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Briefing Oct 15, 2020 11:15 am EqualOcean

Pinduoduo: Agricultural Products' GMV to Exceed CNY 250 Billion in 2020

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Nov 12, 2020 08:15 am ·

China's E-Commerce Giants Announce Record Sales on Singles' Day 2020

The turnover on Alibaba's e-commerce platform Tmall, in the first 30 minutes of 2020's 'Singles' Day' shopping holiday (November 11) exceeded CNY 372.3 billion, surpassing the 2019 figure. After 35 minutes on November 11, Tmall had more than 300 brands with transaction volumes that broke 100 million. Meanwhile, Apple, Huawei, Midea Haier and other brands exceeded CNY 1 billion. As of 12 AM on November 12, the whole-day turnover of Tmall reached CNY 498.2 billion, an increase of 85.62% compared with 2019's CNY 268.4 billion. The Taobao nemesis JD.com (JD:NASDAQ) announced that, as of 0:09 AM on November 11, the cumulative amount of orders had exceeded CNY 200 billion. The final turnover of JD.com on this year's Single's Day reached CNY 271.5 billion. Private retailer Suning.com (002024:SZ) also made great progress this time, with the online sales growing by 75% between November 1 and November 11. Pinduoduo (PDD:NASDAQ), one of the hottest Chinese stocks this year, has decided not to announce its sales data. The firm's officials said they focus more on whether their consumers enjoy the shopping process than transaction data. Above all, the Single's Day festival this year is about more than surprising figures. From businesses to consumers, from foreign factories to fields, from live broadcast ecology to logistics systems, from offline commerce to technical support, from home to overseas, people are feeling the heat and power of consumption under the special background of COVID-19, which is adding more layers of meaning to this year's Single's Day.

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Oct 22, 2020 06:10 pm ·

Pinduoduo to Focus on Supporting New Brands in the Next Five Years

On October 22, Pinduoduo announced that its 2018 'New Brand Plan' had entered the second phase. Specifically, this plan will cultivate new brands in four ways. First, it will support 100 industrial centers from 2021 to 2025 and release 100,000 new brand products, which is expected to drive CNY 1 trillion in sales. Second, expand from serving top foundry companies to serving high-quality manufacturing companies in China, with the number increased from 1,000 to 5,000. Third, Pinduoduo's resources, such as its tens of billions in subsidies, will provide enterprises with customized brand promotion programs. Fourth, upgrade the cooperation model that helps foundry companies incubate their own brands into four new models, including OEM companies' own brand cultivation, well-known brand's sub-brand building, new brand support, and old domestic brands rebuilding. The new brand plan's upgrade aims to form a combination of 'products + new brands + 700 million users.' Chen Qiu, vice president of Pinduoduo, claimed that Pinduoduo pays particular attention to foundries when launching new brand plans as a latecomer in the industry. The reason is that, compared with traditional e-commerce platforms such as Alibaba, Pinduoduo’s philosophy and model are very different. Unlike Taobao’s search-based shopping, Pinduoduo’s core play has always been the 'goods looking for people' model. To grasp Chinese consumers from the demand side, foundries and new brands are particularly important.

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Oct 20, 2020 06:00 pm ·

Pinduoduo's Home Appliances Brand GMV Pulls Ahead in 3Q 2020

Data Burning has released its 3Q 2020 report of the Pinduoduo platform. Here we find the distinction between 'explosive' or super-popular products and slower, steadier sellers being an important one among growing e-commerce companies in China.   A product that reaches a cumulative purchase amount of more than 100,000 is termed as an 'explosive' one. The number of explosive products hit 77,000, five times that of the same period last year. In terms of category structure, fast-moving consumer goods such as apparel, food and beverages and household goods are still the categories that have been purchased in large numbers and are growing rapidly. In terms of pricing, the proportion of goods costing below CNY 20 fell to 72%, a decrease of 8% from the same period last year. High-growth products: the top three categories are beauty and skincare, personal care and apparel. Among them, Bloomage Biotech's GMV saw the highest growth rate, reaching 267% in 3Q 2020. And the average commodity price is still CNY 10-40. The GMV of non-explosive products increased by 110% year-on-year. Affected by the epidemic, household appliances and 3C products' GMV accounted for 42% of the total, surpassing the apparel category and ranking first. In July, products above CNY 500 contributed nearly 50% of GMV. Pinduoduo’s subsidies support mobile phones and electrical products, and those commodities contribute 65% of non-explosive products' GMV. The GMV of products costing CNY 1000-5000 accounted for more than 50%.

