Pinduoduo's first financial report after the "100 billion yuan reduction": Deceleration is not the end.

The story of Pinduoduo's "deceleration" is still unfolding.

On March 20th, Pinduoduo released its financial report for the fourth quarter and the full - year of 2024, ending December 31st. The data shows that Pinduoduo's revenue in 2024 reached 393.8 billion yuan, a 59% increase from 247.6 billion yuan in the same period of the previous year; the net profit was 112.4 billion yuan, an 87% increase from 60 billion yuan in the previous year.

In addition, in the fourth quarter of 2024, Pinduoduo achieved a revenue of 110.6 billion yuan, a 24% year - on - year increase, which was lower than the consensus forecast of Bloomberg. The net profit attributable to common shareholders was 27.4 billion yuan, an 18% year - on - year increase. The growth rates of both revenue and profit slowed down significantly.

Breaking down the revenue, in the fourth quarter, Pinduoduo's revenue from online marketing services and other services was 57 billion yuan, a 17% increase from 48.7 billion yuan in the same period of 2023; the revenue from transaction services was 53.6 billion yuan, a 33% increase from 40.2 billion yuan in the same period of 2023.

The online marketing services and other services basically met expectations, but the revenue from transaction services fell short of expectations. The Bloomberg consensus forecast was about 59.3 billion yuan, a difference of nearly 6 billion yuan from the actual figure.

Due to factors such as increased seasonal demand, holiday promotions like Double 11, and year - end consumption habits, the fourth quarter of each year, as the peak season for e - commerce, is often the period when e - commerce platforms achieve the best performance.

Therefore, for Pinduoduo, when comparing its own performance, the growth rate in the fourth quarter, which was the second - lowest in history and only higher than that in the first quarter of 2022, can hardly be considered outstanding.

However, the prediction of the slowdown in growth was made as early as the second quarter of 2024.

At that time, Chen Lei, the Chairman and Co - CEO of Pinduoduo Group, said in a conference call that the platform had already reached a considerable scale. Improving the ecological construction was not an overnight task. The management had reached a consensus and was prepared to sacrifice short - term profits for long - term investment.

For this reason, Pinduoduo successively launched a number of major initiatives such as the "Hundred - Billion Reduction Program", the "E - commerce Goes West" campaign, and the "New - Quality Merchant Support Plan". It also delved into major agricultural and pastoral production areas and industrial clusters across the country, supported a group of new - quality merchants and brands, and explored new models for industrial transformation and upgrading.

As we all know, Pinduoduo started to experience a slowdown in growth in the third quarter of last year, and the situation in the fourth quarter was just a partial consequence of these long - term investments.

Similar to the third quarter, the reason for the large gap between the transaction service revenue in the fourth quarter and the market expectation was that in Pinduoduo's revenue structure, various technical service fees were "reduced by hundreds of billions". The real - money reduction and subsidy reflected in the performance led to the disappearance of the growth rate.

"In the past few quarters, our firm investment in ecological construction has helped the platform better cope with consumption changes, industrial transformation, and industry competition, leading the e - commerce industry into a new stage of high - quality development."

At this conference call, Chen Lei, the Chairman and Co - CEO of Pinduoduo Group, 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 "new - quality supply" going upstream, continuously benefit consumers' better lives, and strive to build a win - win ecosystem for users, merchants, and the platform.

01

The Era of "Intensive Cultivation" in E - commerce

After more than two decades of development in the e - commerce industry, it is a definite fact that the era of high - speed incremental growth is gradually coming to an end, and stock competition has emerged as a major industry issue. After bidding farewell to extensive development, "intensive cultivation" has become the key word for e - commerce platforms to ride the waves.

Intensive cultivation means that the competition is no longer focused on "short - term profit" indicators such as traffic competition, GMV growth, and revenue growth rate. Instead, more emphasis is placed on continuous efforts in platform ecosystem and industrial depth.

Facing the competitive situation in the e - commerce industry, Pinduoduo's response - high - quality development - has remained unchanged from beginning to end.

Whether it was the fierce "price" siege launched by many competitors at the beginning of last year or the more multi - dimensional competition battles after the price war ended, high - quality development can be regarded as Pinduoduo's solution to "defuse every move".

In the past nearly a year, the tentacles of high - quality development have been implemented in various aspects of the industry, such as platform operation, merchant management, industrial transformation, and logistics upgrading, through multiple measures such as reduction, support, and governance.

