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Editor’s note: This article is from the micro-channel public number “capital Detective” (ID: deep_insights), Author: Hong keys, 36 krypton release authorized.

Before the US stock market opened on May 22, Pinduoduo and Alibaba successively issued financial reports. So far, the three major domestic e-commerce giants (Alibaba, JD.com and Pinduoduo) have all handed in the first quarter report cards affected by the epidemic.
The performance of JD.com, which earlier released its financial report, has been discussed many times: revenue exceeded expectations, active users increased significantly, and the logistics system became a key support for JD.com in a special period.Correspondingly, because the number of Alibaba and Pinduoduo is quite different from that of JD.com, its response to the impact of the epidemic has caused a lot of market attention.
According to analysts’ previous estimates compiled by Bloomberg, Alibaba’s Q1 revenue is expected to reach 107.038 billion yuan (all units are in RMB unless otherwise specified), a year-on-year increase of 14.5%; adjusted net profit is 16.08 billion yuan, a year-on-year decline of 28.5%.
For Pinduoduo, the market’s expectations are more conservative. Analysts expect Pinduoduo’s Q1 revenue to be 4.969 billion yuan, up 9.3% year-on-year, or a new low growth rate; adjusted net loss of 2.670 billion yuan, an increase of 93.6% over the same period last year.
From the final results, Alibaba and Pinduoduo exceeded market expectations to varying degrees.
Alibaba’s key financial indicators are as follows:
Alibaba achieved revenue of 114.31 billion yuan in the fourth fiscal quarter of 2020 (Q1 in 2020), a year-on-year increase of 22%, higher than market expectations;
The net profit attributable to shareholders of ordinary shares was 3.162 billion yuan, a year-on-year decrease of 88%. The reason was that the decline in the price of equity securities invested led to investment losses, while similar investments in the same period in 2019 achieved net income;
The adjusted net profit was 22.287 billion yuan, an increase of 11% year-on-year.
The key financial indicators of Pinduoduo are as follows:
Pinduoduo achieved revenue of 6.541 billion yuan in the first quarter of 2020, an increase of 44% year-on-year, exceeding market expectations;
The net loss attributable to shareholders of ordinary shares was 4.12 billion yuan, an increase of 119% year-on-year;
Under non-GAAP, the net loss attributable to shareholders of ordinary shares was 3.17 billion yuan, an increase of 130% year-on-year.
Due to different development stages and their own advantages, the three e-commerce giants have adopted different coping strategies in the face of the impact of the epidemic. The financial performance in the first quarter is a clear reflection of the differences in thinking between the three.
The three giants have their own ways
In terms of revenue, JD.com still ranks first among the three, which is related to JD.com ’s business model is mainly self-operated e-commerce, which mainly earns direct sales revenue of goods, while Taobao, Tmall, Pinduoduo, etc.Earning more is the platform advertising fees and service fees, so Jingdong’s revenue is often higher than Alibaba, but the profit is not as good as the latter.
Specific to the situation in this quarter, JD.com has distanced itself from Alibaba in terms of revenue, and Pinduoduo, as an e-commerce upstart, has much room for revenue growth compared to the previous two.
In terms of revenue growth, the three have slowed down to varying degrees, with Pinduoduo and Alibaba being more obvious.Under the impact of the epidemic, although Pinduoduo’s revenue exceeded expectations, the growth has dropped significantly compared with the previous level of nearly doubling, and Alibaba has experienced a similar situation.
Compared with JD.com and Pinduoduo, Alibaba’s income structure is more complicated.Since the competition between the three is mainly concentrated in domestic retail business, the Chinese retail business in Alibaba’s core business is a key detail indicator for comparison.The financial report shows that the revenue of this business in the fourth fiscal quarter of 2020 was 70.905 billion yuan, accounting for 62% of the total revenue, an increase of 21% year-on-year, slightly lower than the total revenue growth rate of 22.3%.
Among the various revenues of Alibaba, the growth of Alibaba Cloud and the innovative business segment are more prominent.
Alibaba Cloud achieved revenue of 12.217 billion yuan this quarter, a year-on-year increase of 58%, and its share of total revenue rose from 8% to 11%. It is one of the key forces driving growth;The innovative business segment composed of Cat Elf and others achieved revenue of 2.288 billion yuan, a year-on-year increase of 90%, but the proportion of total revenue has not changed much, and is still 2%.
