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Analysis EO
May 9, 2020 07:10 pm ·

Pinduoduo’s Stock Price Hits a New High, Market Value is Approaching JD.com

► Although Pinduoduo is behind two other giants in terms of revenue and GMV, its annual active users have surpassed JD.com and are gradually catching up with Alibaba. ► In order to rival Pinduoduo, Alibaba and JD.com already launched corresponding measures, such as ‘Taobao Special Edition’ and ‘JD.com Extreme Edition.’ Pinduoduo's stock price reached a record high on May 8, as of the close of the US Stock Exchange Market. The stock price closed at USD 54.60, an increase of 9.09%. The current total market value is about USD 63.47 billion, approaching JD.com again. In comparison, the latter’s current total valuation is about USD 68.40 billion. In addition to market capitalization, Pinduoduo is quickly catching up with JD.com and Alibaba regarding active users. In the fourth quarter of 2019, Pinduoduo's AAU rapidly climbed to 585.2 million, surpassing JD.com’s 362 million, and close to Taobao’s 711 million. According to App Annie’s list of global top apps in the first quarter of 2020, in terms of monthly active users, Pinduoduo rose by two places and surpassed Taobao for the first time to rank ninth, while Taobao fell two places to rank tenth. With the rapid development of Pinduoduo in recent years, both Alibaba and JD.com have felt the threat and are taking a series of measures. In order to fight the sinking market of Pinduoduo, Taobao Special Edition (淘宝特价版) was officially released on March 26. In the last week of March, the active users of Taobao Special Edition increased by 47%, which was 24 times the increase of Pinduoduo in the same period. Among the Taobao special edition orders, the sinking market accounted for more than 70%. In April, JD.com launched the ‘JD.com Extreme Edition,’ (京东极速版) which is geared towards the sinking market. This app’s products and supply chain originate from JD.com as well. Although there is no data released yet, it signifies a strong resistance to Pinduoduo’s rise. These three giants also compete in logistics. During the epidemic, when e-commerce platforms were subject to logistics compliance issues, the normal operation of Jingdong Logistics made JD.com the first choice for many consumers. This recognition is likely to continue until the end of the epidemic, driving the other two to grab such opportunities. On April 19, Pinduoduo announced that it will subscribe for USD 200 million of convertible bonds issued by Gome Retail, with a term of three years and a coupon rate of 5% per annum. This strategic cooperation will compete with Jingdong Logistics through Anxun Express under Gome. According to Yunda’s 2019 annual report released on the evening of April 29, Alibaba has become one of its shareholders with a shareholding ratio of 2%. Prior to that, Alibaba also successively acquired part of the equity of STO Express, YTO Express, Best Express and ZTO Express. Thanks to the cooperation, the average revenue growth of five Express Companies in 2019 is significantly ahead of the industry average, exceeding 25 percentage points. The three major companies are stepping into each other’s strengths, to take a bigger slice of the ‘e-commerce cake,’ but the strategies of the three companies are still different. Pinduoduo pays attention to low-price commodities and implements a group buying strategy through WeChat's powerful traffic entrance. The more people in the group, the much cheaper the goods are. Similarly, products on Taobao are not high-quality. This is why Pinduoduo and Taobao is added again to the ‘2019 Review of Notorious Markets for Counterfeiting and Piracy’(Blacklist) released by the US Trade Representative’s Office. In order to get rid of the ‘fake’ label, Pinduoduo officially reached the authentication service cooperation with the two major domestic shoe authentication platforms ‘get’ and ‘knowledge’ on April 20. There is still a long distance to the reputation and quality of JD.com products. Besides, the firm also launched a new WeChat mini-program, quite similar to Xisohonshu, which focuses on high-quality products, and is recommended by people. The gap between Pinduoduo and JD.com both in reputation and quality is actually getting smaller.   Pinduoduo has apparently become one of the top three domestic e-commerce giants, but the companies’ revenues are all generated from commissions in merchants’ sales and advertising. While both Alibaba and JD.com run business in cloud computing and digital media. According to the 2019 and quarterly financial reports, Pinduoduo still has a long way to catch-up with Alibaba and JD.com. Alibaba’s revenue reached nearly 16 times that of Pinduoduo. Even if only considering the income of both companies’ e-commerce business, the numbers of Alibaba has reached nearly 8 times that of Pinduoduo. In terms of transaction scale in the fourth quarter of 2019, the total GMV of Pinduoduo in the past 12 months exceeded trillions for the first time, reaching CNY 1006.6 billion. Compared with JD.com's CNY 20854 billion in the same period, Pinduoduo still has a long way to go.

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Analysis EO
Mar 14, 2020 04:20 pm ·

EqualOcean on Pinduoduo 4Q 2019: The Unstoppable Rising Star of E-Commerce

Pinduoduo (PDD: Nasdaq) released its fourth quarter of 2019 report on March 11, 2020. Its stock price fluctuated afterward, finally closing at USD 35.06 after a 6.98% drop at the day. This result is the aftermath of its major financial indicators from the quarter – revenue and operating losses. The former beat expectations while the latter did not. For this mixed result we can look to its strong performance in the central terms in the e-commerce sector for the entire year – GMV (Gross Merchandise Volume), active buyers in the last twelve months (active buyers for short), and MAU (Monthly Active Users) – as well as the recent crash in the US stock market. The firm reported quarterly total revenue of CNY 10.79 billion (USD 1.55 billion), which was slightly lower than the CNY 11.12 billion (USD 1.60 billion) picked by average analyst estimates on Bloomberg. It’s CNY 1.34 billion (USD 192.0 million) non-GAAP operating loss had narrowed down considerably, as compared to both the CNY 2.11 billion in the same quarter of 2018 and the CNY 2.12 billion in the last quarter of 2019; meanwhile, this result was lower than the average market perception of CNY 2.59 billion. Key operating figures generally show a strong pattern, both in terms of absolute number and growth. With a 113% year-on-year increase, Pinduoduo’s GMV surpassed RMB 1 trillion for the first time in 2019 – a significant milestone if talking about scale. Active buyers reached 585.2 million (77% year-on-year growth), which implies that more than 40% of Chinese people have placed at least one order on the platform in the past year (if we assume ‘one person, one account,’ which is generally not unreasonable). With CNY 1 trillion GMV and 585 million active buyers – Pinduoduo is marching towards the status of mainstream e-commerce platform, covering every class of person around China The fourth quarter of every year is undoubtedly the fiercest battlefield for e-commerce platforms throughout the world – in the West, there is Black Friday and Christmas, in China, Singles Day and ‘Double 12.’ Unfortunately, these two huge shopping festivals that come at the end of the year – put forward by TMall, emphasizing the promotion of branded products with a higher Average Selling Price (ASP) – do not mark out the home court of Pinduoduo. On top of this, it is not excessive to say that this fourth quarter that just passed was the most stressful since its establishment in 2015. Both PDD’s major incumbent competitors – Alibaba (BABA: NYSE) and JD.com (JD: Nasdaq) – significantly enhanced their firepower against the latecomer who is sharing a considerable slice of the cake. Spotting the wide market in the lower-tier cities – the base of Pinduoduo – they have been launching their own “10 Billion RMB Subsidy Campaign (the Campaign)”. Therefore, although Pinduoduo is still far from being able to stand up to TMall and JD.com as an equal in terms of GMV – especially in the fourth quarter – the 53.15% year-on-year quarterly GMV growth it achieved is fairly eye-catching. It demonstrates the dynamic of growth of Pinduoduo, as well as the decision-making capabilities of the management under unfavorable conditions. On the other hand, the active buyer figures of Pinduoduo (585 million) are rapidly approaching those of Alibaba (711 million) while it is widening its gap with JD.com (362 million). With this large user base, the traditional view that ‘Pinduoduo can only attract low-tier cities’ population’ is hard to back up; in fact, there are more figures in its fourth quarter of 2019 financial report that can refute this long-standing trope – for example, the growth rate of Average Revenue Per User (ARPU) compared to that of the number of active buyers and the average user engagement level. This will be elaborated in the following part. Pinduoduo shows the market that its 10 Billion RMB Subsidy Campaign is not ‘simple and witless’ Since Pinduoduo started the Campaign in June 2019 to heavily lower down the price for 3C products (Computer, Communication, and Consumer electronics) – which tend to have relatively high ASP – skeptical views on the effectiveness of this straightforward strategy have never stopped. From its fourth quarter of 2019 financial report, we can see observe that the campaign has truly been helping Pinduoduo in attracting ‘high-end’ users and keeping a considerable part of them active on the platform, while sustaining the relevant costs in a controllable range. ARPU growth exceeded active buyer growth Pinduoduo realized considerable growth in terms of both annual active users, which it already has a certain scale on, and ARPU – possibly one of its primary weaknesses compared to its major competitors. In this context, it is notable that its 53% year-on-year growth in ARPU (from CNY 1126.9 to CNY 1720.1[USD 247.1]) in 2019 is considerably higher than the 40% year-on-year growth in the number of active buyers (418.5 million to 585.2 million). This implies that Pinduoduo – which started its business with a ‘value-for-money’ strategy that largely attracted people in low-tier cities – has truly been successful in reaching a population with higher purchasing power (whether it was the increased spending of its incumbent users that contributed more or the new users from high-tier cities contributed more, is not the central issue). In this case, we see that the Campaign indeed supports Pinduoduo in moving towards a mainstream e-commerce status, serving users of many stripes. Continuously uprising engagement level Although it is hard to quantitively measure the repurchase rate of new customers acquired through the subsidy campaign – who tend to have higher purchasing power – from the figures disclosed in Pinduoduo’s financial report, we can have a rough idea of it through looking into the average user engagement level (as measured by average MAU/average active buyers [LTM]). The figure was 82% in the fourth quarter of 2019, representing a 17% increase compared to what in the same period in 2018. Besides, we can see that this figure appeared to increase significantly and continuously after Pinduoduo launched the Campaign in June 2019. The above pieces of evidence from the engagement level apparently do not support the hypothesis that holds that ‘a majority of the new ‘high-end’ users only aim at taking the benefits from the campaign on Pinduoduo and will never open the app again and repurchase items on it.’ Therefore, even we cannot say anything regarding the exact level of repurchase rate of new users, who tend to have stronger purchasing power, from its financial report; we can at least conclude from the pattern in engagement level that this rate is not likely to be very low. Increasing efficiency in subsidy campaign, and sufficient cash holding as a backup If we compare Pinduoduo’s sales and marketing expenditure as a percentage of total revenue before and after the company launched its subsidy campaign, it is not hard to find that the strategy is working more and more efficiently. Two of the three quarters prior to the exercise of the campaign (3Q 2018 –1Q 2019) witnessed the awkward situation that its sales and marketing expenses could not even be covered by its total revenue. However, this ratio lowered down to 90% or below in the three quarters after the campaign was initiated. This implies the revenue growth is higher than the growth in sales and marketing expenditures. Moreover, Pinduoduo had CNY 33.3 billion (USD 4.8 billion) in cash on its account by the end of 2019; this number has been growing over the past three years. This suggests the company is still holding a relatively fair amount of capital to support its aggressive marketing campaign. Check out our previous analysis on the logic of the Campaign during Pinduoduo released its third quarter of 2019 financial report. The bottom line – how we shall regard Pinduoduo? Pinduoduo is getting better armed in its competition with JD.com for the second spot on the table of China's e-commerce market. Meanwhile, with the Siphon effect and the actions of Tencent to intensively control the ‘induced sharing’ activities on WeChat since the second half of 2019 (which didn’t harm Pinduoduo that much, as it has a warm relationship with Tencent), those small-scale copycats of Pinduoduo will be gradually pushed out of the market. However, it is also scarcely possible that Pinduoduo will disrupt the status of Taobao and Tmall. Just like Rome wasn’t built in a day, the huge gap in the entire ecosystem will make it extremely difficult to catch up.

