumer goods has reached 39 trillion in 2020, and it will grow at an annual growth rate of 5% in the next five years, while our Gmv only accounts for 4% of it. Consumers’ online and offline behaviors will continue to integrate, and we will also be in this area Continue to invest.
Ma Jing: 3P mode is the main business mode of our community group buying. We provide services to businesses and farmers to obtain trading service revenue. In the fourth quarter of fiscal year 2020, the revenue generated by community group buying accounts for a very small proportion. Our cost is mainly concentrated in warehouse leasing and other aspects. However, we are very confident in this business mode, which is still in its infancy We believe that this business model will bring benefits to all participants in the whole value chain. One of the important driving forces of development is the simplification of distribution chain. The optimization of supply chain can not only reduce the pressure of inventory, but also bring more value to stakeholders. The development of these infrastructures that I mentioned takes time, and now achieving profitability is not a goal of community group buying.
David Liu: in 2020, we will be the largest e-commerce platform in China according to the number of users. Improving the stickiness of users has always been the top priority of our business strategy. Now the number of users continues to grow in a good trend, so we can better optimize the stickiness of customers. The business of community group buying also plays a very important role in this aspect. It can touch the needs of users that we can not grasp before. Community group buying is a very good business model and an expansion of the main business. With our continuous development, the business of pinduoduo community group buying will continue to develop. This is a very important opportunity, I think We can make good use of it, just need some attempts to build a perfect business model.
Jeffrey analyst: how to view the growth trend of Duoduo’s gross profit? How will Gmv performance change per user?
David Liu: first of all, I want to make it clear that 1p commodity sales business is another revenue item of our company, and this business has nothing to do with buying more vegetables. The reason why we set up this business is that we found that there are some consumers’ needs that can not be met by businesses. Therefore, we temporarily launched this business, so that users can find their favorite products, and the price is also very suitable. However, we have no plan to grow this business. In the fourth quarter, this business accounted for 1% of our Gmv, and will continue to grow in the future That’s the level.
Duoduo shopping is a very new business, and its business model is constantly developing. First of all, I want to explain that Duoduo shopping is not a typical community group buying business. I hope investors can distinguish between Duoduo shopping and traditional group buying business. Traditional group buying in community refers to team leaders or shop owners gathering a group of users to place orders, and But pinduoduo now has 788 million active users. We don’t need people to help us gather a lot of users. Users can place orders independently on the app, so Duoduo shopping is an expansion of our business sector.
Duoduo vegetable shopping is to meet people’s demand for more convenient and cheaper fresh food. At present, Duoduo vegetable shopping has been launched in 300 cities in China. Duoduo vegetable shopping relies on the construction of logistics base with agricultural products as the core. The core idea is to reduce waste and then reduce costs. We focus on agricultural products and rely on technology to achieve better quality control and quality control In this way, we can reduce waste and improve the efficiency of the supply chain. We will continue to cooperate with third-party suppliers and continue to invest in infrastructure. As a result, we can now achieve a logistics flow time of no more than 24 hours. In the past few years, we have been committed to meeting the needs of users, and we have not been able to meet the needs of customers Now users are also constantly using real gold and silver orders to support us.
In terms of gross profit, I will not go into specific details. Excluding 1p business, the whole business model is actually losing money. Excluding the 1p business, the fourth quarter net profit is consistent with the non GAAP net profit recorded in the third quarter.
With the increasing number of pinduoduo users, we will continue to improve the stickiness of users. With the increasing purchase behavior of users, we will continue to expand the types and quantity of products on pinduoduo platform. Users will also buy more kinds of products on pinduoduo platform, and the trust in pinduoduo platform and the amount of orders will continue to rise. In terms of cash flow, the increase in cash flow rate that we saw before also shows that businesses on pinduoduo platform have seen an increase in conversion rate, and the reason for the increase in conversion rate is also the growth of pinduoduo users’ purchasing behavior.
Citigroup analyst: I have two questions. The first is what are the main commodity types of pinduoduo 1p business? Second, I know Duoduo is still in the early stage of development. Would the management briefly talk about its performance, which is consistent with the management’s expectation, or better?
David Liu: the types of products in 1p business are very diverse. Our main method is to see which users’ needs on the platform have not been met, and we can not find suitable businesses to provide services at the same time. The types of products are very diverse. Our strategy is not only for one kind of product.
Buying more vegetables is our long-term business plan, which contains huge opportunities, and we firmly believe that this business can bring a lot of value to consumers. Now we can provide this service in 300 cities in China. So far, we are very satisfied with the progress of market development, but we are more concerned about building better logistics Infrastructure, because for the platform of pinduoduo, we have inherent advantages in increasing the number of users. It is very easy for us to expand the number of users, and the most important thing for us is how to use investment to provide better consumption experience for users.