Source: Alibaba financial report
For JD.com, its first-quarter product sales revenue was 130.09 billion yuan, accounting for 89% of total revenue, an increase of 19.7% year-on-year, slightly lower than the total revenue growth rate of 20.7%; service revenue was 16.11 billion yuan, year-on-yearAn increase of 29.6%, including logistics and other services revenue of 6.6 billion yuan, an increase of 53.6% year-on-year, is the most prominent growth in each segment.
Source: Jingdong Financial Report
Pinduoduo’s revenue structure is only online marketing service revenue and commission income. Its online marketing service revenue in the first quarter was 5.492 billion yuan, an increase of 39.1% year-on-year; commission income was 1.049 billion yuan, an increase of 76% year-on-year.
It is worth noting that the commission income of Pinduoduo has remained at around 11%, and the proportion of this income rose to 16% in the first quarter.
In other words, 44% of total revenue growth was driven to a considerable extent by the increase in commission income.
Source: Pinduoduo Financial Report
In terms of active users, Alibaba, JD.com and Pinduoduo’s annual active users are 726 million (China’s retail market), 387 million and 628 million.While Pinduoduo achieved the number of active users breaking 600 million, the distance to Alibaba has narrowed to less than 100 million.
In terms of annual active user growth, the only one showing a slowdown in growth is Alibaba.JD.com’s outstanding logistics performance during the epidemic period, the return of old users accelerated, sleeping users were awakened, new users’ active access and active shopping are also increasing, and their annual active users increased by 24.6% year-on-year, hitting the highest level in recent quarters;Pinduoduo slightly improved on the basis of maintaining the original high-speed growth.
For the breakthrough in the number of active buyers, Huang Zheng, Chairman and CEO of Pinduoduo, said that the monthly / annual buyer index of Pinduoduo has increased from 65.4% in the first quarter of 19 to 77.6% in the first quarter of 20,This means that users prefer Pinduoduo’s products, and Pinduoduo also has a stronger ability to meet the needs of users’ diversity.
It is also worth noting that the per capita consumption level of Pinduoduo users for the 12 months ended March 31 this year increased from 1257.3 yuan in the same period last year to 1842.4 yuan.In other words, users spend more money on Pinduoduo.
The number of active users continues to grow and the per capita consumption level rises. Pinduoduo has shown huge growth potential.
However, Pinduoduo’s revenue and user-level growth is not without cost.The financial report shows that its sales and marketing expenses in the first quarter reached 7.297 billion yuan, and the rate was as high as 111.6%.The financial report shows that the reason for the increase in this fee is that Pinduoduo’s investment in advertising, promotion and subsidies continues to increase.
In other words, Pinduoduo’s growth in the first quarter was largely a result of burning money.At the same time, the general and administrative expenses and R & D expenses of Pinduoduo also increased by 43.3% and 120.8% year-on-year, and the operating expense ratio was as high as 139.2%, so that the operating loss reached 4.397 billion yuan.
Source: Pinduoduo Financial Report
It seems to be responding to the “burning money” behavior of Pinduoduo. In the earnings call, Alibaba’s chief financial officer Wu Wei said that Alibaba does not agree with the practice of burning money to seek transaction volume growth. “WeWon’t do it “.Wu Wei also said that Alibaba hopes that any investment will be sustainable and efficient.
Judging from the financial report data, as a “big brother”, JD.com and Alibaba are much more restrained in their investment than they are.
Although the epidemic situation of JD.com has increased significantly, its effective control of market expenses offset the corresponding impact. The overall operating expense ratio was 13.8%, which was lower than the 14.1% in the same period last year and 14.2% in the previous quarter.Alibaba ’s market expense ratio for the quarter was 10.7%, which was an increase from the previous period. Its operating expense ratio was 26.8%, compared with 27.7% and 21.2% in the same period last year and the previous quarter.
The difference in fees affects the profitability of the three. Under non-GAAP, Alibaba, JD.com, Pinduoduo ’s net profits attributable to shareholders of ordinary shares were 25.1 billion yuan, 2.97 billion yuan, and -3.17 billion yuan, respectively.Alibaba’s profitability is still far ahead, JD.com maintained profitability during the epidemic, and more losses increased.