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Nov 29, 2019 07:42 pm ·

EqualOcean on Pinduoduo 3Q 2019, Part 3/3: An Optimistic Outlook

In this article, we will elaborate upon why Pinduoduo is a stock worth investors’ long-term tracking, despite its negative profitability, by analyzing both internal factors from its recent financial results, actions, and the external factor that is China’s current e-commerce market. Users, users, users – the key driver for every Chinese e-commerce player right now As previously mentioned in part 1, the remarkable increase in the number of active users as well as active buyers is perhaps the most attractive figure in Pinduoduo’s Q3 2019 financial results. In Q3, there were 429.6 million average monthly active users (MAUs) on its mobile app, an 85% boost from 231.7 million users in the same quarter of 2018. During Q3, the MAU of China’s young e-commerce leader increased by 63.6 million. Regarding annual active buyers, the platform reached 536.3 million buyers in the last twelve-month period ended September 30, 2019. This was a 53.1 million increase from 483.2 million as of last quarter. This was the largest quarterly growth in absolute terms since its IPO. Most importantly, during the quarter, the number of annual active buyers on Pinduoduo hit the 500 million milestone for the first time, which directly suggests the space – or say, boundaries – of the platform is going to move into a next stage. Besides, this figure of Alibaba is 693 million – for the twelve months ended September 30, 2019 – and for JD is 334 million. The fact that the profit margin carries by the sharp increase in internet traffic in China already started to diminish, brings the players in China’s e-commerce market to the ultimate battlefield of attracting new customers – and take the last opportunities in the vast development of China's Internet infrastructures and increasing smart phone adoptions in the past decade. This creates a special window of opportunity for the juggernauts platforms. How to achieve a large amount of user base in both the top-tier cities and lower-tier cities has become the common goal of all the three dominant powers – namely Alibaba, JD, and Pinduoduo – in China’s online shopping sector. Always focusing on the right things at the right time is crucial to success, as we all know. Trying to do everything at once is not a smart choice. Once consumers form their purchasing habits, they are extremely hard to change downright. In this sense, in one day that the period is over, i.e., ‘window is closed’, it would be a tough issue to account on pin long-run business growth on acquiring massive customers. By then, the long way of consumption upgrading will be started all-around, and it will be the phase that indicators that directly relate to profitability – like annual spending per active buyers – taking the center stage of the game. Therefore, the most important thing for Pinduoduo, for now, is to attract as many users as possible, and to integrate the upper- and lower-tier cities market – just like what its counterparts are doing. Profitability, at current, is not the most predominant issue to value the four-year-old young challenger, who is not mature enough. The logic of ‘10 billion subsidy’ program As has been discussed in the section, to attracting more users is the most central issue for Pinduoduo – or any other e-commerce platforms – for now. Actually, the junior giant also provided decent figures on this aspect in the third quarter of 2019. The most direct strategy it has used to trigger user growth is its ‘CNY 10 billion subsidy’ program. Since the campaign has been launched, many have questioned that the effectiveness of this cash-burning marketing strategy, indeed, it is simple, but works, at least on the aspect of acquiring customers. For now, the strategy – heavy subsidies on branded products, particularly in the 3C category – accelerates the development of Pinduoduo in the following aspects: 1. Attracting users, especially those from top-tier cities; 2. reshaping people's perception of the platform, so that they can actually purchase more kinds of products on it; and 3. improving the image of the company, as a listed firm. To educate consumers and help foster long-term loyalty to their platform are ways to generate long-term growth for the company. Although this subsidy campaign worked poorly in pulling up the average spending price on the platform – its ultimate goal – during the quarter, however, the logical idea behind the strategy more or less illustrated its potential for the future. Human nature is simple. To cut into the market of branded items – the home base of TMall and JD.com – and directly compete on price is perhaps the most efficient way to trigger the so-called 'high-end consumers' to at least take a look. “Through subsidies, we seduce users to order an iPhone on our platform. If they get a good shopping experience, then it is likely that our platform will gain their trust,” said Zhao Jiazhen (赵佳臻), Co-Founder and Senior Vice President of Pinduoduo. “At least some of them will consider us when purchasing items in the same category in the future.” On the other hand, under the typical subsidy model of Pinduoduo, this enlarged the order quantity of merchants. In the case that there are still profits for the dealers, the 'high volume low margin' model, in fact, could significantly help the sellers to boost their sales in general. The bottom line Pinduoduo, as a late entrant in China's e-commerce market, has already surpassed JD and approaching Alibaba in terms of the number of active buyers. It is the barrier that any other players on the battlefield have not achieved before. Besides, the growth of its business remains strong – though slowed down compared to its preceding performance – it still suggests the captivating potential of the company. For now, in its bid to keep rapid growth, the day that the company starts to make a profit seems far away. To attract more active users in the somewhat ‘ultimate’ customers acquiring battle among all the dominant e-commerce players, and to build up a decent brand image remain the most central issues for the young juggernaut at present, and in the upcoming quarter. While on its path to profitability, the ability to provide decent shopping experiences to its users, to pull up retention rates – especially among the top-tier city customers – and to increase average selling price on the platform will largely determine its boundaries in the next few years.

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Nov 29, 2019 07:32 pm ·

EqualOcean on Pinduoduo 3Q 2019, Part 2/3: Is Winter Coming?

