Simon Cai: Thank you, Brian. Since 2018, we have been monetizing the freight yellow page service through the introduction of membership system. Members enjoy more privileges than non-paying users, including the ability to post orders. Currently, there are two membership tiers. The first tier members paying an annual fee of RMB688, allowing them to post up to 100 orders per year, primarily serving mid-to-low frequency direct shippers. The second tier membership is designed for high frequency shippers who pay an annual fee of RMB1,688, enabling them to post up to 1,688 orders per year. The platform occasionally introduces membership benefits to ensure that members receive additional order posting rights. From an operational synergy perspective for high frequency shippers, FTA has achieved a high level of user penetration compared to the traditional model where shippers had to pay at least RMB10,000 for logistic parks fee, rental fee.
FTA has gradually replaced logistics parks and the cost per shipment is reduced to less than RMB1 — $1 per order. Membership fees are significantly cheaper compared to traditional logistic park booth rental fees for this user segment. FTA mainly monetizes through cross-selling, value-added services and commissions, increasing the revenue scale of our other business. For mid-to-low frequency direct shippers, new shipper users entering the platform are mostly direct shippers. Hence, the number of 688 members has been steadily growing over the past few quarters. And looking at the market size of millions of small and medium-sized business owners in China, there’s still considerable growth potential. However, we observed that the number of orders corresponding to 688 members exceed the usage needs of some low frequency users.
And based on this, our operation team are actively devising product strategies and attempt to develop packages that are more suitable for low frequency shippers. Additionally, while the ARPU for direct shipper members appears relatively low, their freight rates are higher and they exhibit better fulfillment rates, offering greater monetization potential through commissions and cross-selling value-added services. In the long-term, direct shippers are not only the main driving force for future membership fee growth, but also present opportunities for growth in other business lines.
Brian Gong: Thank you.
Operator: The next question comes from Jiulu Li with CICC. Please go ahead.
Jiulu Li: [Foreign Language] Thanks management for taking my questions. We noticed that the penetration rate of the commission model in the third quarter was around 58%, slightly lower than 59% in the previous quarter. So what are the main reasons for this? Thanks.
Simon Cai: Thank you. That’s a good question. In the past quarter, revenues from commission model reached around RMB600 million, increasing by over 54% year-over-year. This strong growth was primarily due to the overall increase in order volume and continued improvement in commission rates. Operationally, we have been primarily focused on scaling the platform as a whole with no additional city extension or significant adjustment to our commission strategy. Nevertheless, we have conducted stress tests with higher commission rates in certain cities to prepare for potential future increase in commission rates and penetration rates. The penetration rate of a particular transaction type is defined as the number of commissioned orders for the transaction divided by the number of total order volume.
At the time of our IPO back in 2021, our short-haul transaction commission business was very small. Hence, it was classified under the value-added services line of our revenue. The transaction commission revenue line does not include short-haul contribution. So when calculating penetration rate, the numerator excludes fulfilled short-haul orders, while the denominator includes both long-haul and short-haul orders. In the past quarter, the penetration rate was approximately 58%, showing a slight decrease compared to the previous quarter, primarily due to the fast increase of short-haul fulfilled orders under our Shengsheng brand. The commission penetration rate for long-haul orders remained stable quarter-over-quarter. Looking ahead, our focus will remain on increasing the penetration rate of our commission model and adjusting commission rates.
Both are critical metrics for our core business. We will achieve this through operational optimization and market expansion to ensure sustained rapid growth.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Mao Mao: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance or TPG Investor Relations. Our contact information for IR in both China and the US can be found in today’s press release. Have a good day.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