Although Alibaba is relatively restrained in terms of expenses, the net interest rate is still seriously affected by the epidemic. Under non-GAAP, the net interest rate attributable to ordinary shareholders in the first quarter is 22%, which is a significant decline from the previous quarters; Jingdong ’s net profit margin was 2%, compared with 2.7% and 0.5% in the same period last year and the previous quarter, respectively; Pinduoduo ’s loss rate was greatly expanded to -48.5%.
The special situation is just an episode of competition
It can be seen that compared with the restraint of the industry’s veteran giants Alibaba and JD.com, they are still in the growth period and fight more, and continue to focus on “grabbing the ground” under the impact of the epidemic, and significantly increase marketing and subsidies.In addition to the increase in revenue and active users, the loss range is also staggering.
It is worth noting that Pinduoduo’s official Weibo announced after the financial report that its tens of billions of subsidies will continue to increase.In other words, Pinduoduo still insists on the strategy of burning money for growth.
Based on various indicators, JD.com benefited from the “heavy asset” model of self-built logistics and performed the most stable in the first quarter affected by the epidemic.However, the two opponents are also continuing to make efforts in the logistics field:
Alibaba continued to increase its rookie network logistics services. This business achieved revenue of 4.951 billion yuan in the first quarter, a year-on-year increase of 28%, higher than the total revenue growth rate.
While investing in “Four Links and One Access”, Alibaba has also invested heavily in the land distribution business in first- and second-tier cities to optimize the logistics experience.
Pinduoduo has access to Jitu Express in logistics. Although both parties deny that Jitutu is a “pinduoduo express”, because both may have inextricably linked with Duan Yongping, the outside world generally believes that it is related to Pinduoduo.The ambiguous polar rabbit is a sign of the former’s effort in logistics.
In April of this year, after joining together with Gome, Anxun Logistics, a subsidiary of Gome, will access the Pinduoduo platform to provide directional services for Pindo multi-platform merchants in large-scale logistics, warehouse integration, installation and delivery.
Another important meaning of Pinduoduo and Gome is that the former officially cut into the category of 3C home appliances with higher unit price.Although Gome is not as good as JD.com and Tmall in the market share of home appliances, Gome may challenge JD.com and Tmall by virtue of the traffic advantage of “600 million people are using more and more”.
“2019 China Household Appliances Market Report”
China Electronic Information Industry Development Institute
Pinduoduo tried to cut into the 3C home appliance category to continue to promote the “rural surrounding cities” strategy, while Alibaba and JD.com are also invading Pinduoduo’s basic market.
Alibaba said in its financial report that more than 70% of its new annual active consumers in fiscal 2020 will come from underdeveloped areas;Three to six line users accounted for more than 60%, and GMV accounted for more than half.
That is to say, the short soldiers meet is happening, and the smell of gunpowder will become stronger.
As the epidemic was brought under control, business activities in all walks of life gradually recovered.After coming out of the shadow of the epidemic, Alibaba, JD.com and Pinduoduo also ushered in a new stage of competition.
During the epidemic, due to the suspension of offline activities, merchants realized the importance of going online, and live broadcast e-commerce continued to heat up.Driven by preferential policies, the number of newly added live broadcast rooms on Taobao Live has doubled year-on-year.The financial report shows that in the three months ended March 31, 2020, the number of daily active merchants using live broadcast on Taobao live broadcast increased by 88% year-on-year; as of the fiscal year ending in March 2020, the GMV brought by Taobao live broadcast increased by more than 100 year-on-year%.
That is to say, after the merchants recover their vitality, how the live broadcast will spur Taobao Tmall’s revenue growth will be a major aspect of Alibaba’s next quarter performance.JD.com and Pinduoduo are also exploring how to catch the express train.
For JD.com, after the epidemic has eased, how to continuously amplify its logistics advantage, seek growth, and maintain profitability is a long-term test; while Pinduoduo still has to face the old problem of increasing user loyalty and customer unit price.
Feng Shui turns, the dominant position will not always exist, and pressure may also bring rebound.Alibaba, JD.com, and Pinduoduo will have a long-standing three-pronged position in the e-commerce field. This special first quarter will magnify the differences between the three major platforms.On the way, the fight between the three major e-commerce platforms will only become more intense.

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