On November 20, Pinduoduo’s stock witnessed its biggest drop since the young juggernaut held an IPO in July last year. The 22.89% plummet – reducing its market capitalization by more than USD 10 billion – was triggered to a large extent by its worse-than-expected quarterly results. The company reported a Gross Merchandise Volume (GMV) for the last twelve-month period ending September 30, 2019, of CNY 840.2 billion (USD 117.5 billion), implying a quarterly GMV of RMB 249.4 billion, which is below the average analysts’ estimation of RMB 285 billion. Based on its staggering growth rate in the past, investors tended to be too optimistic regarding the continuation of this trend. In this case, as long as Pinduoduo fails to meet the consensus in terms of growth, the company has to face huge pressures from the market. Missed estimates GMV results in revenue and net loss both came below consensus The somewhat disappointing GMV could probably be attributed to the fact that the company invested hugely in sales and marketing – especially regarding computers, telecommunications and consumer electronics (3C products) – to boost its Average Selling Price (ASP) along with attracting more users from top-tier cities. However, things did not turn out as they expected. In the three months ending September 30, 2019, the quarterly GMV/active buyers declined sequentially despite sales and marketing expenses enhancement, according to SeekingAlpha. On the other hand, the users’ engagement level – measures by MAUs/annual active buyers – observed an upward trend this quarter, possibly simulated by its aggressive marketing campaign. In spite of this, if we look into both indicators in combination, these strongly suggest that much of the purchasing activities gravitated towards low-value units, which somewhat counters the ultimate goal of Pinduoduo, at least for now. This fact becomes somewhat puzzling when taken together with the information disclosed by Colin Huang Zheng (黄峥) – CEO of Pinduoduo – during the earning conferences in recent quarters. According to Mr. Huang, the proportion of users who came from the first- and second-tier cities contributed 48% of GMV by June 30, 2019, representing a sharp increase from the 11% figure recorded by January 30, 2019. Besides, he also mentioned in the third-quarter 2019 earnings call that the average annual spending per active buyer from primary users on the platform has already reached CNY 5000. Based on the above information provided by the management, the drop in quarterly GMV/average MAUs is likely to be attributed to the following reasons: 1. Users from upper-tier cities who spend more on the platform tend to have a lower retention rate, which implies that a considerable proportion of these people did not form a consistent purchasing habit on Pinduoduo – i.e. the proportion of its GMV contributed by first- and second-tier cities users likely decreased as of September 30, 2019, as compared to the 48% level by June 30, 2019. 2. Annual Spending per Active Buyer on the platform in the twelve-month period ending September 30, 2019, was RMB 1566.7 (USD 219.2), an increase of 75% from that of the same period last year, which is significantly lower than its year-on-year revenue growth rate of 123%. This figure, together with the downward trend in terms of quarterly GMV/active buyers, suggests the increase in per-customer spending is actually not that optimistic, and the new users, on average, tend to purchase low-value items that Pinduoduo specializes in rather than the heavily subsidized3C products that carry a higher ASP. In either of these cases, the reality seems to deviate somewhat from what the company would like to achieve with its current strategies, at least for now. Therefore, this has resulted in revenue of RMB 7.5 billion and a net loss of RMB 2.3 billion both came below projections. Momentum decelerated halfway through this game of catch-up Though Pinduoduo is catching up with Alibaba in terms of the number of annual active buyers – with 536.3 million customers in the last twelve-month period ending September 30, 2019, representing 77% of Alibaba’s 693 million figure – the two platforms still have wide disparity regarding the ability to generate profits. It is truly unfair to compute the level of net income between an emerging business and its very mature counterparts; however, it is somewhat reasonable that we take a look at their revenue growth rate. Even if revenue from the core commerce of Alibaba (excluding its cloud computing, digital media, and innovation initiatives businesses) has reached RMB 101.2 billion (USD 14.2 billion) in the third quarter of 2019, China’s top Internet giant is still keeping 40% year-on-year growth in this segment. Pinduoduo, on the other hand, shows quarterly revenue that only accounts for 6% of Alibaba’s scale, and its year-on-year growth rate has already slowed down from 169% in the second quarter of 2019 to 123% in the third quarter of the same year. In this case, no matter how we compare this result on a cross-sectional or time-series basis, this is not good news for the rising e-commerce player. JD’s Q3 results were better than expected On the path to becoming one of the top players, Pinduoduo has consistently surpassed JD in terms of MAUs and is also competitive with them in terms of GMV and market capitalization. Each of the aforementioned three metrics (MAUs, GMV, and market cap), especially the latter two, are key measurements of any e-commerce company. GMV indicates the scale of the retail platform. Market capitalization directly measures the size of any public firms. As a result, investors had a tendency to be overly optimistic about Pinduoduo's future, as evident in its 26.9% stock surge this past October. With considerably higher MAUs and growth rates than those of JD’s, the continuous increase in Pinduoduo’s stock price reflects the overall market view that this giant can soon surpass China's second-largest e-commerce company. However, on November 15th, JD released its third-quarter results showing strong figures. According to the firm, net revenue for this past quarter was RMB 134.8 billion (USD 118.9 billion), an increase of 28.7% from Q3 2018, the highest growth rate in the last five quarters. These figures significantly surpassed the average projection of RMB 128.4 billion. Most importantly, its non-GAAP net income that is attributable to ordinary shareholders increased by 160.6% from RMB 1.18 billion in Q3 2018 to RMB 3.09 billion (USD 431.7 million) in Q3 2019. This ability to generate profit is ultimately what secondary-market investors care the most about. Therefore, since Pinduoduo's third-quarter financial results looked lackluster compared to JD’s, its share price suffered as a consequence despite beating their Q3 estimates. Pinduoduo failed to meet the market’s expectation that it will outperform JD to become the second-largest player. Even if Pinduoduo hit the estimates, its share price would also have fallen, albeit less. However, since it failed in beating estimates and its Q3 results were outmatched by JD’s, so its share price witnessed a tremendous decrease. However, this does not mean that Pinduoduo is not a company to keep an eye in the long-term for investors because their Q3 financial results also reveal positive indicators, allowing us to observe their future potential. In part 3 of this series, ‘An optimistic outlook’, we explore the company’s possible strategic moves and future prospects.

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Nov 29, 2019 07:30 pm ·

Amazon Opens Pop-Up Store on Pinduoduo for Black Friday Sales

On November 25, global Internet juggernaut Amazon opened a pop-up store on Pinduoduo – China’s third-largest e-commerce platform ­­– focusing on providing value-for-money deals with a ‘Group Buying’ model. This means a group of buyers can team up to promote branded foreign products. This Black Friday sales will last for five days, till November 30, including the two-day pre-sales period starting from November 25. The partnership between the two companies will continue until the end of this year. “The Amazon Global Store pop-up store on Pinduoduo provides customers with a curated selection of about 1,000 overseas products with competitive prices, authenticity guarantees and convenient shipping,” an Amazon spokeswoman said in a statement. This year, China's e-commerce players are especially active on the international online shopping scene. In previous years, Black Friday sales used to be the domain of offline stores and plazas, as well as those online platforms that specialize in cross-border e-commerce. This year, all the dominant forces in the industry seem to want a slice of the ‘Black Friday’ field – right after having competed fiercely in the recent ‘Single’s Day’ campaign. Apart from team-up with Amazon, Pinduoduo is starting the new round of its 'CNY 10 billion subsidy' program. JD.com is joining the table and matching its competitor’s raises in the round, matching the current subsidy amount. Alibaba, however, is relying on its ecosystem, and has a big-picture regarding this Black Friday. On the one hand, TMall international announced that there will be more than 40 hot brands launching exclusive new products on the platform during the campaign. Apart from this, the platform also enables cross-border cold chain service all-around during this shopping festival, empowered by the Cainiao (菜鸟) Smart Logistics Network of the corporation. The distribution of players on China's cross-border e-commerce area is in some ways similar to that of the domestic ones – especially in the sense that the business of the Alibaba and JD.com still recorded the top results, which strongly suggests their dominant positions. According to iiMedia Research (艾媒咨询), NetEase Koala (网易考拉) – acquired by Alibaba for USD 2 billion in September – TMall international, and JD Worldwide (海囤全球) were the top three cross-border e-commerce players in the first half of 2019, recording a market share of 27.7%, 25.1%, and 13.3% respectively. In this case, the motive for Amazon and Pinduoduo to team-up seems to be obvious. Apparently, this is a win-win deal for both parties. Since July 18, 2019, the American e-commerce giant has been closing its marketplace on Amazon.cn, which connects mainland Chinese buyers and sellers, while other units of its local ventures – for example, Amazon Web Services, Kindle e-books, and cross-border operations – remained intact. A primary reason for Amazon’s failure in China lies in the fierce competition in the marketplace as well as the fact that the model of its business does not fit the local situation well enough. Pinduoduo, the fast-growing e-commerce challenger to market leaders Alibaba and JD.com, has been stuck in a mire of selling cheap and counterfeit products ever since its listing. Also due to this reason, many top-tier brands averted their gaze from selling their products and opening official stores on the platform. This made it even more difficult to attract customers in top-tier cities, which then formed a vicious circle. Upgrading its corporate image might not have been one of the most central issues for the young juggernaut years ago – but now it is. To keep its high historical growth rate as it attempts to quickly catch up with Alibaba and beat JD.com overall, the company needs to build up a decent image and enlarge its boundaries – to tell its loyal customers that it can provide them with all categories of product, to attract more customers from first- and second-tier cities, to inform investors on the secondary market it is an outfit with a good reputation. “If we cannot deter Pinduoduo from growing, then we let ‘inferior’ become a permanent label for it,” said a senior employee in Alibaba. To team-up with Amazon is a smart idea in breaking into the cross-border e-commerce market. It would significantly add credence for consumers to buy branded goods with a high Average Selling Price (ASP). On the other hand, it is also a good chance for the American giant to increase the power and influence of its Amazon Global Store and the ‘prime’ membership system in China, considering the fact that the service still counts for a relatively low market share at present.