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Sep 6, 2020 02:17 pm ·

Growth and Challenges of Pinduoduo, the Chinese eBay – Initiate with Hold [1/2]

Pinduoduo (PDD: NASDAQ) released its 20Q2 earnings on August 21, 2020. The slower GMV growth in Q2 caused its share price to drop more than 10%. GMV refers to the total value of all orders placed on PDD – it is also an important metric that PDD emphasizes to represent its performance. In this article, EqualOcean takes a more in-depth look at Pinduoduo’s 20Q2 financials, explaining both PDD’s upsides and downsides. We recommend initiate with hold. PDD is a US-listed e-commerce company and now the third-largest e-commerce player in China, just behind Alibaba (BABA: NYSE) and JD.com (JD: NASDAQ). It focuses on group buying – i.e. products and services offered at a lower price on the condition that a minimum number of people make the purchase collectively. The model has driven PDD's valuation to > USD100 billion within 5 years, a feat that Alibaba and JD took more than 10 years to achieve respectively. Its revenue comes from the commission fee it takes from sales on its platform and advertisements.  What makes PDD soar? Upstream - PDD successfully balances the benefit between suppliers and consumers and adds value to both parties. It builds up the channel that directly connects suppliers and consumers, without traditional midstream parties like distributors & channels, retail outlets, etc. Without a middle-man, consumers can enjoy lower prices without hurting manufacturers' profit, and the boosted transaction volume can then help manufacturers to earn more. Besides, the most successful part of PDD’s business model is how it supports small-to middle-size factories in China. Many of these factories in China are outsourcers of larger brands. They produce high-quality products and earn low profits because they cannot gain access to customers on their own. PDD cures this pain by providing platforms for these factories to access more than 500 million active users directly. Customers’ positive experiences lead to repurchases of the products, thus factories’ brandings are incubated. Downstream - PDD has enjoyed a low customer acquisition cost as a result of support from Tencent. As a move to pressure Alibaba, Tencent integrated PDD into WeChat, meaning over one billion monthly WeChat users can get access to PDD and make payments through the app. Bringing e-commerce into lower-tier cities was another factor that kept PDD's customer acquisition cost low – as Alibaba and JD were not accessing this market, PDD was able to grow quickly without intense competition. In addition, PDD is tapping into its customers in three ways: 1. Through its big data base and emphasis on AI, PDD can accurately tailor suggested items to increase its customers' purchases. Its recommendation algorithms change traditional ways of searching for purchases. 2. PDD's group purchasing model leads to sharing and recommending purchasing items and experiences. 3. PDD also develops small games that award players with purchasing credits to increase the stickiness of customers. New Vertical - In the most recent earnings call, the new CEO of PDD, Lei Chen, revealed the latest plan of PDD: "Our aim is to further consolidate our position as China's number one online agricultural platform and to build a worldwide presence in agriculture." Agriculture is still a blue ocean in China – on average, agricultural products have to go through five layers before reaching customers, adding 105% in costs and leading to 37% spoilage for vegetables. Furthermore, he expressed PDD's willingness to incubate new brands within the platform to build up brands for consistently high-quality products and recognize a premium on those products. PDD's agricultural product sales increased by more than 136% in this year's shopping festival, a good sign for its plan. If this plan is successful, it can bring transformation in the area and be able to build a more stick customer base from first and second-tier cities, who demand high-quality food. Also, expanding from the current saturated e-commerce market into this untapped market can be a way to maintain PDD's high growth. This article is part I of our analysis on Pinduoduo. Please continue to part II.

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Nov 4, 2020 02:09 pm · Information Times

Dada Break Its Record of Daily Order

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