On August 26th, Pinduoduo released its financial report for the second quarter of 2024, which ended on June 30th. Benefiting from the stabilization and recovery of the macroeconomy and the continuous improvement of online retail, Pinduoduo's performance was robust, with revenue reaching 97.1 billion yuan for the quarter. In Q2, Pinduoduo continued to deepen the implementation of its high-quality development strategy, firmly invested in the construction of the platform ecosystem, continuously improved consumer experience and service systems, and optimized the quality and efficiency of the supply chain, further meeting the diverse consumption needs of a broader user base.
"In the first half of this year, we have continuously invested in a healthy and sustainable platform ecosystem, and have received positive feedback from both the supply and demand sides," said Zhao Jiazhen, Executive Director and Co-CEO of Pinduoduo Group. The platform has seen a continuous emergence of new consumption and new demands, with the number of new merchants and products also maintaining high growth, which has driven the agricultural production areas and industrial belts to increase production and income, improve quality and efficiency, and has further strengthened our focus on the path of high-quality development.
"In order to ensure the long-term healthy development of the platform, we will continue to improve ecological construction through a combination of 'support and governance', and will invest in a billion yuan resource package to support new quality merchants in the next year, and resolutely carry out merchant ecosystem governance," said Chen Lei, Chairman and Co-CEO of Pinduoduo Group. The platform's overall scale has reached a considerable size, and improving ecological construction is not an overnight task. The management has reached a consensus and is prepared to sacrifice short-term profits for long-term investment.
Deepening the development of high-quality strategies and continuing to provide benefits to both supply and demand sides
In the first half of this year, Pinduoduo's high-quality development strategy entered a deepening development stage. The platform continued to be guided by consumer demand, continuously increasing support for high-quality merchants and brands, and continuously upgrading logistics and after-sales service experiences, bringing benefits to both supply and demand sides. In Q2, Pinduoduo's "Agricultural Cloud Action" went deep into the fields of major agricultural production areas, promoting the out-of-village and into-the-city movement of seasonal fruits such as Xianju bayberries, Guangdong lychees, Shandong cherries, Yangshan watermelons, and Xinjiang Hami melons, and continuously promoting the brand of the place of origin through billion-yuan subsidies, "flash sales," and group purchases of tens of thousands of people. In mid-May, during the lychee season, due to the impact of weather, lychees in Guangdong, Hainan, and other production areas were greatly reduced, with varieties such as Feizixiao reducing by nearly 40% year-on-year, and market prices increased several times. Pinduoduo's "Agricultural Cloud Action" joined forces with local merchants to actively promote the local lychees from the source to the billion-yuan subsidy, and helped consumers achieve lychee freedom through large subsidies and full cold chain. In Q2, Pinduoduo's "Agricultural Cloud Action" continued to go deep into major agricultural production areas, driving local agricultural production and income increase during the 618 period.
Pinduoduo continued to adhere to the principle of simple and affordable promotions, leveraged the digital advantages of new e-commerce, and attracted more new merchants and products to directly connect with new consumption. In the first week of the promotion, the number of merchants with Pinduoduo's billion-yuan subsidy increased by more than 90% year-on-year, the number of agricultural product merchants increased by 83% year-on-year, and the number of merchants in various categories such as digital, home appliances, and beauty maintained rapid growth. In addition, Pinduoduo invested 1 billion yuan in subsidies in the first week of the promotion to help home appliances go to the countryside and replace the old with the new, driving more than 10 million users in third and fourth-tier cities to place orders, completing the renewal and upgrade of digital, home appliances, kitchen appliances, and home furnishings, and many new brands and old national goods achieved excessive growth. Taking the old national brand Skyworth as an example, this 36-year-old brand, relying on Pinduoduo's digital technology, accurately understood new market demands and achieved a breakthrough through popular refrigerators and color TVs, selling 100 million yuan in two months after the store joined the platform.
In Q2, Pinduoduo's R&D investment reached 2.9 billion yuan, a year-on-year increase of 6%, mainly due to a new round of investment in operations and R&D. Zhao Jiazhen introduced that in order to further strengthen the governance of the merchant ecosystem, the platform optimized the process of merchants joining and products going on the shelf, and actively inspected products that have been on the shelf through technical means, combined with the rules team for refined review, and cracked down on illegal cheating merchants to create a better business environment for high-quality merchants. "In the past quarter, we have become more determined on the path of high-quality development. We will continue to increase investment in ecological construction, bring more high-quality and affordable goods to consumers, and help agricultural production areas and industrial belts become golden production areas, benefiting more high-quality agricultural products, national goods, and industrial belt merchants." Zhao Jiazhen said.
"Support and governance" are both important, and we are determined to invest in long-term value
This year, while Pinduoduo deepens its high-quality development strategy, the competition in the e-commerce industry has further intensified, and the impact of global business on changes in the international environment has also increased, with new challenges coming one after another. "Looking at the performance of this quarter, our revenue growth has declined on a quarter-on-quarter basis, which also puts forward higher requirements for us," Chen Lei said. Pinduoduo's path of high-quality development will enter a new stage, and it will continue to build a healthy and sustainable platform ecosystem through "strong support" and "resolute governance." On the one hand, Pinduoduo will invest in a billion-yuan resource package to strongly support new quality merchants and new quality industrial belts with product and technological innovation capabilities, significantly reduce the transaction fees for high-quality merchants, and is expected to reduce 10 billion yuan in the next year, and continue to strengthen the positive incentives for high-quality ecological development, and comprehensively improve the quality and efficiency of the supply chain. Recently, Pinduoduo has successively launched resource position technology service fees and refundable rights for promotion software service fees for merchants. Taking technology service fees as an example, merchants can enjoy the above service fee refund rights for orders that are canceled, refunded during the activity period, and refunded after confirmation of receipt, further promoting merchants to improve quality and efficiency. On the other hand, Pinduoduo will also continue to increase investment in operations and technology, resolutely carry out platform and merchant ecosystem governance, crack down on illegal cheating merchants, promote industrial belts to remove the dross and retain the essence, continuously optimize and upgrade the supply chain, and create a more effective and healthy ecological environment for new quality merchants. Zhao Jiazhen said that in this process, sacrificing short-term profits is necessary, and the management has reached a consensus and is willing to pay a huge current price for long-term health. Profits in the next few quarters may fluctuate and rebound, but the trend of long-term profit reduction is inevitable. In the "Science and Technology Courtyard" project, hundreds of agricultural students went deep into the fields to guide farmers in using new agricultural tools. As a platform enterprise serving the vast number of consumers, Pinduoduo will continue to join hands with ecological partners, research institutions, and public welfare organizations to bear more social responsibilities. In Q2, Pinduoduo successively invested in multiple projects such as the "4th Duoduo Agricultural Research Competition," "Science and Technology Courtyard," and the "7th Duoduo Reading Month," and continued to cultivate agricultural science and technology talents and promote the popularization of knowledge and technology. In addition, the agricultural research fund established by Pinduoduo and China Agricultural University has also achieved important phased results in several projects. "With the changes in the social environment and the increasing scale of the company, we will also upgrade the company's governance structure or distribution methods to adapt to the continuously advancing and changing times, to give back more to society, agriculture and industry, to help the most ordinary people in need, and to bear more social responsibilities."
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