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Nov 29, 2019 07:28 pm ·

EqualOcean on Pinduoduo 3Q 2019, Part 1/3: An Eventful Fall

Shares of Pinduoduo (PDD:Nasdaq) plummeted 22.89% on November 21 after the company released its financial results for the third quarter ending September 30, 2019. This was the largest single-day drop since its IPO; the market value of the company has now shrunk to USD 36.5 billion. With USD 10.8 billion of market capitalization burned overnight, the company was surpassed by JD.com (JD: Nasdaq), Baidu (BIDU:Nasdaq) and NetEase (NTES:Nasdaq), and ranked as the seventh-largest Internet firm in China. The boom-and-bust pattern of the stock price of Pinduoduo, triggered by the release of its financial results, has happened for the firm once again. Total revenues in the third quarter of 2019 were RMB 7.5 billion (USD 1.1 billion), representing a 123% year-on-year increase, and a rise of 3% from the last quarter of 2019. The number was slightly lower than the USD 7.6 billion average of analysts’ estimates on Bloomberg.  Net losses attributable to ordinary shareholders was RMB 2.3 billion (USD 326.7 million), which was a  considerable increase compared with the net loss of RMB 1.1 billion in the same quarter of 2018. The figure almost doubled that of the average analyst projection of RMB 1.2 billion – this is considered to be the primary cause that triggered the tremendous drop in Pinduoduo’s stock. On the other hand, it is worth mentioning that there was also positive news carried by its 3Q 2019 financial report. The number of active users – one of the central metrics for every Internet company, and E-commerce platforms in particular – was the aspect wherein Pinduoduo performed especially well during the third quarter of 2019. During this three-month period, active buyers on its platform hit the 500 million milestone to reach 536.3 million for the twelve-month period ending September 30, 2019. This represents an increase of 39% from 385.5 million last year. Besides, average monthly active users (MAUs) on its app also boosted remarkably in the quarter, recorded at 429.6 million, representing an increase of 53.1 million from the second quarter of 2019 – marking the largest increase in a single quarter since its listing. Pinduoduo – the young challenger to China’s e-commerce dominators Alibaba and JD – has always been surrounded by controversies, even starting from its pre-listing period. People continuously pass different judgments regarding its ‘team purchase’ program, the idea of integrating the ‘Costco model and Disneyland model,’ the ‘CNY 10 billion subsidy’ campaign (百亿补贴计划), the ability to build up a decent reputation, etc. – some of these criticisms are justified, and some verge on the ridiculous. In the four years since its founding in 2015, the rising e-commerce giant has always been in the midst of a storm, facing confrontations as it explores and strives to grow. In short, the fall in the share price of Pinduoduo after its third-quarter release could be possibly attributed to internal and external reasons. On the one hand, considering the fact that Pinduoduo's net loss far exceeded expectations, while the revenue growth rate slowed down, some investors – especially the short-term ones – would not go deep into the company’s performance on other core metrics in making their judgements, which then shook investors' general confidence of the company. Meanwhile, its huge increase in sales and marketing expenses did not trigger a corresponding soar in revenue, which made some typical secondary-market investors doubt the effectiveness of its ‘CNY 10 billion subsidy’ program. On the other hand, Pinduoduo was facing increasingly severe pressure from its counterparts, especially after it's market capitalization surpassed JD.com in late October. Besides, the two Chinese e-commerce juggernauts – Alibaba and JD.com – both aimed at the lower-tier cities market in the third quarter of 2019. Meanwhile, TMall launched its ‘Double Nine Huasuan Festival’ (天猫九九划算节) – employing a similar CNY 10 billion strategy in targeting value-for-money – and JD.com officially launched its online group-buying platform ‘Jingxi’ (京喜) in September. Whether these will constitute lethal countermeasures or not, such market shifts undoubtedly leave a question mark on Pinduoduo’s ability to sustain its sharp growth in the future. Here’s the second part of the series on Pinduoduo’s quarterly financial report, where we dissect the story behind the company’s latest performance. In the last part – ‘An Optimistic Outlook’ – we talk about the company’s possible strategic moves and future prospects.

Analysis EO
Analysis · 2
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Analysis EO
Nov 7, 2019 02:20 pm ·

Dissecting Pinduoduo: The Financial History of the New E-commerce Giant

Pinduoduo – a four-year-old company that has grown into an e-commerce giant in a Chinese market that was once dominated by the duopoly of Alibaba and JD.com – has recently seen its stock go through the roof. After soaring by 12.56% on October 24, the firm’s market cap hit USD 46 billion, which means that it took Pinduoduo only two months to become the fourth-largest Internet corporation in the country after the firm surpassed Baidu in August of this year. Shanghai-based Pinduoduo was founded by former Google engineer Colin Huang in 2015. During the intervening time, profit margins uplifted by the exponential growth of China’s Internet traffic over the last decade started to diminish; Alibaba and JD.com have also already established their solid status as dominant powerhouses in the sector. The market insiders doubted that there was still space in China’s e-commerce marketplace for new entrants to grow. However, Pinduoduo provides its own solutions by targeting value-for-money merchandise and creating fun and interactive shopping experiences. The inception Walking through the historical development of Pinduoduo, fast growth has always been one of the central concepts of the company. Their funding history has been accompanied by rapid growth in Gross Merchandise Volume (GMV). Officially launched in September 2015, Pinduoduo just reached a monthly GMV exceeding CNY10 million in February 2016, just half a year after its operations started. In July 2016, with a Monthly Active User (MAU) amount that surpassed 100 million, Pinduoduo raised USD 11 million in its Series B round of funding. After only one year since it started its operations, the GMV of the platform soared to CNY 1 billion in September 2016. And it took Pinduoduo only a quarter for this number to sharply increase to CNY 2 billion at the end of 2016.  Pinduoduo then completed its Series C funding in February 2017, raising another USD 214 million. Its monthly GMV doubled again within only three months, reaching CNY 4 billion in March 2017. Impressed by its strong operating figures, the Chinese tech behemoth Tencent poured over USD 1.4 billion into the Series D funding of Pinduoduo. After a total of USD 1.7 billion was raised in funding over four rounds, with leading investors like Tencent, Sequoia China, IDG Capital and Gaorong Capital, within less than three years Pinduoduo was listed on the NASDAQ stock exchange on July 26, 2018, at an IPO price of $19, where it raised USD 1.6 billion, making the deal one of the largest IPOs of the year. By comparison, JD.com went public ten years after its founding; Taobao made it after seven years. Part of the reason lies in the fact that these predecessors made great contributions to the development of China’s e-commerce industry, enabling late entrants like Pinduoduo to grow under better circumstances. On top of this, it shouldn’t be forgotten that today’s success for Pinduoduo is largely based on: 1. its ‘team purchase’ concept, which uses the power of social networking efficiently though “inviting social contacts to form a shopping team to enjoy the more attractive prices available;” 2. the idea of building its business on an integration of the ‘Costco’ model and the ‘Disneyland’ model, which stands for ‘value-for-money and entertainment combined.’ ‘Nasdaq days’ In its first year of listing, the stock of Pinduoduo did not show a very decent performance. In the first full week, after it was listed on NASDAQ, Chinese regulators launched an investigation (in Chinese) into the company for selling counterfeit goods. This was followed by Pomerantz LLP, one of the foremost securities litigation firms in the United States, announcing a class action lawsuit against Pinduoduo, contending that its revenue was traceable to unlawful conduct and misleading investors. With the company affected by the issues above, the mainstream financial institutions worldwide were generally skeptical about the profit model of the business, which cast a shadow over the prospects of the company. When numbers matter The turning point that ended the ongoing decrease in the share price of Pinduoduo was the announcement of its 2Q 2018 results. In this financial report, which was also the first one since Pinduoduo went public, we saw strong operating performance across several dimensions. The GMV for the last twelve months was CNY 262 billion (583% year-over-year growth), total revenue was CNY 2.709 million (2,489% year-over-year growth), and the average MAUs totaled 195 million (495% year-over-year growth). Besides, on August 22, Pinduoduo also disclosed (in Chinese) its progress in controlling counterfeit goods. During the period of August 2-9, 1128 stores were forcibly closed, nearly 4.3 million pieces of goods were removed, and more than 450,000 pieces of suspected counterfeit goods were intercepted in batches. These figures gave investors a reassurance, which was then reflected in the upward movements in Pinduoduo's share price. Competition with Chinese characteristics The next wave of the downward trend started from October 4, which was a structural fluctuation that affected China Concept Stocks collectively. However, a more convincing reason behind the share price of Pinduoduo continuing to decline lies in the commercial war initiated by Alibaba. Around October 10, nearly all of the brands that had been invited to Pinduoduo's three-year celebration offer were forced by Alibaba to take their sides –  to either exit Pinduoduo's event before it started and discontinue selling products on Pinduoduo, or lose the qualification to participate in the ‘Single's Day’ event on Tmall. Alibaba did not comment with respect to this issue at the time. However, on October 15, 2019, Wang Shuai, Alibaba’s PR head, admitted on the social network for the first time that Alibaba did 'take sides' in reaction to its rivals. On November 20, 2018, Pinduoduo announced in its 2018 3Q results that its revenue had reached over USD 491 million (697% year-over-year growth) – a number which far exceeded the expectation given by Bloomberg of USD 438 million.  Based on Pinduoduo’s good operating performance since it went IPO, analysts from several mainstream financial institutions – including UBS, JPMorgan, and Goldman Sachs – initiated coverage of Pinduoduo with a buy rating, right before the company announced its first annual report. However, things were not going in the way that most analysts expected. After Pinduoduo announced its 4Q 2018 results and its 2018 annual results, its share price tumbled 17.45% on the day, marking the biggest drop in a single day since its listing. Although both the GMV and the revenue of Pinduoduo rocketed during the quarter, the tremendous increase in sales and marking expenses and thus the huge worsening of its operating loss was far more than what was expected. This made investors start to doubt that if Pinduoduo was making an overdraft on itself in exchange for short-term success. By the time, comments like “eventually they sell more and lose more” formed a general view on the market. Input over output? The primary reason for the selling and marketing expenses to sharply increase and thus widen the company’s net loss lies in its commercial strategies: 1. In order to boost average spending per user and thus raise its GMV, Pinduoduo increased its subsidy for 3C digital products with high unit prices to attract new users from top tier cities and to encourage more current users to purchase more expensive SKUs on the platform. During its ‘Singles Day’ campaign, the subsidies on Apple's mobile phones alone were more than 1 million Yuan; 2. Pinduoduo increased its promotion on its ‘new brand support plan,’ which was one of the main focuses of the company in the next stage; 3. As the Spring Festival got closer, Pinduoduo increased its advertising on TV to create a better image; “Money is a tool rather than a purpose,” according to Colin Huang, CEO of Pinduoduo. Now it seems that the choice of Pinduoduo to pour money into campaigns to acquire new customers and to strengthen the barrier of its ‘team purchase’ model is worthwhile. In fact, the abundant cash position on its account is enough to support the cash-burning marketing activities for a few more years. And theoretically speaking, as long as the cash on Pinduoduo’s account does not bring a halt to its continuously growing trend, the company could go on with these cash-burning campaigns into the future. On the crest of the wave On August 21, Pinduoduo released its 2Q 2019 financial report. The outstanding performance of the company during the quarter caused its share price to rise 15.99% and the momentum was carried over the next several days. During its ‘618 shopping festival’ campaign, Pinduoduo continued its ‘10 Billion Yuan Subsidies’ strategy that it launched during the last ‘Singles Day’ campaign. And at this time, it ended up with a completely different story that the market responded positively to. The main reason lies in four aspects: 1. Selling and marketing expense decreased sharply to 80.87% (-27.6% year-over-year, and 22.38% compared to last quarter); 2. Due to the improvement in the cost controlling ability of Pinduoduo, its Non-GAAP Net Loss Attributable to Ordinary Shareholders dropped dramatically; 3. Better user structure: the contribution of users from top-tier cities continuously increased from 37% in January 2019 to 48% in June 2019; 4. Annual spending per active buyer on the platform increased dramatically, from 763 to 1,468 CNY/year, a 92% year-over-year increase. On October 10, Colin Huang, the CEO of Pinduoduo, said that GMV on Pinduoduo has actually surpassed that of JD.com, which was two years ahead of schedule. With this momentum, the share price of the company continued to increase and with a 12.56% jump in a single day, its market cap finally surpassed JD.com on October 24. And these imply that Pinduoduo has become the 2nd largest Chinese e-commerce platform in real terms and on multi-dimensions. Pinduoduo is now recording a Price-Sales (PS) ratio of 15.89 (TTM), which is one of the highest among all the NASDAQ-listed firms with a market cap exceed USD 30 billion, suggesting the market is holding an optimistic attitude towards the prospects of the company. The 4-year-old Chinese e-commerce platform created its own myth based on business growth to become the most important upstart in this competition-intense industry. Stock prices rarely reflect the true value of companies, especially in the short-term – the historical price pattern of Pinduoduo demonstrates this story aptly. For itself, this period of time that has elapsed since its IPO is the process for it to improve governance, enrich strategies and become more standardized.On the other hand, for the market, it was the progression to form cognition and adjust its general attitude to the ‘team purchase’ model and ‘value-for-money’ idea of Pinduoduo. Today's Pinduoduo is undoubtedly one of China’s new e-commerce giants, which means it will face more and more challenges from both the market and its peers. The three months at the end of the year are always a time for the most intense battles between all the retail players. With ‘Singles Day’ approaching in the next few days, who will win the ultimate campaign of 2019, based on what kind of strategy, will be a very interesting thing to observe.