At the conference call, Pinduoduo's executives also said: The company noticed that in some industries, some merchants were facing homogeneous competition, which squeezed corporate profits and damaged innovation and investment. As a platform connecting manufacturers, merchants, and consumers, the company launched a series of policies to support high - quality suppliers. By reducing costs and simplifying operations, it encouraged merchants to invest more in products and services, leading the platform into a new stage of quality - driven growth.

"With the development and modernization of the supply chain, more high - quality merchants and products are emerging, providing consumers with more choices, higher quality, and a smoother shopping experience. This brings tangible benefits to consumers and creates a healthy ecosystem that benefits all stakeholders in the long run."

Previously, in interviews with many merchants, when asked what they hoped the platform could do, the core of their answers almost always revolved around the four words "cost reduction and efficiency improvement".

In the past, Pinduoduo enabled countless merchants to settle in with low costs through measures such as the "Hundred - Billion Subsidy", abundant traffic, low thresholds for opening stores, and "fool - proof" operations, allowing them to earn their first pot of gold and subsequent profits.

For example, the kumquats from Rong'an, Guangxi, opened up the national market through Pinduoduo. Xiao Youju was one of the beneficiaries. In 2019, a customer's words "At least 40,000 to 50,000 catties of Rong'an kumquats can be sold on Pinduoduo every day" inspired her to start her business on Pinduoduo. The store's sales volume quickly increased from zero to 6,000 - 8,000 orders per day.

Later, on Pinduoduo, Xiao Youju discovered the opportunity of the third - generation variety of Rong'an kumquats, the crispy honey kumquats. According to her, in 2022, she could occasionally collect one or two thousand catties of crispy honey kumquats, which were almost sold out instantly on Pinduoduo. Later, the daily orders ranged from one or two hundred to six or seven hundred, and the sales volume of crispy honey kumquats gradually stabilized.

Later, Xiao Youju focused on crispy honey kumquats. Whenever she was free, she would search for fruits all over the mountains. She even drove her car directly to the orchard and said, "I'll pay in cash on the spot. I'll take as much as you have." In 2023, the daily order volume of her Pinduoduo store could reach over ten thousand, and there were more than 1,500 orders for crispy honey kumquats alone.

It should be noted that the price of crispy honey kumquats is not low, about five times that of ordinary kumquats, but it couldn't stop the 20% repurchase rate on Pinduoduo. Thanks to the platform's "Hundred - Billion Subsidy" and traffic support, the price of four - jin crispy honey kumquats, which originally cost 130 - 140 yuan, was nearly 40 yuan cheaper on Pinduoduo.

This made it easy for Xiao Youju and others to do business. The team size expanded to more than forty people, and they also had a new warehouse covering an area of more than two thousand square meters.

Zha Lanru, a native of Lu'an, Anhui, who returned to his hometown from Suzhou after ten years of hard work to start a new business, opened his first wedding dress store on Pinduoduo in 2019. One year later, his business boomed, and the annual sales volume quickly reached five million. In his opinion, compared with other platforms, Pinduoduo has lower operating costs, which is an important reason for his successful transformation.

On the one hand, Pinduoduo's traffic shortens the startup period of the store compared with other platforms. A newly launched toast dress can generate sales on the same day. On the other hand, Pinduoduo has no annual fees, and the advertising cost is also lower.

With the increasing number of e - commerce players under the certainty of growth, when the business becomes crowded, an inescapable truth is that the cost rises while the efficiency may decline.

The "Hundred - Billion Reduction Program" of Pinduoduo has alleviated the cost pain points of merchants to a certain extent. Official data shows that since last year, the "Hundred - Billion Reduction Program" has helped more than ten million merchants improve quality and efficiency. Just the "refund of promotion service fees" has reduced the annual cost of merchants by billions of yuan.

The "E - commerce Goes West" campaign of Pinduoduo waives the logistics transfer fees in the remote western regions, and the platform bears all the costs. It not only realizes the e - commerce inclusion of "free shipping across the board" in remote regions such as Tibet and Qinghai but also increases the efficiency while reducing the cost for merchants, opening up new business opportunities. The sales volume of many merchants has increased by dozens of percentage points.

In addition to considering the needs of merchants in terms of real - money support and business growth, in order to continuously optimize the business environment for merchants, at the beginning of January this year, Pinduoduo established the "Merchant Rights Protection Committee" (hereinafter referred to as the "MRPC").

