The growth rate of all employees has slowed down, and the pursuit of quality, stability and anti-risk ability

In the past quarter, compared with the same period last year, Pinduoduo’s revenue increased by 7%, JD.com’s revenue increased by 18%, and Alibaba’s revenue increased by 9%. Overall, although the revenue of the three companies has maintained growth, the growth rate has declined significantly. Among them, JD.com still has double-digit growth mainly relying on its own brand advantages, but the growth rate has dropped to below 20%; while the growth rate of Alibaba and Pinduoduo has fallen to less than double-digit.

Since the 2022 fiscal year (April 2021), Ali’s revenue growth has begun to slow down and has stabilized. As the high growth logic pursued by the entire industry shifts from “high speed” to “high quality”, capacity building and value creation are becoming Alibaba’s new development engine.

Pinduoduo has been adjusting its development strategy over the past period of time, focusing more on investment in R&D and agriculture, hoping to pursue a long-term, high-quality development. In the short term, this adjustment of the development direction will not see any effect, and the growth rate will also be affected to some extent.

While revenue growth has slowed, some of the three major e-commerce companies have experienced a relatively large decline in their net profit, while some have improved their profitability and some are still losing money.

Not calculated according to US GAAP, Ali’s net profit fell by 24% year-on-year in this quarter, which was lower than market expectations. Ali’s operating profit in this quarter also decreased to a large extent compared with the same period last year, mainly due to the increased investment in Taocaicai and Taobao, and the impact of the new crown pneumonia epidemic, the provision for impairment of Sun Art Retail’s assets.

In terms of Pinduoduo, the net profit was 4.2004 billion yuan, exceeding market expectations, while the net loss in the same period last year was 1.8093 billion yuan. Starting from Q2 profitability in 2021, Pinduoduo has been profitable for 4 consecutive quarters.

As for JD.com, due to continuous investment in infrastructure, technology research and development, employee compensation and benefits; support for Shanghai and other places to fight the epidemic and ensure supply; and support for partners to reduce the impact of the epidemic and transfer profits to consumers, JD.com is still at a loss, with a net loss of 3 billion yuan, while the net profit in the same period last year was 3.6 billion yuan, and the loss narrowed year-on-year.

Judging from the number of annual active buyers, Alibaba, JD.com, and Pinduoduo have all bid farewell to the era of rapid growth and entered a stable stage.

In the past quarter, Alibaba’s domestic annual active consumers exceeded 1 billion for the first time, Pinduoduo’s annual active buyers were 881.9 million, and JD.com’s active buyers were 580.5 million. In terms of quarterly net additions, Ali is still in the first place, with Pinduoduo’s net additions of 13 million, higher than JD’s 10 million.

Chen Lei, CEO of Pinduoduo, pointed out in the earnings conference call that Pinduoduo’s current focus is still on better serving the existing 880 million users. “As Pinduoduo has gradually reached the scale of its users, I don’t think people should expect us to maintain rapid growth.

In general, the three e-commerce giants have now reached a certain order of magnitude, and it is impossible to grow indefinitely. When the market density reaches a certain level, the slowdown in growth is the natural result of the market reaction.

At the same time, the epidemic has caused consumers to lack confidence in income, and the overall consumption situation is relatively sluggish. According to the data given by the Bureau of Statistics in April, the consumption power of products with high customer unit price is not strong. Even if the traffic and users are increasing, the customer unit price in April and May has decreased year-on-year.

Cost reduction and efficiency increase across the economic cycle

Judging from the three financial reports, cost reduction and efficiency enhancement have become a common survival strategy for Internet companies today, and it is also the main theme of e-commerce companies in the past year.

In the past quarter, Ali’s overall expenses fell by 30% year-on-year. Various expenditures have shrunk to varying degrees. Among them, the proportion of product development expenses in total revenue has dropped from 7% to 5%; sales and marketing expenses have dropped by nearly 2.05 billion yuan year-on-year; and equity incentive expenses have dropped by nearly 4.9 billion yuan.

Regarding cost optimization, Alibaba executives said in the earnings conference call that the group will continue to reduce costs and increase efficiency in the next year. The primary task is to improve operational efficiency and reduce costs; at the same time, ensure cash inflow and control cash balances. Specifically, at the business level, there will be cases of shutdown and transfer, and some businesses with insignificant long-term value will be shut down; according to the different nature of the business, specific targets and requirements for cost reduction and efficiency enhancement will be issued; at the group level, for the market Costs such as fees will be controlled in a relatively strict manner, and the expenditure of certain businesses may be reduced at this stage.

Pinduoduo has reduced marketing expenses by 14% year-on-year, and the proportion of marketing expenses to revenue has further reduced to 47%, compared with 59% in the same period in 2021. But R&D expenses rose 20% to a new high.

JD.com has maintained low-margin operations in the past few quarters. During the quarter, its largest proportion of expenses, fulfillment expenses and marketing expenses, increased, but research and development expenses decreased. Starting from March this year, JD.com has further adopted new cost control measures. How effective it will be will be reflected in the financial data of the next few quarters, such as financial data such as profitability and cash flow.

On the whole, the three e-commerce platforms no longer pursue the rapid growth of a single indicator, but turn to focus on the health and sustainability of the overall business growth, and enter the stage of refined operation.

Traffic game will continue, competition tends to repair internal strength

In terms of competition, the three e-commerce platforms no longer hold high, and gradually abandon the extensive traffic-based growth methods such as relying on subsidies, but shrink the front line and pay more attention to the cultivation of internal skills.

JD.com’s construction and investment in logistics and supply chain infrastructure in the past few years has given it an advantage in traversing the economic cycle and resisting environmental risks in an uncertain environment such as the epidemic. This investment will continue in the future.

As an e-commerce platform that started in the sinking market, Pinduoduo has found a differentiated route. In the past year or so, it has re-invested in the agricultural field, and has continuously invested tens of billions of profits to set up the “Ten Billion Agricultural Research” project. By emphasizing agricultural strategy, reducing marketing, reinvesting in R&D and agricultural product logistics, Pinduoduo has continued to develop its new development path.

Ali’s ability to make money has declined significantly, and it pays more attention to improving its anti-risk ability. For Ali, which has the upper hand in terms of revenue scale, profitability, and user scale, it is more important to stabilize the market and help merchants achieve growth. Under the situation of slowing growth, promote the development of businesses with certain growth space other than e-commerce. This quarter , Alibaba Cloud business achieved annual profit for the first time, and international business carried great expectations.

In addition, the three e-commerce platforms are jointly facing competition from Douyin and Kuaishou.

In March this year, Kuaishou E-commerce announced that due to the change of the cooperation agreement between the third-party e-commerce platform and Kuaishou, in order to strengthen the ecological self-construction effect, it will cut off the links of Taobao and Jingdong alliance products from March 1. To a certain extent, this has accelerated the attraction of merchants on JD.com and Ali platforms, resulting in a certain diversion effect. Kuaishou data shows that in the first quarter, Kuaishou stores contributed more than 99% to the platform’s GMV.

Facing new competition, e-commerce platforms are also constantly seeking innovation. For example, Pinduoduo is vigorously investing in short videos. Some time ago, short videos have been placed at the bottom first-level entrance, and the method of watching videos to get cash and gold coins is introduced to try to attract users and increase retention. However, the effect of drainage and conversion has not been verified. .

How to stabilize the fundamentals and continue to innovate is the question that the three major e-commerce giants continue to think about.

However, the coexistence of various forms in the retail industry also makes the industry competition continue. Behind the traffic game, the e-commerce market will be more consolidated and diversified.

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