Analysis EO
Analysis · 2
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Analysis EO
Aug 21, 2019 09:41 pm ·

Reflection on Our Talk with Pinduoduo VP in View of the Firm's Q2 Financials

Pinduoduo Inc. (PDD:NASDAQ), an innovative and fast-growing “new e-commerce” platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2019. The company's GMV amounted to CNY 709.1 billion (USD 103.3 billion) in the twelve-month period ended June 30, 2019, an increase of 171% from the same period last year. Total revenue for the June quarter reached CNY 7.29 billion (USD 1.06 billion), up 169% compared to the same quarter of 2018. “We are pleased with our results in the second quarter of 2019,” said Mr. Zheng Huang, chairman and CEO of Pinduoduo. “Putting users’ interests first, we worked with our merchants to provide our users with a targeted, compelling value proposition on their most coveted items. This unwavering focus on our users contributed to the significant increase in our annual active buyer base and annual spending per active buyer, which together led to the 171% increase in our last-twelve-month GMV." Two other important indicators, the monthly active users (MAU) and the expenses in sales and marketing remains the focus. The increase rate of MAU, which already slowed down quarter-over-quarter, is considered highly related to the large expenses on sales and marketing. Average monthly active users in the quarter were 366.0 million, an increase of 88% from 195.0 million in the same quarter of 2018.  As to sales and marketing expenses, it saw an increase of 105% year on year to CNY 6.1 billion (USD 889.1 million), representing 84% of the company's total revenues. Mr. David Liu, VP of Pinduoduo strategy department said that they plan to continue investing in users and merchants in 2019 to drive further engagement. In terms of daily active users, Pinduoduo has broken the once-thought steady duopoly between Alibaba and JD.com  to become the second-largest online e-commerce platform. EqualOcean talked with Victor Tseng, VP of Corporate and Investor Relations in Pinduoduo a month ago, trying to have a better grasp of the company's future direction. Modestly and decisively, Tseng shared his initiatives to join the company, introduced Pinduoduo's effort in dealing with challenging issues and gave insights about the company's strategy in the new brand plan. Below is the dialogue transcript. Q: China plays a more important role globally, enterprises arise during the period will form a growing influence overseas. We believe Pinduoduo may be one of them that will represent not only China's enterprise but also our country. Since we know that you worked for Ctrip in the US and joined Pinduoduo early this year, could you share the catalyst that drove you to this company? A: Excitement I would say. A lot of new business models and innovations are originated from China. Consumers and the retail market have leapfrogged their peers in the United States and have been followed by not only emerging markets like India and Indonesia but also developed countries. Plus China's total retail sales of consumer goods reached CNY 30 trillion, it is a spending market to surpass the US soon. The e-commerce sector, though prosperous in China, still poised a relatively low penetration rate. There are also great opportunities here.  Previously we say consumption upgrading, it seemed to be limited to expensive spendings. From my point of view, it should not be a one-sided explanation. In many western countries, non-branded goods sometimes grow faster than brand items. With a diversified geographic and demographic layout in China, Pinduoduo got the innovation initiative and opportunity to provide a different shopping experience for consumers. Q: You mentioned the diversification of China's consumers. Since you have lived in the US for a very long time, what do you think of the stratification of consumption in the US?  A: Though the e-commerce penetration (14% in the US in 2018) is not as high as China's record of 23%, the US has rooted deeply in the brick-and-mortar business model and accumulated decades of offline retail experiences. Therefore, stores like Dollar Store, Wal-Mart and Costco are examples of consumption diversification to meet the needs of different consumers. For China, the country is so big that the shopping habits in different tiers of cities would vary substantially than in the US. The uneven situation offline should also exist and be met online with increasing Internet penetration rate, however, the traditional e-commerce giants might ignore this due to their already well-built business model. They tend to provide more online traffic to relatively well-known and expensive brands that might not suit the case for low-tier cities' consumers. Such a situation created another online opportunity and that's where Pinduoduo broke in. We also subverted the original online shopping habit of consumer-search-goods to goods-search-consumer. Q: As you said, Pinduoduo has innovated in many ways, not only changed the way of online marketing but also adopted a group-shopping model and an entertaining way of consumption. But the underlying logic of innovative technologies is still based on people's social networking activities. A: We don't define ourselves as a social e-commerce platform, but the company has accumulated users online shopping data and social relations to analyze one's behavior based on distributed artificial intelligence. By promoting entertaining consumption, we launched several online mobile games, which has also contributed to our user data pool, assisting better user portraits and promoting strategy. Q: Pinduoduo sets the goal of a future company to be a combination of Costco and Disney. The entertaining game is one of your practices. One of the online game I recall is Duoduoguoyuan, what about Duoduonongyuan? A: Just like you said, Duoduonongyuan's approach represents the Disney part, Duoduonongyaun's trial stands for the Costco part. It's a customer-to-manufacturer (C2M) business model. Traditional e-commerce players had paid lots of energy in online traffic distribution and infrastructure building such as logistic and mobile payment.  When Pinduoduo started its business four years ago, those preparations were all in order.  Thus we got more time to know our upstream suppliers, by abandon some of the unnecessary distributing procedures, we could save cost for suppliers and provide more benefit for our consumers. On the other way around, suppliers or farmers in Duoduonongyuan's case could also be updated with consumer market's feedback, and make production adjustment in time.  Q: Got it, so it's not just a poverty alleviation project. A: It brings Pinduoduo opportunities as well and the direction is right. But we don't want this to be just another traffic distribution business. If we simply provide farmers with online users and display those goods on website, those rural area farmers will be better off for the moment but it is not sustainable. We want to move down the value chain of the industry. And that's why we have cooperated with China Agricultural University in this project to cultivate 10,000 talents who have their know-how in agriculture technology, industry and operations to help optimize and upgrade the redundant chains. The company's development is driven largely by rural consumers and it has a strong incentive to revolutionize the production and supply chains. Q: I think Pinduoduo's strategic plan on entertaining consumption, poverty alleviation and supply-side optimization are very insightful. But speaking of the negative report of the company or the downgrade by some investment institutions, how do you deal with it? A: We take those reports with a normal heart. The capital market, especially the secondary market is short-termed. Pinduoduo has a big vision that won't easily be shaken by quarter-to-quarter turbulence. So be patient is also important.  Q: Some questioned the high expense in Pinduoduo's sales and marketing, that's to some extent reasonable for the company at this stage. But one thing I notice is the take rate, meaning the take rate from GMV to revenue, seems to decline to 0.8% at Q1 this year. A: If you look at the take rate quarter to quarter, it is bumpy, but if you see it in a twelve-month period, the number keeps increasing. This quarter should be 2.99%. We have 1 million merchants at the beginning of last year, by the end of 2018, the number jumped to 3.2 million. New merchants also need more time to adapt to our platform, to build trust and buy ads. It's a process, we are patient about it. Q: I see, and for the Pinduoduo new brand plan, I think it's a very good strategy. As Pinduoduo grows larger in size, it is good enough to represent China's e-commerce. However, people may question the fake goods issue, how will the Pinduoduo's new brand plan help in this, especially in representing China's e-commerce overseas? A: Selling counterfeits is one of the current situations, to be honest. But as a marketplace, Pinduoduo, as well as Alibaba and Amazon, are facing the same challenges. We are working hard to crack down those issues by both technology and mechanism. We require merchants' licenses that linked to the government ID to sell on Pinduoduo platform and fine10 times the price of those who sell fake goods. From the technology perspective, the merchant quality score is based on our rating algorithm. Merchants credibility, user review and so on will be included in the iterating ranking system. Even as a young company, we take this very seriously. Q: Exactly. Back to the new brand plan, could you introduce a bit more on that? A: Sure, China has accumulated a great number of manufacturers in the past two to three decades to serve as a world factory. Many of those have great product R&D and manufacture capability, but for one product that may sell for CNY 100, after tagging another brand, the price will double and redouble. Manufacturers want to sell with their own brands with a more appealing price, but they don't have suitable channels. Plus the uncertainties in the OEM model, the supply-side market status pose another opportunity for Pinduoduo, and we take it. 