The "MRPC" is led by Zhao Jiazhen himself. It coordinates various teams on the platform, comprehensively studies the needs of merchants, collects feedback from merchants, optimizes the business experience and service mechanism for merchants, and further improves the platform's ecological construction.

At the beginning of March, just before the release of the financial report, the "MRPC" held its first merchant symposium since its establishment. Dozens of merchant representatives from various categories such as fresh produce, alcoholic beverages, daily necessities, and sports goods participated in the meeting.

It is worth mentioning that after the establishment of the "MRPC", Pinduoduo successively launched a number of new initiatives such as the "Abnormal Order Warning" and the "Low - price Risk Warning", and launched an upgraded service to promote "net merchant transactions", providing merchants with more refined data support and continuously helping merchants improve their return on investment.

The issue of "more refined data" was frequently mentioned by merchants when communicating with 36Kr Future Consumption, and now it has become a reality on the platform.

Pinduoduo empowers merchants with data to promote the differentiated development of products. Through in - depth mining and analysis of massive consumer data, merchants can accurately grasp the personalized needs of consumers and carry out targeted product innovation and optimization.

Hidden in Pinduoduo's rise is the business truth that in the e - commerce industry, the real moat lies in whether the platform can convert its profits into industrial value. In the past, the manifestation of industrial value was to make it easier for merchants to do business, while now it is to make it more profitable for them.

Although the short - term financial data is under pressure, the platform's influence demonstrated in cases such as the wedding dresses in Lu'an and the crispy honey kumquats in Guangxi is leading the e - commerce industry into a new stage of high - quality development, further verifying that only platforms that can provide an ecological soil for merchants can gain more advantages in the competition, just as roots hold on to the soil.

02

The Upward Mobility of New Industries

After thirty years of large - scale expansion, traditional industrial belts have long been trapped in the vicious circle of homogeneous competition. Especially when the e - commerce they once relied on shifted from an "incremental" to a "stock" market, it not only intensified the competition among platforms but also posed challenges for merchants on how to break through.

From a macro perspective, new economic growth requires emerging consumption and industrial support. Industrial transformation is not only necessary for individual merchants but also the source of current economic vitality.

Looking at Pinduoduo's "New - Quality Merchant Support Plan", it has invested a resource package worth 10 billion yuan to provide full - chain support in product, marketing, operation, and supply chain for new - quality merchants and brands with product and technological innovation capabilities. Through a series of reduction and support measures, it has created space for merchant and industrial innovation and promoted the upgrading of industrial belts.

Take the women's shoes in Huidong as an example.

The shoe - making history in Huidong can be traced back to the 1980s. After more than forty years, a complete industrial chain has been established. In the past, due to the lack of mainstream brands, the women's shoes in Huidong had low popularity, and consumers had limited knowledge of Huidong's shoe - making industry. The industry was even on the verge of stagnation due to market changes.

However, the popularity of a pair of Birkenstock - style shoes changed the fate of Huidong's women's shoes.

Last winter, Pinduoduo collaborated with local merchants. Relying on the platform's data analysis capabilities, they developed fleece - lined Birkenstock - style shoes that were more popular among female users and transformed the traditional women's shoe supply chain. A medium - sized shoe factory could achieve a daily shipment of 15,000 pairs, successfully embarking on a transformation path of "new - quality supply" and saving the jobs of hundreds of thousands of industrial workers.

Fu Qiu was one of the early merchants selling Birkenstock - style shoes on Pinduoduo. Since the fleece - lined Birkenstock - style shoes were launched last winter, he has sold nearly 30,000 pairs in total. A local shoe factory has also emerged, producing about 1.4 million pairs of Birkenstock - style shoes a year.

Under the "New - Quality Merchant Support Plan", Fu Qiu can save more than 30 yuan in marketing costs per pair of shoes compared with other platforms. In his words, the platform has considerable natural traffic and low marketing costs, and the saved costs have become an important competitive advantage and innovation driver for them.

It is reported that the pattern - making masters in Fu Qiu's team have designed more than 50 versions of Birkenstock - style shoes. In addition to designing according to the current fashion trends and elements, they also launch thick - soled Birkenstock - style shoes for groups such as short - statured people to meet the needs of a wider range of consumers.

Now, Fu Qiu has built his own factory, bringing employment opportunities to local people with monthly salaries ranging from 8,000 yuan to over 10,000 yuan