This paper is a special research on agricultural digitization. Through in-depth research on the industry, it also discusses the development trend and investment logic of pinduoduo agricultural sector, the core target.
In August 2021, pinduoduo announced the establishment of the "ten billion agricultural research" project, continued to promote the universal benefit of agricultural science and technology, and invested all the profits in the second and third quarters into the project. Chen Lei said that the profits in the fourth quarter will also be used in the field of agricultural research and technology, and continue to deepen pinduoduo's efforts in agricultural digitization, so as to promote more agricultural production areas and farmers directly connected to the digital economy. At the fourth quarter financial report meeting, Chen Lei also repeatedly mentioned the importance of agriculture. It can be seen that pinduoduo has promoted the development of agriculture to the most important strategic height. Agriculture is the ballast of China's economy. After realizing the historical task of comprehensively eradicating poverty, the transformation of agricultural digitization has become a new policy hotspot. Agriculture is the basic market of pinduoduo. Facing the bottleneck period of peak growth of new users, pinduoduo adjusted its strategic focus and committed to building agriculture into an important engine to improve performance. Based on this, this report is committed to solving the following problems: how big is the market space for agricultural digital transformation? Why should pinduoduo focus on agriculture? What advantages has pinduoduo accumulated in agriculture that makes it a pioneer in the e-commerce industry to participate in the digital transformation of agriculture? How much valuation space can you get in agriculture by gathering more people in agriculture?
\u3000\u30001. Agriculture is the ballast of economy. There is a large space for digital transformation at the three ends of production, circulation and sales. At the same time, agricultural digital transformation has favorable conditions in policy, capital, logistics and other aspects.
\u3000\u3000. The market opportunity of agricultural digital transformation involves the whole industrial chain: at the production end, agriculture is in the stage of pursuing large output value from 2.0 to 3.0 for efficiency and Shenzhen Agricultural Products Group Co.Ltd(000061) quality. At the initial stage of transformation, ① the phenomenon of "relying on nature" is serious, ② the agricultural use of chemical fertilizer per unit area is large, and ③ the three rates (resource utilization rate, land output rate and labor productivity) still need to be improved. At the circulation end, Shenzhen Agricultural Products Group Co.Ltd(000061) reach consumers need to go through many redundant links, Shenzhen Agricultural Products Group Co.Ltd(000061) circulation cost is high, loss is large, efficiency is low, Shenzhen Agricultural Products Group Co.Ltd(000061) special logistics construction is insufficient. At the sales end, Shenzhen Agricultural Products Group Co.Ltd(000061) online penetration is low.
\u3000\u3000II. There are many favorable conditions for agricultural digital transformation: ① Shenzhen Agricultural Products Group Co.Ltd(000061) uplink infrastructure is improving day by day, providing support for farmers to participate in Internet e-commerce and Shenzhen Agricultural Products Group Co.Ltd(000061) go out of the production area from three aspects of network, logistics and capital. ② The epidemic has cultivated consumers' habit of purchasing fresh Shenzhen Agricultural Products Group Co.Ltd(000061) online, which is still maintained in the post epidemic era and the Shenzhen Agricultural Products Group Co.Ltd(000061) upward acceleration. ③ Under the background of Rural Revitalization and agricultural modernization, agricultural digitization stands on the "tuyere of policy". The state has formulated the goal and timeline for the development of agricultural digitization, and the development prospect of agricultural digitization is clear. ④ Investment in the agricultural food industry chain tends to shift upstream, and agricultural science and technology has become a hot spot of investment.
III. by 2025, the scale of agricultural digital economy will reach 1.26 trillion and Shenzhen Agricultural Products Group Co.Ltd(000061) online retail sales will reach 1.36 trillion.
\u3000\u3000 2. Pinduoduo builds a moat in all links of the agricultural industrial chain. Agriculture is a growth point that pinduoduo must and can grasp.
I. why does pinduoduo focus on agriculture? Focusing on agriculture is a natural choice for pinduoduo to deal with the bottleneck of user growth and achieve sustainable growth. In Q4 of 2021, the number of active users of pinduoduo increased by only 0.2% month on month, and the growth of users was close to the ceiling. This also means that pinduoduo's model of relying on the growth of users to drive the growth of Gmv has come to an end. The growth engine needs to transform from "raising users" to "raising ARPU". The improvement of ARPU depends on the improvement of customer unit price and repurchase frequency. Pinduoduo has the characteristics of high cost performance and sinking the market. In addition, Jingdong Taobao has accumulated a deep moat in high customer unit price categories. Pinduoduo can only start with repurchase frequency. Pinduoduo has accumulated many advantages in agriculture, which makes agriculture a natural choice for pinduoduo.
\u3000\u3000II. What advantages has pinduoduo accumulated in agriculture that makes it a pioneer in the e-commerce industry to participate in the digital transformation of agriculture? Gene theory: pinduoduo's predecessor, pinhaohuo, is a platform focusing on fresh fruits, with deep agricultural genes. From Huang Zheng, the founder, to Chen Lei, the current CEO, are all technical believers from engineers, hoping to benefit agricultural development with digital technology. Strength theory: pinduoduo's exploration of agriculture is roughly divided into four stages: ① like most Shenzhen Agricultural Products Group Co.Ltd(000061) e-commerce, pinduoduo initially focused on the circulation field in the transformation of the agricultural industrial chain. Reduce costs and increase efficiency for Shenzhen Agricultural Products Group Co.Ltd(000061) circulation by reducing circulation links and intelligently matching supply and demand. ② We will further consolidate the advantages of people and goods and further promote the standardization of agriculture. ③ The epidemic has led to a surge in the demand of residents to buy fresh food online, but it has also exposed the defect of insufficient construction of Shenzhen Agricultural Products Group Co.Ltd(000061) special logistics of mainstream e-commerce. It has been more than 20 years. In August, it launched the "buy more vegetables" business, which has entered the battlefield of community group purchase in full swing. It also takes this business as a starting point to speed up the construction of Shenzhen Agricultural Products Group Co.Ltd(000061) special logistics. ④ The establishment of the "10 billion agricultural research" project is the starting point for pinduoduo to expand its production side technology.
Conclusion: we believe that agriculture is the ballast of economy, and there is a large space for digital transformation at the three ends of production, circulation and sales. Focusing on agriculture is the inevitable choice to build a deeper moat and explore long-term value. Pinduoduo will take advantage of the "east wind" of agricultural digital transformation. With many advantages accumulated in agriculture, it is expected to continuously improve the market share of Shenzhen Agricultural Products Group Co.Ltd(000061) online retail and achieve Shenzhen Agricultural Products Group Co.Ltd(000061) gmv of 818.1 billion in 2025.