Analysis EO
Analysis · 2
Analysis EO
Mar 13, 2019 09:35 pm ·

Pinduoduo Q4 Result: GMV and Losses Both Increasing

Pinduoduo (拼多多), the third largest and still fast-growing e-commerce in China just published its Q4 financial results earlier. This article will highlight key figures and provide analysis of why its share price drops after the publish of Pinduoduo's Q4 earnings. Highlights Pinduoduo highlights the following five aspects: - GMV: Ending December 31, 2018, GMV was CNY 471.6 billion (USD 268.6 billion), an increase of 234% from CNY 141.2 billion in the twelve-month period ended December 31, 2017 - Total revenues: In the quarter, revenues were CNY 5,653.9 million (USD 822.3 million), an increase of 379% from CNY1,179.4 million in the same quarter of 2017. - Research and development expenses: In the quarter, MAU were 272.6 million, an increase of 93% from 141.0 million in the same quarter of 2017. - Active buyers: In the twelve-month period ended December 31, 2018, the number of active users was 418.5 million, an increase of 71% from 244.8 million in the twelve-month period ended December 31, 2017. - Annual spending per active buyer:  In the twelve-month period ended December 31, 2018, the average spending per buy was CNY 1,126.9(USD 163.9), an increase of 95% from CNY 576.9 in the twelve-month period ended December 31, 2017. Note: it is the unaudited financial results  Soon after the results have been released, the share price of Pinduoduo has dropped by 17.45% (USD 5.9 billion in absolute amount). Possible reasons for the price drop: 1. Dramatically increasing expenses As can be seen from the table below that expenses increase at a much faster speed (1200%) than revenue or COGS.  Note: in million, the currency used is CNY. Pinduoduo's expenses include sales and marketing expense (S&M), general and administrative expenses (G&A), and Research and development expenses(R&D). - S&M expenses: due to increased spendings on both online and offline advertising campaigns to cultivate greater user recognition. More advertising might be because of the increasing difficulty in acquiring customers. The number of new users increased in Q4 is 33 million, compared to 42 million in the third quarter. Moreover, the average user acquisition costs per customers increase to CNY 185.4 (USD 27.6) with an increase of 140% from Q3. - G&A expenses: due to an increase in headcount and share-based compensation expenses as Pinduoduo expanded its operations.  ​​​​​​- R&D expenses: due to an increase in headcount to built technical capabilities. Expenses are primarily used in recruiting more experienced R&D personnel as well as in R&D related cloud services expenses. Adding to that, LU Qi, the former senior executive at Baidu, will also join as the head of Pinduoduo' s technology consulting council. The R&D expenses reach CNY 525.2 million increasing by 901%. 2. GMV is too high to believe It seems that Pinduoduo more often mentions its GMV figures rather than revenue or profit figures. Is that because revenues and profits are recognized in a more strict manner? Dividing the number of revenue by GMV, it gets only 0.12%. This means the great majority of it GMV does not positively contribute to revenues and that's why the phenomenon of greater GMV, greater losses occurred. Albeit Pinduoduo did not give the exact way that how its GMV is calculated but by recalling the general formula of GMV, it includes all the transactions including unpaid ones not excluding returns and exchanges sales.  According to Blue Orca Capital, a short seller, one cause for the overwhelmingly large GMV might to one specific function of Pinduoduo that there is no shopping cart setting. This means once customers added something, it will automatically be added in an order which contributes to the GMV. Thus, Blue Orca Capital believes the GMV of Pinduoduo has been inflated and therefore cannot reflect the true and fair view. The valuation that Blue Orca capital has given to Pinduouo was USD 7.1 per share, only about one-third of its per share price.

Analysis EO
Analysis · 2
Analysis EO
Jan 22, 2019 10:15 am ·

A Solution for the Once-ignored Demand, Pinduoduo and its Different User Image

Recent news of Pinduoduo has been widely discussed in China that Pinduoduo was hacked and exploited which may introduce millions of losses.  Being widely discussed indicates from a side angle that Pinduoduo is a phenomenon company in China and is keenly focused by the mass. From nowhere to a current big name, Pinduoduo discovers the demand that exposed by the upgraded consumption trend occurred in traditional e-commerce bodies. As discussed in a previous article, Pinduoduo is a fast-growing company and represents for a new force in e-commerce, but it is also criticized and judged by the outside because of counterfeit products sold through its platform. Even in the F-1 filing, Pinduoduo disclosed the risk of being reliable for counterfeit products through the platform. Content released in Walnut Street Co. Ltd's F-1 filing Indeed, Pinduoduo took the market share with full speed and strength. According to a report from China Security’s R&D department (CSRDD, 中信建投证券研究发展部) published in August 2018, Pinduoduo’s active number in 2018Q1 was tantamount to Taobao (淘宝网) and JD.com (京东)’s 53% and 98% respectively, while Taobao was founded in 2003 and JD.com was established in 1998. Pinduoduo took over the market by providing cheap commodities and expanding the customer pool with group purchasing. Cooperating with Tencent, Pinduoduo boarded on WeChat ship that brings it customer flows with much lower costs comparing to other e-commerce giants like Taobao and JD.com – Pinduoduo’s CAC (customer acquisition cost) is RMB 24 (USD 3.51) and Taobao and JD.com’ CACs are over RMB 200 (USD 29.37) according to CSRDD’s report. Nevertheless, Pinduoduo’s GMV (gross merchandise volume) per capita is only 6% and 13% of Taobao and JD.com’s respectively, which is considerably determined by the products’ cheap price on its platform. The cheap price is not equivalent to cheap quality, and this is what Pinduoduo’s CEO HUANG Zheng (黄铮) tries to tell. That Pinduoduo’s platform can provide low-price products attributes to its business model, which is discussed in a previous article. Price-sensitive customers have more incentive to use Pinduoduo if the price is the determinant factor. According to a report from Penguin Intelligence, Pinduoduo’s customer image indeed deviates from other e-commerce giants – more female customers, lower-tier cities and less education level. The customer image from diffentment dimensions conforms to China’s demographic map. Lower-tier cities are labor outflow areas and usually geographically less open than top-tier cities. A major cause of labor outflow is the financial reason, and hence it is reasonable to infer lower-tier cities are more sensitive to price compared to large cities considering local economic development. Lower-tier cities also have scarce education resource issue that leads to a less education level in general than tier cities. Top-tier cities have more opportunities and are attractive to higher-education-level population, and inversely causes a gap in education level among different city tiers in a demographic map. While most e-commerce players marching towards consumption upgrade, the consumption-level-yet-to-be-upgraded population is squeezed out from the main trend of consumption upgrade. Alibaba’s Tmall is an upgraded shopping platform comparing with its sister Taobao, JD.com conveys an image of a shopping platform that sells authentic electronics, and VipShop (NYSE: VIPS, 唯品会) is a platform selling big brands’ goods though with discounts. The consumption upgrade is a trend along with China’s economic growth, but the population that is unable to enjoy the trend is left by the upgraded e-commerce. Pinduoduo’s appearance came at a proper time to meet the unsatisfied consumption demand of its users, not too early or the demand was not even emerged, nor too late or it would be at a passive position in the market just like Taobao and JD.com does. The cheap price is friendly to price-sensitive consumers, but the stereotype of “cheap” and counterfeit products truly have troubled Pinduoduo for a long time. Pinduoduo’s business partners are third parties and Pinduoduo’s entrance bar is welcoming more sellers. The non-selective entrance bar brings the regulation to an advanced complication. The quality control and regulation is more an afterward action from Pinduoduo’s side: for example, Pinduoduo sets restrictions in withdrawing limit and requests for a high amount of deposit to seller side. The afterward action can prevent further harm but not compensating incurred losses for users. To build a platform with no counterfeit product might still be a long way to go and a major obstacle on Huang Zheng’s dream to achieve “Costco + Disney” model.    