I think there are two main reasons for Duoduo’s success. The first is the prediction of purchase and price. How many products do you want to sell? And at what price? All these need to be based on the demand forecast and the efficient organization of the supply chain. The second is logistics infrastructure. I think we are still in a very early stage, but we are very satisfied with the progress we have made at present and think that there is still a long way to go in the future.
Analyst: my question is, what is the synergy between Duoduo and the original platform in the supply chain? Will buying more vegetables become a favorable factor for pinduoduo in the future?
David Liu: we think that buying more vegetables is a part of our complete business segment, an extension of our optimization of customer experience, and an extension of our better satisfaction of user needs. Our focus is on the logistics infrastructure, not only the previous agricultural products Express network, but also the logistics network that can buy more vegetables and complete orders within 24 hours. After further improvement of logistics capability and efficiency, we can recommend appropriate SKUs to users.
We also found a lot of opportunities to improve the market position of duopinduoduo and the synergy of Duoduo’s shopping business. In terms of supply, pinduoduo’s supply is basically from the local. At present, there are 10 million farmers on pinduoduo, providing a variety of agricultural products for users across the country. They will also become suppliers or sellers of Duoduo’s vegetables, as long as they can get the support of efficient logistics network. In the future, with the continuous development of logistics infrastructure, we will see that it can not only support local suppliers, but also support nationwide product sales. And this will go beyond the business of agricultural products itself. Pinduoduo wants to become the largest distributor of agricultural products in China. In the future, we are determined to become the largest grocer in the world.
Morgan Stanley analyst: the management mentioned before that Duoduo vegetable buying is not a traditional community group buying mode, but in fact Duoduo vegetable buying is facing competition from other community group buying. In fact, the next step of these competitors is to focus on investment and warehousing. I want to know how the management views the next competitive situation?
David Liu: it’s not convenient for us to evaluate the business strategies of other companies, so I’ll just talk about what pinduoduo has done. Pinduoduo currently has 788 million active users, and the Mau in the fourth quarter reached 719 million, almost 90% of the annual active users. We see that the user stickiness continues to grow. In the past four quarters, our focus is not to expand the number of users, but to continuously improve the user stickiness, increase the credit of users to our platform, and realize the growth of the number of users.
In view of the current scale of pinduoduo users, I think it is inevitable that the growth rate of users will slow down in the next time. What is more important is to improve the stickiness of users and meet the needs of users. Duoduo shopping provides us with such an opportunity to meet people’s demand for more timely purchase and distribution of fresh products. As such a platform, we need to make our business more substantial. We need to make more efforts in operation, not only in warehousing but also in logistics distribution. We need to continue to make more investment in offline logistics.
In the competitive situation, I think pinduoduo can’t ignore its huge user group. We should continue to make efforts in doing a good business, that is to say, to find suitable products for users, to solve their needs, and to accurately find the products they expect. We not only rely on ordinary express delivery business, but also provide fast delivery business with logistics circulation time less than 24 hours for goods with strict delivery time requirements. We strive to ensure that there is enough infrastructure to compete.
What are the Internet companies thinking about in the club of 100 billion dollars? Do what? Pinduoduo: top selling commodities on father’s day in 2020 pinduoduo: cash reserve 41.1 billion, Huang Zheng holds nearly 17% of shares of Tencent, the major shareholder pinduoduo: 2q20 revenue 12.193 billion yuan, a year-on-year increase of 67% pinduoduo: release “618 mother and baby” list, post-90s become the main force of raising children, “fancy consumption” increases family fun pinduoduo: 4q20 revenue 4.068 billion US dollars, a year-on-year increase of 146% More active buyers than Alibaba pinduoduo: the performance of 3q20 is the second brother of domestic e-commerce. In the next year, the sales revenue of 3q20 is 14.209.8 billion yuan, an increase of 89% over the same period last year. Pinduoduo: 3q20 financial report teleconference record Duoduo shopping is not community pinduoduo shopping: 4q19 trading service revenue grows rapidly, net loss narrows year on year, pinduoduo’s strategy of Encircling Cities in rural areas catches which sinking users pinduoduo Huang Zheng: epidemic situation will have a negative impact on 1q20 performance, but long-term expectation remains unchanged pinduoduo: 1q20 financial report teleconference record The short-term impact of the epidemic on the company is not great, and the company will continue to invest in customers: 1q20’s revenue is 6.54 billion yuan, with a year-on-year growth of 44%
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