Keep investing, Pinduoduo insists on tinkering.
Below are the phone minutes for Pinduoduo Q4 2022. Please refer to "Mentality Expansion, the Good Days of Pinduoduo Are Coming to an End" for financial report comments.
1. Management Speech
1. Employee Development
In the past year, many young colleagues have taken on more responsibilities and played more important roles. These young talents are passionate and creative, and will continue to provide more opportunities for personal development, to grow into future leaders.
2. Consumer Recovery and Investment in Promotion and Subsidies
In Q4 2022, user emotions and consumption confidence are rising, increasing investment in promotion season, further increasing consumer engagement. For example, directly providing large coupons and discounts during the Double 11 period in the previous quarter. At the same time, efforts to expand product diversity are being made, with platforms and merchants working together to address consumer demands for more and better products.
Many categories performed well in the promotion season, such as phones, cosmetics, etc. At the same time, the order volume of many seasonal agricultural products has more than doubled, which helps to promote consumers' understanding of various local agricultural productions.
3. Supply Chain Strategy-Agriculture and Manufacturing
Will continue to invest in supply chains and improve supply chain efficiency to meet the growing demand for quality products.
Using manufacturing as an example, Pinduoduo can quickly obtain information such as consumer preferences, which helps manufacturers make wiser decisions in project design and production, thus creating products with large crowds of demand;
In terms of agriculture, we will continue to use existing resources and technologies to promote agricultural digitization and have a positive impact.
4. The Latest Situation of Temu
This is a new global market. The holding company of Pinduoduo has established purchasing, logistics, and fulfillment capabilities to support Temu's various businesses.
2. Q&A Session
Q: Pinduoduo has gradually developed into a multinational multi-line business group. What are the development priorities, strategic planning, and international market positioning after the expansion of business lines?
A: The company is still in a growth stage. The company is moving towards serving consumers, and to better serve consumers, it is committed to implementing a strategy of creating long-term value through research and development and technology.
Pinduoduo takes technology as its core, and more than half of its employees are engineers, many of whom are core management-level graduates with a technology background. From the perspective of creating value for consumers, efficient understanding of rapidly changing user usage preferences, rapid iteration of services, and strong research and development capabilities are indispensable-therefore, the key to serving users well in the future is to continue to strengthen research and development capabilities.
Pinduoduo's clearly defined long-term strategy is to strengthen its technological capabilities, improve the supply chain efficiency of agriculture and manufacturing; and investment in this direction will not be affected by short-term external factors, and the company will make persistent investment efforts.
Q: Reasons for the quarter-on-quarter slowdown of online marketing in Q4 2022, and the outlook for online marketing in 2023. A: 4Q22 showed the resilience and vitality of the consumer market, and the company is confident in the prospects of the consumer market. In activities such as Double 11 Shopping Festival, Pinduoduo collaborated with more merchants and brands to provide consumers with more high-quality product choices, and consumers also showed good shopping demand.
In the current context of consumer recovery, the company is increasing resource investment to better meet consumer demand. In 4Q22, Pinduoduo leveraged its strengths in serving users' basic needs, and the sales of life-related products on the platform have steadily increased. As consumers' demand for good quality merchandise increases, sales of mobile phones, beauty, maternity and child care and other categories on the platform have also grown well.
The industry competition is fierce, and consumers have different platforms and shopping options to choose from. Pinduoduo still has a lot of room for improvement, and the team will continue to make continuous efforts to increase investment, develop core capabilities, and adhere to providing consumers with a "multi-benefit" and "multi-fun" shopping experience.
Q: How to deal with the competition's increased subsidies, competing for market share at low prices, and how to continue to maintain high-quality growth in this competitive environment?
A: Each company will develop different strategies in competition, and benign competition is beneficial to consumers and industry development, but sometimes intense competition can lead to varying degrees of differentiation. Pinduoduo will always maintain a modest spirit, bravely face industry competition and differentiation at certain times.
The company believes that serving consumers well is the key to creating long-term value. Starting from its own positioning, the team explores how to provide more value to consumers---will continue to focus on "heavy R&D" to better understand consumers' new needs and preferences, improve their shopping experience, and thereby enhance consumer trust.
At the same time, the company is fully aware that there is still much room for improvement, so it will further increase investment---especially in the agriculture and manufacturing sectors, to create more value for consumers by improving supply chain efficiency.
Q: Marketing spending in 4Q22 reached 18 billion yuan (+56%). With the gradual recovery of consumer confidence, is the high marketing spending in this quarter only due to seasonal factors? Will marketing spending continue to rise in the next few quarters?
A: The trend of consumer recovery continued in 4Q22, and the company increased marketing investment to encourage consumer demand through strong promotions and subsidies, resulting in an increase in marketing expenses.
The company closely monitors the ROI of each investment, reasonably allocates resource investment, and invests in areas that achieve high-quality growth of the Pinduoduo platform.
Q: Temu's financial performance
A: Temu is still in the early stage, and its 4Q22 performance has a small impact on the financial report. In terms of financial accounting, Temu will be counted as a 3P model.
To enter different markets, it is necessary to better understand consumer needs to provide a better consumer experience. In the future, exploratory initiatives will be gradually launched to observe how to better meet market demand. For the company, the most important thing is to realize international development through Temu.
Currently, it is not financially driven, and financial performance only reflects performance results. Will continue to observe different investment opportunities and maintain high ROI standards. Q: The growth rate of the community group buying industry has slowed down. What is the current situation of Duo Duo Mai Cai and its future strategy - expanding or reducing costs to increase efficiency?
A: Pinduoduo was founded with agricultural products, and agriculture is one of the company's long-term strategies. Through Duo Duo Mai Cai, we enhance the efficiency of agricultural product circulation and efficiently match local products and demand.
In the process of Duo Duo Mai Cai exerting its agricultural characteristics and creating unique value, it plays an important role. Duo Duo Mai Cai demonstrates the enormous value brought by the efficiency improvement of the supply chain in diversified selection of agricultural products, delivery efficiency, and user experience. At the same time, it also creates huge social value. For example, the Duo Duo Mai Cai Warm Winter Action helps off-season unsold agricultural products to connect directly with consumers, and teams from various provinces purchase and match local consumers in the fields.
As the company's investment in agriculture is still in its early stages, there are still many areas for improvement through technology, and the services provided by Duo Duo Mai Cai still need to be further optimized. Therefore, we will continue to invest in the long term to create more consumer value.
Q: The profit margin of Q4 2022 compared to the previous two quarters has declined. Q4 is typically the peak season for e-commerce. Does this mean that the company is moving towards growth?
A: We are still in the early stages of development, and there is still much room for improvement in many areas to optimize the user experience. We will continue to increase investment in key areas (agriculture and manufacturing) to use technology to assist agriculture and manufacturing to achieve better development.
Currently, profitability is not the primary goal. We will prudently approach all investments, rigorously evaluate ROI, and consider whether they can help the company achieve long-term, high-quality development. If we encounter good investment opportunities, we will firmly invest.
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