Analysis EO
Analysis · 2
Analysis EO
Jan 21, 2019 07:58 pm ·

Behind Being Harmed by Hacking, the Developing Risk Management of Pinduoduo

On January 20th, Pinduoduo (拼多多) reported that its system hole was exploited by a collective and hence caused great losses to the company. The hole in its system enabled customers to use CNY 100 – face-valued (USD 14.7) coupons with no restriction to purchase goods on its website. Pinduoduo is preparing to execute its right to sue those who gained improper profits from the system hole. The public is arguing for the attribution of Pinduoduo’s losses since most coupon users were not those who are responsible for hacking in the system. However, knowing the bug but still choosing to exploit the defect is considered illegal whether in China or elsewhere in the world: in 2017, a couple in the U.S. was charged for exploiting Lowe’s website’s hole to gain improper profits. Pinduoduo’s coupon users involved in the case voluntarily and purposefully so that Pinduoduo is rightful to ask those who took improper gains to stop harm and take the responsibility for the losses. Though, coupon users are the ones who were responsible for the losses directly whether from the legal or ethical perspective, Pinduoduo’s risk management is weak that no one could foresee never-should-happen losses introduced by its vulnerable system. No alert or intervention mechanism was set for such a huge flow of abnormal transaction activities. The jaw-dropping fact astounded the mass because Pinduoduo represents for a new force in the e-commerce industry and is believed that it is embedded with technology gene. The fact is that Pinduoduo failed to establish such a mechanism when the hacking happened at a Saturday late night, an even less-protected time than other - less staffed at weekend and more lagging in response.  For a startup (speaking from the establishment time), Pinduoduo has been growing rapidly than most of its peers and is on the road to be a giant in its industry. Founded in 2015, Pinduoduo swiftly completed billions of funding within three years and went public at USD 19 per share in Nasdaq Stock Market with a total raised amount of USD 1.6 billion in July 2018. Pinduoduo’s growth is motivated by the classified market’s diverse demand. Being different from other e-commerce players, Pinduoduo targets at lower-tier cities and provide cost-efficient goods to its users through group purchases. The role that Pinduoduo playing is a platform that connects manufacturers and customers and boosts the supply chain’s efficiency. To put in another language, Pinduoduo is the C2S2B’s (customer to supply chain to business) S (supply chain) ring: it collects data from customer side, and reflect to the business, or so-called production side, which leads to a simplified goods distribution from business side to customer side, reduce the financial pressure generated from inventory and information asymmetry, and satisfy consumers with consumption need. Pinduoduo is beyond a supply chain. Being an e-commerce platform, Pinduoduo is able to reallocate resources and find the optimized solution for commercial activities for its users. EqualOcean: The Connector Role of Pinduoduo in C2S2B Model Pinduoduo is still developing at a pace that troubles its competitors, but problems exposed during the operation should arouse enough attention for Pinduoduo’s management team. For instance, the coupon accident that caused thousands (or maybe millions)of losses should not have happened if Pinduoduo’s risk management were to be implemented as expected. The coupon accident is not a black swan event and should be foreseen by the system developer. However, for some reasons, Pinduoduo failed to manage the risk, and when the risk occurred, it had no effective control. After the occurrence of being taken improper profit by its app users, though Pinduoduo deactivated the coupon to prevent further losses, the afterwork is ongoing. As an e-commerce body with weak cybersecurity sense, Pinduoduo had its lesson. The fintech skills might be what Pinduoduo lacks, but it should aware of the risk – at least for a known risk, and Pinduoduo’s major investor should have knowledge of the risk, especially for an investor who is partially predominating China’s mobile payment market. Pinduoduo’s investor, also the most important character in Pinduoduo’s cooperation strategy, Tencent is WeChat Pay’s (微信支付) controller, which is one of the largest mobile pay third parties in China. Screenshot of Pinduoduo's F-1 Filing on sec.gov WeChat Pay as one of the most matured mobile pay third parties is rich in fintech experience, not even mentioning other financial products derived from WeChat Pay’s ecosystem. Tencent has also suffered from the hacking since it is closely connected with Pinduoduo. To speak from the truth, Tencent is qualified to provide fintech consultation and offer security check for Pinduoduo, whether from an investor’s perspective or a strategic partner’s angle. Tencent’s investment style is financially investing and cooperating through providing its social network’s tunnel and payment solution, but seldom involving in actual operation, which leaves pros and cons but is a common choice for most investors. For a giant and an experienced technological-driven company, Tencent can offer more to its portfolio’ companies – like fintech security consultation for Pinduoduo.

Analysis EO
Analysis · 2
Analysis EO
Jan 14, 2019 05:19 pm ·

Pinduoduo’s Next Strategic Move towards Accelerated Transformation

Pinduoduo (拼多多) had a pretty bumpy start at the beginning of 2019, breathing through the criticism from some of the Chinese media. Though being challenged by facing stagnation in the expansion, actively searching methodologies to overcome the obstacles, the company had a shining performance last year. In its third-quarter financial report, from September 30th in 2017 to September 30th, 2018, Pinduoduo's active member number increased 42 million, reaching 385.5 million, registering a 144% of growth. What's more astonishing is the company is not yet 3 years old, but already surpassing the No.2 E-commerce company – JD.com in customer volume of 80 million. Despite the accusations on Pinduoduo selling fake products, it's undeniable even for a few Chinese media castigating the company that it indeed registered a success, and the major contributing factors behind its triumph are the following two: 1.The magic which lures more customers in without costing a penny 2. Significantly lower price compared to its competitors The different shopping experience on Pinduoduo The biggest distinction in user experience between Pinduoduo and JD.com (京东) as well as Tmall (淘宝天猫) is, every time user launches a deal, a message pops out strongly suggesting the user find friends or relatives to launch a group sale, also, adding time pressure to the action. "Time is running out, please find someone to purchase it together, you will get a better deal!". For new users, this message presses them to consider finding someone to get a better deal. After all, the user's friends and relatives may as well need the product, and it is, indeed, a lot cheaper than purchasing through other channels. This is, in fact, a very smart if not shrewd strategy to get large customer flow, and it almost does not cost a dime. It's more like a psychology trick, yet very ethical. If the company stops there, say, if the customer does not want to make the effort to find another customer for the platform, and the platform hence resists the selling to the customer at low price it promised, she or he might as well feel being fooled by the platform and leave, never come back. What's interesting is, Pinduoduo labeled the higher price, which is the common price generally set by JD.com and the like on its website, right next to the low price Pinduoduo could offer to its customer, which makes customers feel they have got a great deal; and the company did not stop there, it actually allows the customer to get the low price deal through buddying-up with any stranger who wishes to purchase the product instead of finding a person to form a group by him or herself. The algorithm which takes all the credits The algorithm behind the platform allows a certain time frame for the customer to find a buddy in the group buying action, again, if you do not wish to wait, you can find another "customer" and get the product shipped as soon as possible, the platform helps to record every progress of your purchase, and sends you the notifications of whether the algorithm successfully found you the match or not, which in a way, further adds a bit of time pressure to the customer, a bit of excitement and expectation, and provide the customer the sense of ease and security during the entire process. The algorithm would always be able to find the magical "match" if the customer is patient enough, and it's always a pretty much enjoyable journey for a purchaser. De facto, even if the algorithm failed to find the customer the match, which very rarely happens, the platform allows you to get the low price deal relying on a special "Buddy-up Free" scheme. Because the possibility of this is very low, the company's balance book would not be compromised by these very occasional incidents. Cooperation with other brands In fact, many famous brands have established cooperation partnerships with Pinduoduo already, including top luxury brand Giorgio Armani. These negate the logic SinaTech (新浪科技) described, of famous brands cannot cooperate well with Pinduoduo because customers on Pinduoduo do not recognize brands, which is a conclusion quite interesting if not bizarre. It turns out brands will lean towards to you when you are becoming the largest market share occupier of the industry. Psychology theories suggest that the more emotional and physical efforts inputted in either a relationship or an event, easier for participants to engage more and stick with it. When customers see the records of his or her purchasing on the platform, with all the details about every progress, it enables the customer a feeling of being emotionally involved in the procedure, it's quite difficult for the customer to back out during a purchase. Though the glorious past performance lingers, the company has to face with the struggle in further expanding adopting genius ideas, highly possibly, involving stealing customers from  JD.com and Tmall the like.  But how? To cooperate with small to medium scale manufacturing bodies is no doubt, so far, the best and most smart strategy to adopt to retain its paramount competitive edge, compared with JD.com and Tmall, of offering very low price via the form of group buying. According to Jiemian  News (界面新闻), Pinduoduo launched its cooperation plan with small to medium scale manufacturing bodies in December 2018, preparing to support 1000 factories to promote their brand, the first batch includes good but very fresh brands like Jia Wei Shi (家卫士), Song Fa China (松发陶瓷), China Sanho (三禾厨具), Bai Ya (百亚), Fu Guang (富光) and so on covering many industries. In the article published on SinaTech mentioned above, the author argues that the manufacturing bodies Pinduoduo chose are sacrificing their own profit margin for recognition from the public in the long term; however, the alliance is not strong enough since these manufacturers will not search for long term cooperation because once the goals are reached, they will leave for better partners. However, the interesting fact is more and more famous brands are settling in Pinduoduo's platform. It's highly possible that these manufacturers are gaining support from Pinduoduo, at the same time, enjoying the large customer flow it is creating. Furthermore, these small to medium scale companies lack sufficient fund to burn into marketing for itself, the recognition of their brands can more easily be obtained through the growth in sales, which thanks to Pinduoduo's large customer pool, seems not so difficult to realize.

