Pinduoduo (拼多多) first filed a massive USD 1.6 billion IPO on the US stock market, one of the biggest IPOs in 2018. For the first time, the company released its first shareholder letter and disclosed its 2018 fiscal year financial results.
According to iYiou, Pinduoduo’s CEO, HUANG Wei (黄峥), released the company’s annual fiscal year results where it yielded healthy growth across key financial figures. Its revenue reached CNY 131.2 billion, a YOY increase of 652.26%; GMV reached CNY 471.6 billion, a YOY increase of 234%; the number of active buyers reached 418.5 million, a YOY increase of 70.96%.
The Chinese e-commerce company also suffered a CNY 102.17 billion net loss, a YOY increase of 1845.69%. Regarding its losses, HUANG commented in his address that the company would actively seek investment opportunities with long term benefits to company value even if it undergoes significant short-term expenses.
These results were released simultaneously with HUANG’s first shareholder letter where he gave his two cents on new e-commerce characteristics, the current competitive situation, and the company’s future strategy.
Unlike traditional retail, new e-commerce tries to understand the psychology behind what makes people click. HUANG revealed that the company’s logistics electronic system designed to fight the stagnant development of the logistics industry became the second largest domestically and internationally. To eliminate associated costs and the middleman, Pinduoduo “ships products directly from manufacturers.”
Pinduoduo's been met with criticism has been questioned in the past for becoming listed less than four years after its establishment. As competition is also fierce, HUANG mentioned that whether a business is sustainable depends upon the following: benefit to consumers, workers, value to creators, how can it create “irreplaceable value,” and how it can fulfill its social responsibility.
In the future, HUANG emphasized that the company will adhere to the following strategies: customer orientation, creative solutions, protecting intellectual property rights, helping those less fortunate, long-term corporate value, strengthening its organization towards a more inclusive, transparent and international public institution.
In Apr 2017, Pinduoduo's valuation was USD 1.5 billion. After Tencent’s investment, it jumped to USD 15 billion.
Pinduoduo focuses on relatively few bestsellers desired by buyers while Alibaba focuses more on product numbers. Compared to all Chinese e-commerce apps, Pinduoduo also flaunts the best retention rate (7 days after app installations). Most of Pinduoduo’s users are from third-tier cities and are also less educated than Alibaba owned Taobao. To compete with Pinduoduo, Alibaba released a discount app (Taobao Tejiaban) for shoppers in rural areas and smaller cities.
According to Investor Place, Pinduoduo may “slow Alibaba’s revenue growth and impact the stock” by “putting pressure on its margins.”
Currently, Alibaba, JD.com, and Pinduoduo dominate in e-commerce sales in China occupying 58.2%, 16.3%, and 5.2% of sales share respectively.
Pinduoduo recently launched its poverty alleviation project to support agriculture to which its speculated to be a win-win project.