The first report card after the "100-billion yuan reduction and exemption" initiative, Pinduoduo is determined to reshape the e-commerce ecosystem.
On March 20th, Pinduoduo released its financial report for the fourth quarter and the full - year of 2024. The report shows that Pinduoduo achieved a revenue of 393.84 billion yuan in 2024, a year - on - year increase of 59%. The net profit attributable to common shareholders was 122.34 billion yuan, a year - on - year increase of 80%.
In the fourth quarter, Pinduoduo achieved a revenue of 110.61 billion yuan, a year - on - year increase of 24%. Previously, Bloomberg analysts unanimously expected its revenue in this quarter to reach 116.03 billion yuan. Compared with the 24% revenue growth in this quarter, its single - quarter growth rate had previously exceeded 100%.
The trend of slowing growth has been evident since the second quarter of last year. Meanwhile, Pinduoduo has continuously increased its investment in platform ecosystem construction and launched a number of merchant support and subsidy policies. In August last year, Pinduoduo launched the "10 - billion yuan fee waiver" plan, waiving 10 billion yuan in transaction fees for high - quality merchants, and continuously improving the business environment.
Up to now, Pinduoduo's own growth has been somewhat dragged down. However, in the second quarter of last year, Chen Lei, Chairman and Co - CEO of Pinduoduo Group, once said that improving the ecosystem construction is not an overnight achievement, and the management is prepared to sacrifice short - term profits for long - term investment. At the earnings conference after the release of this quarter's financial report, Chen Lei mentioned again that investments in the ecosystem, such as the 10 - billion - yuan fee waiver plan and logistics support in remote areas, have affected the short - term financial situation. However, the company's investment commitment remains firm, believing that it will bring long - term returns.
Its platform ecosystem is also showing high - quality development characteristics different from short - term growth - the number of new merchants and new products has maintained high - level growth, and merchants from multiple agricultural production areas and small towns with industrial characteristics have flocked in, further improving the product quality.
Supporting merchants and improving the platform environment is undoubtedly a long - cycle task that is difficult to yield immediate performance feedback. Once merchants can achieve real quality improvement and efficiency enhancement, the related products, consumers, and the entire industrial chain will all move towards a positive cycle, thereby promoting the reshaping of the entire e - commerce retail industry ecosystem.
01
Protecting merchants' rights is protecting users' interests
At the beginning of March this year, Pinduoduo's Merchant Protection Council convened a symposium with dozens of merchants. The main content was to understand merchants' business needs and establish a regular communication mechanism. The merchant representatives attending the meeting covered multiple categories such as fresh produce, alcohol, daily necessities, and sports goods. After this symposium, Pinduoduo launched four upgraded measures such as "establishing a regular communication mechanism" and "launching a warning function for illegal business operations" to further improve the protection of merchants' rights.
The "Merchant Protection Council" is the "Merchants' Rights Protection Committee" established by Pinduoduo in January this year, aiming to comprehensively collect merchants' feedback and improve the merchant service mechanism. Currently, each team of this organization is coordinated by Zhao Jiazhen, Executive Director and Co - CEO of Pinduoduo Group. Since its establishment, it has successively launched a number of measures such as "early warning for abnormal orders", "early warning for low - price risks", "optimizing the refund - only policy", and "promoting merchants' net transactions".
A series of actions can be regarded as a continuation of Pinduoduo's high - quality development strategy. Since the launch of the "10 - billion - yuan fee waiver" plan in the second half of last year, Pinduoduo has successively introduced a series of support policies such as the "E - commerce Goes West" and the "10 - billion - yuan Support Plan for High - quality Merchants". The measures of the Merchant Protection Council this year focus on the governance of the business environment within the platform.
Compared with before, a significant difference on the Pinduoduo platform currently is that the refund - only process has been appropriately relaxed. For example, the platform no longer actively intervenes in the refund - only requests of high - quality merchants, and the recognition rate of orders from malicious users has been improved through technological upgrades.
Initially, the refund - only policy was specifically set by e - commerce platforms to ensure users' consumption experience. However, later, it gradually gave rise to malicious behaviors such as "free - riders" and "coupon - hunters", making this policy a controversial one in the e - commerce platform. Merchants who bear the risks in this rule often have to cut costs in various links such as R & D, procurement, production, sales, and after - sales in the face of the erosion of profits by malicious behaviors. Eventually, the products or services in the hands of consumers are "devalued".