Analysis EO
Analysis · 2
Analysis EO
Nov 24, 2018 03:31 pm ·

Utopia of Pinduoduo

Next to the gorgeous Lake Mendota, the University of Wisconsin – Madison (UWM) sits aside. West of the campus, there is a Walnut St., which is as ordinary as all other streets on campus. From south to north, houses, apartments, gas station, express stores and laboratories scatter along the street. HUANG Zheng was born in Hangzhou, graduated from Zhejiang University with a bachelor degree and gained his master degree from UWM. From 2002 to 2004, Zheng majored in computer science, a major is highly ranked among the US universities. On June 29, 2018, Pinduoduo, founded by Huang Zheng, submitted its listing prospectus to SEC with a registered company name Walnut Street Group, as ordinary as no one could tell its ambition. In Walnut Street Group's prospectus, Huang Zheng mentioned that Pinduoduo should not be a tool characterized with personal features and colors. When talking about the picture of Pinduoduo, Huang Zheng said that Pinduoduo would be a mixture of Costco and Disney (a combination of cost-efficiency and entertainment) that will be driven by distributed network of artificial intelligence agents (not the mainstream centralized network of artificial intelligence agents). Such an ambiguous description was taunted and received as an unrealistic story by the public; people hardly understood the concept that Zheng presented and even Zheng himself admitted it was a "Description in the Utopian Tone". Utopia, as commonly accepted, is an exceptionally ideal world and future. To bring the utopian dream into reality, one of the measures is minimizing human interests through completed and perfected system of laws and institutions instead of man ruling. It is once said that, when Bezos preparing to found Amazon, he had used to come up with a utopian idea: the ideal shopping website should not cost consumers' time on searching for goods, and instead, a few items listed on the site page should exactly meet what customers' needs. Restrained by technological barrier at that time, Bezos' thought could be actualized. However, Amazon has kept simplicity style in its UI design and made remarkable progress on personalized recommendations that none of its competitors could catch up with. So far, Amazon is valued more than USD 880 billion and the second largest tech company except Apple Inc. Piles of reasons could explain Amazon's success. The top two reasons might be followings: the first one is user first and the second is that continuously investing in technology secures user first and optimizes the efficiency. Interestingly, in Amazon, whose belief is user first, the founder Bezos that worships the tech the most, is shockingly rigorous to his employees and often referred as "tyrant". According to Pinduoduo's prospectus, dated to March 31, 2018, Pinduoduo had more than 700 engineers, which was 50% of its total employment. In which, 100 of those participated in algorithms and program designing. The high employment percentage of engineers and the tech background of both founders, Huang Zheng and CHEN Lei, have embedded the company with tech genes and driven the company through tech. Though the outside criticizes Pinduoduo for its coarsely-designed products, Pinduoduo is indeed a company ruled by tech instead of man. For a company who truly believes in user first, users are customers. Sellers are business partners of the platform and both parties aim to serve customers. In old days, Alibaba was in a debate of "Who is the customer?" for years and finally closed the question with "users are customers". Apparently, Pinduoduo agrees that users are customers and treats sellers as business partners other than customers; based on users(customers) interests, Pinduoduo has encountered numerous conflicts with sellers, and conflicts will still emerge and last for a considerably long time. Another fun fact about Pinduoduo is that, similar to Amazon, tech-driven company lacks humanity: plenty of Pinduoduo's employees sensed little about their meaning of existence, but being over-used, under-valued and unappreciated, and no space for self-development. In the era of internet, varied people share a common utopian dream: decentralization. In the drama Silicon Valley, Richard and his fiend founded Pied Piper, and kept fighting against the giant tech company Hooli with failures. Richard was a typical tech nerd and he believed that internet had been born due to an honorable utopian assumption, but become a tool and been utilized and centralized by giant companies like Hooli; Richard abhorred Hooli and wanted to establish a decentralized network: A New Internet. In season five, Pied Piper partially actualized the dream of decentralized network finally, and the future was seemed so brilliant and optimistic. Obviously, in eyes of "Richard", giants in silicon valley like Apple, Amazon, Google, Facebook and in China like Alibaba, Tencent, and Baidu are all centralized platforms and losing visions. It is undeniable that the world belongs to those centralized platforms. Receiving investments from Tencent and it became the second largest shareholder, the outside agree upon that Pinduoduo is a Tencent member now, but Huang Zheng holds a contrary opinion. Zheng also dislikes the idea of people comparing Pinduoduo with Alibaba or JD. Zheng emphasized for times that current giants are imperialist:” Alibaba, JD, DiDi and Meituan, they are all involved in imperial-alike wars, scrambling for definite boundaries for their empires. But I think our generation should think more than that.”(Caijing Journal). Zheng expressed his preference towards Toutiao(Byte Dance), which is referred as a personalized news recommendation service platform driven by tech: "You can regard Pinduoduo as the Toutiao, but products are not news but goods."(Caijing Journal). It is well-spread in investment circle that Toutiao is preparing to be listed in HKSE with a valuation of USD 45 billion. A famous media professional CHENG Lingfeng once highly praised that WANG Xing from Meituan and ZHANG Yiming from Toutiao (Byte Dance) were Groundbreakers of the New Generation. Agree or not, Zheng admires Toutiao but disinclines Meituan. Zheng may agree that non-imperial thinking mode and competitions are more important, even though Pinduoduo is considered as the successor to overturn the imperial giants and to become the next one. Zheng said that he had two icons that he admired: one is Lee Kuan Yew and the other is Benjamin Franklin. Lee Kuan Yew pulled Singapore from the third world and made it a modern country; Benjamin Franklin is a man that had made great contributions in different fields: a successful merchant, and an outstanding scientist and politician after quitting business. Ambivalently, Lee Kuan Yew's authoritarian policy fits small size countries, but in big countries, he would probably become a power-centralized ruler; When Benjamin Franklin quitted business after 40, he became a scientist and politician. Whether this was a personal selection or forced by the outside is unresolved. One thing we could assure is that after Pinduoduo stepping into the capital world, it is destined to be on the opposite side of small and ideal; Zheng's idea of keeping Pinduoduo from being characterized with personal features and colors seems hard to achieve ever since. In decades of Lee Kuan Yew's reign, it is no that Lee Kuan Yew did not want to rule, but he could not un-rule; when his son Lee Hsien Loong sat in his seat, Lee Kuan Yew was condemned for his fake-democracy and dictatorship. Benjamin Franklin's success was bred on a different land. To culture and change a land is more complex and harder than to select seeds or to trim branches. Zheng has a mentor named DUAN Yongping, who was known for establishing BBK Electronics(BBK), auctioned Warren Buffett Lunch and ranked in the money from stock market. But for other people(including myself), strengths of Duan Yongping include being professional in institutionalization, daring to forsake interest, and following his heart. No matter BBK, or BBK hatched OPPO or VIVO, all are armed with gifted professionals and experts, but what is more important is their perfected institutions, whether in excitation mechanism, HR regulations, or competition mechanism. Good institutions could make the bad to be good, and this saves Duan Yongping from routine works and let him enjoy his leisure time in the US, while the company is still safe and sound. Foundation is the promise for long run and the most critical part is to build up institutions that could bring the company forward without restraining by its founders. Zheng called himself the forth mentee and has said that his mentor had casted great influence onto him. His Pinduoduo is somehow similar to BBK group in its business mode and strategy planning. Nevertheless, if Zheng wants a free-and-easy life like his mentor does, he needs to culture a right team and set up satisfactory institutions for Pinduoduo Back to 2006, before the internet explosion, a company named Maimaibao has started to sell product to fourth, fifth- or sixth-line cities, suburban and rural areas through mobile websites. At the beginning, the company was selling copycat electronics, clothes and shoes, which turned out to be incredibly profitable. The only fly in the ointment were the backward status of instant logistic network and the inconvenience of making payments: shipments could only be carried by EMS, which service leaves much to be desired; payment could only be cash on delivery, which tremendously increased the costs. Maimaibao obtained Tencent's investment in 2014 and became a Tencent member, but its subsequent development was disappointing. situations are improved, and incoming players want to occupy the sub-third-line cities' market. The instant logistic network has covered numerous towns and villages, mobile-pay is widely accessible, and social network has gained its user base in these areas. It is evident that those sub-third-line cities' market has become increasingly ideal for market players. It is commonly accepted that "encircling the cities from rural areas" are a means for players to take over the city market, and rural area is only functioned as a springboard and will be abandoned once the city market is opened. After years, the rural areas stay marginalized and filled with copycat and low-quality products. In comparison with the sales No.1 company Walmart, Costco is more commended by IT practitioners. MI's founder Lei Jun claimed that he had learned how to sell high-quality product at a low price from Costco. Zheng from Pinduoduo said that the ultimate orientation of Pinduoduo is be the personalized Costco for diversified groups: bring the infinite flow into finite commodities and form to a scale; when the scale upgrades to dimension level, inversely customize commodities to cut off the costs. Alibaba fails to build its brand in C2B and C2F market, but MI and Pinduoduo are full of potentials. Besides Costco, another company that Zheng appreciated is Disney, which could be called the most successful O2O company in the world. Online and off-line flows are strategically combined and prove that a win-win could be expected when the virtual and real worlds come into one. In the film Ready Player One, the reality is far from expected but the virtual world could still be attractive and utopian; though virtuality and reality are twins, they are contradictory at the same time. The utopian world presented by Disney could only let people temporarily return to innocent days; the Oasis in Ready Player One could only excite people for a moment. It is reasonable to expect Pinduoduo's combination of Costco and Disney, which is a utopian dream driven by distributed network of artificial intelligence agents. Yet, it is lightyears away from actualizing the dream, and on the road to achieve the dream, Pinduoduo and its founder Huang Zheng would be subjected to myriad anti-utopia forces, which might appear in bundles and be mighty beyond imagination.   ——Author: YuanPu; write to YuanPu at YuanPu@EqualOcean.com

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