Now, with the platform's upgrade and optimization measures, the balance of rights has returned to a neutral position between merchants and users.
It is reported that before the Merchant Protection Council held the symposium, it distributed tens of thousands of online questionnaires to platform merchants to understand the effectiveness of measures such as optimizing the refund - only policy. The survey results show that 73% of merchants think that the platform's measure of optimizing the "refund - only" policy is "very useful", 82% of merchants think that the platform's measures to improve the protection of merchants' rights are "quite useful", and more than 60% of merchants say that the new measures to promote merchants' net transactions are "very useful".
A series of governance measures seem to tilt the platform rules towards merchants' rights. In fact, they are guiding merchants, users, and the platform to move towards a positive cycle - the platform helps merchants improve quality and efficiency, merchants release their potential to launch high - quality products, users get high - quality experiences and form long - term repeat purchases, and the platform thus consolidates its traffic advantage and achieves sustainable growth.
02
Small industrial towns find more orders on Pinduoduo
In addition to optimizing platform rules and protecting merchants' rights internally, and supporting merchants externally to guide product and industrial upgrades, Pinduoduo emphasizes real - money investment.
As a mainstream e - commerce platform, Pinduoduo has a large user base. The platform has first - hand data to grasp consumer demand and trends and has the channel function to connect the supply and demand sides. In the past year, Pinduoduo has been leveraging this platform advantage to further help merchants expand their growth space through forms such as fee waivers, traffic tilts, and consumer voucher subsidies, and guide the small industrial towns behind many merchants to find new paths for upgrading.
Dingji in Lu'an City, Anhui Province, is a well - known wedding dress town in China. In Suzhou, which occupies 70% of the domestic wedding dress market, bosses from Dingji control the main production capacity. With the rise of retail e - commerce, a large number of people from Dingji have returned to their hometown to open online stores. They experienced the explosive growth stage of Pinduoduo, and their wedding dress business quickly reached a scale of millions of yuan. However, in recent years, they have been trapped in the dilemma of soaring advertising costs and cut - throat price competition.
Since 2017, a group of people from Dingji have returned from Suzhou to their hometown to produce wedding dresses
Wang Chuan, a merchant in Dingji, mentioned that the return rate has been increasing year by year. "Now users have higher requirements and are used to buying multiple pieces at once and only choosing one after trying them on." His peer, Zha Lanru, has also experienced profit challenges in the "price war".
The wedding dress industry in Dingji, which rose along with the e - commerce express train, is also facing the dilemma of homogenization. Previously, there were more than 120 auxiliary material merchants in the local area. All kinds of fabrics and auxiliary materials needed to make a wedding dress could be bought in the town. In the eyes of local people, one could set up a wedding dress factory by buying a sewing machine and calling a few relatives.
Facing such an environment, many merchants began to adjust their business strategies. Zha Lanru started selling better - quality wedding - reception dresses by improving the fabric and workmanship. However, the upfront investment for this kind of improvement was still a considerable expense after a period of trough.
Pinduoduo's new policy timely provided transformation support for Zha Lanru. In August last year, Pinduoduo successively launched a series of fee waiver plans under the "10 - billion - yuan fee waiver" initiative, focusing on supporting high - quality merchants in industrial belts like Zha Lanru.
Specifically, for example, in the "refund of promotion service fees" measure, Pinduoduo saves billions of yuan in promotion costs for merchants every year; the "E - commerce Goes West" plan waives the logistics transfer fees for orders in remote areas; the "10 - billion - yuan subsidy" channel has launched "10 - billion - yuan consumer vouchers" and "super - doubled subsidies" to subsidize "new - quality supplies".
According to Zha Lanru's estimate, Pinduoduo will save her 30,000 - 40,000 yuan every year just from the waiver of technical service fees. With the support of the platform, Zha Lanru upgraded the fabric of the wedding - reception dresses from the previous 120 - 130 - yuan - per - roll fabric to a 200 - yuan - per - roll fabric. The unit price of the corresponding dresses has increased by nearly 50 yuan, and the return rate has decreased significantly.
Now, the workers in Zha Lanru's factory have a monthly income of 7,000 - 8,000 yuan, which can almost double during the peak season. More "wedding dress workers" in Dingji are returning home. Data shows that currently, the number of employees in the wedding dress industry in Dingji has reached 15,000, accounting for more than 40% of the local permanent population.
Currently, Zha Lanru is planning to try more original wedding dresses on Pinduoduo. Compared with the investment of hundreds of thousands of yuan in fabric, the R & D investment for a single - style wedding dress is only about 1,000 yuan, which is more operable. Coupled with the waived advertising and other fees by Pinduoduo, he estimates that the investment in original wedding dresses is only in the early R & D and production stages.
"After the improved wedding - reception dresses became popular on Pinduoduo, we have more confidence to make bolder attempts in styles," Zha Lanru said.
By improving the fabric and workmanship, Zha Lanru operates mid - to high - end wedding - reception dresses on Pinduoduo
It can be predicted that his attempt will drive many local peers to join the transformation towards differentiation and high - quality.
The wedding dress town is a microcosm of Pinduoduo's continuous efforts in platform ecosystem and industrial depth. Across the country, there are many small towns such as Huidong (the "women's shoe town") and Rong'an (the "kumquat town"), jointly witnessing the transformation results brought about by Pinduoduo's support for merchants.
A report from the University of Chinese Academy of Social Sciences shows that the number of merchants on the Pinduoduo platform has reached 14.2 million, and it has created a total of 55.321 million jobs in China.
When referring to "new - quality supplies", Zhao Jiazhen mentioned at this earnings conference, "We can see that there is indeed a certain degree of homogeneous competition in some industrial chains. Long - term homogeneous supply will continuously compress merchants' profits, and the innovation momentum and investment intensity will also be greatly suppressed."
Encouraging merchants to innovate products and technologies through forms such as fee waivers not only helps merchants improve their profitability but also enhances users' consumption experience and helps industrial belts open up market space.
03
Reducing the burden on merchants is accumulating strength for the platform
At the earnings conference, Chairman Chen Lei also said that in 2025, Pinduoduo will continue to implement the high - quality development strategy with the "nail - driving spirit", leverage the platform's digital advantages, expand the scale of the upward flow of "new - quality supplies", continuously benefit consumers' better lives, and strive to build a win - win ecosystem for users, merchants, and the platform.
This shows that the management's determination to improve the ecosystem is not affected by the short - term financial situation.
Looking back on the past few years, the entire industry was once trapped in the vicious circle of low - price competition. The low - price strategy gave rise to a rapidly expanding market, but in the process of blind pursuit of growth, some nutrients were sacrificed. Merchants' profits were diluted by low prices, and they were unable to invest in R & D and production. Although this young market seemed to grow rapidly on the surface, it actually had underlying problems.
Now, Pinduoduo's firm investment in supporting merchants with real money is a thorough cleanup before the symptoms become prominent. It solves merchants' operational problems from multiple aspects such as promotion, traffic, and rights protection, so that they can free up energy to focus on their main business and form a positive interaction with consumers.
In the short term, this move may reduce Pinduoduo's own platform revenue and even increase its capital expenditure. However, once merchants achieve order growth, reasonable profits, and higher efficiency, they can achieve long - term development, and in turn, create stable revenue for the platform. In the long run, the platform's growth will be healthier and more sustainable.
Actually, after the entire industry has reached the ceiling of incremental growth, the retail e - commerce industry has entered the stage of stock competition. From the landmark inter - connectivity during the Double 11 shopping festival last year to the year - long merchant support and subsidy policies, it is not difficult to find that e - commerce platforms have realized again that not only do merchants rely on the platform for growth, but the platform's own development also depends on the development of merchants.
In this process, Pinduoduo's high - quality development strategy is expected to open up a new growth path with a gentle slope but long - term effectiveness, promoting the entire e - commerce industry to complete the ecological reshaping. As Chen Lei said at the earnings conference: "In 2024, we focused on promoting the sustainable growth of the Pinduoduo platform ecosystem and the broader supply chain. Through innovation in platform operations and industry support policies, we continuously promoted the high - quality development strategy, aiming to benefit the entire e - commerce ecosystem."