Pinduoduo sacrifices profits for the future.

Give priority to the interests of merchants and consumers rather than the platform's short - term interests.

The slowdown in growth may have become the main theme for Pinduoduo for a long time.

On May 27, Pinduoduo released its financial report for the first quarter of 2025, ending March 31. The data shows that Pinduoduo achieved revenue of 95.7 billion yuan in the first quarter of this year, a year - on - year increase of 10%. The market had expected 101.6 billion yuan, nearly 6 billion yuan higher than the actual result.

In this quarter, Pinduoduo's operating profit was 16.1 billion yuan, a 38% decrease compared with the same period last year; the net profit attributable to common shareholders was 14.7 billion yuan, a 47% year - on - year decrease.

Specifically, in the first quarter, the revenue from online marketing services and other services was 48.7 billion yuan, a 15% increase from 42.5 billion yuan in the same period in 2024, exceeding the market expectation of 48 billion yuan; the revenue from transaction services was 47 billion yuan, a 6% increase from 44.4 billion yuan in the same period in 2024, more than 7 billion yuan less than the expected 54.23 billion yuan.

At first glance, the performance is surprising, but upon in - depth exploration, it reflects the platform's firm determination and long - term layout in the high - quality development strategy.

In fact, the temporary slowdown in revenue and profit was foreshadowed as early as the second quarter of last year. At the earnings call at that time, Chen Lei said that the platform had 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.

So since the second quarter of last year, a series of policies such as the "Hundred - Billion Relief", the "Westward Expansion of E - commerce", and the "New - Quality Merchant Support Plan" have been successively launched, and this year, a new strategy of "Trillion - Yuan Support" was launched on top of the previous ones.

The first - quarter financial report, following the third and fourth quarters of 2024, once again verifies that Pinduoduo's so - called long - term investment is not just empty talk but real investment to support both the supply and demand sides.

"The market is changing rapidly. Our support and feedback to merchants are responsibilities we must undertake at this stage. Only by giving priority to the interests of users and merchants can we create a better platform ecosystem," Chen Lei said. "We will continue to promote high - quality development with perseverance, help merchants weather the cycle, and firmly pursue long - term development for the future."

01

The Choice between Long - Term and Short - Term

It is an undeniable fact that in an environment where the industry growth rate has dropped to single - digits, it is not easy for Pinduoduo to maintain a 10% growth rate.

However, this still couldn't stop the sharp decline in the stock price. On the day the financial report was released, Pinduoduo's pre - market stock price once fell by more than 20%, and finally closed down nearly 14%.

After last year's performance miss, the market no longer doubts the real investment in policies such as relief and subsidies for merchants by Pinduoduo. So before the release of the financial report, institutions such as Citigroup clearly pointed out that Pinduoduo's revenue growth rate was slowing down. However, the market still underestimated Pinduoduo's sincerity and generosity.

How much has Pinduoduo invested?

This can be seen from the marketing expenses in this quarter. The financial report shows that Pinduoduo's sales and marketing expenses in the first quarter of this year reached 33.4 billion yuan, a 43% increase from 23.4 billion yuan in the same period last year, far exceeding the market expectation of 28.9 billion yuan. It should be noted that the marketing expenses in the peak e - commerce season of the fourth quarter last year were only 31.4 billion yuan, and the first - quarter expenses were 2 billion yuan more. Such a large amount of money was used to subsidize merchants or users.

For example, on the merchant side, the "Hundred - Billion Relief" significantly reduced the store guarantee deposits for multiple categories such as home appliances and digital products. The "New - Quality Supply" increased support for small and medium - sized merchants. The "Westward Expansion of E - commerce" waived logistics transfer fees. The special action of "2025 Duoduo Good Specialties" also penetrated into major agricultural specialty areas to help merchants and farmers increase production and income.

In addition, Pinduoduo's Hundred - Billion Subsidy channel added a "10 - Billion Merchant Feedback Plan", investing 10 billion yuan in consumer vouchers successively. With ace activities such as the "Hundred - Billion Consumer Vouchers" and the "Hundred - Billion Double Subsidy" as the driving force, it built an "Excess Subsidy Matrix" covering all categories. At the same time, relying on big - data analysis and intelligent algorithms, the platform accurately matches the supply and demand sides, building a "fast - track" for the rapid growth of new - quality merchants and brands to help them tap into new market growth.

Moreover, on the user side, Pinduoduo further explored the innovative model of "direct platform subsidies". On the basis of fully protecting the rights and interests of merchants, it benchmarked the price standards of "national subsidies" in multiple categories to benefit consumers comprehensively, stimulate consumer demand and vitality, and help platform merchants build sufficient market competitiveness.

Due to the significant increase in marketing expenses, Pinduoduo's operating profit and net profit both declined sharply this quarter. Not only the marketing expenses, but also the changes in advertising revenue, commission income, and profit margins show Pinduoduo's unreserved support for merchants.

In this quarter, although Pinduoduo's advertising revenue slightly exceeded expectations, the growth rate also dropped from 17% in the previous quarter to 15%. The reason is that the platform refunded and waived the promotion fees for merchants.

In September last year, Pinduoduo launched the "Refundable Promotion Software Service Fee" policy. For orders that are fully refunded before shipment, the platform will automatically return the corresponding promotion red envelopes for the promotion software service fees paid by merchants without the need for merchants to file an appeal.

A herbal tea merchant in Bozhou receives an average of more than 1,000 yuan in refunded promotion fees from the platform every day, with the annual refund amount of red envelopes approaching 400,000 yuan. This merchant has more than a dozen stores on Pinduoduo, with an annual sales volume of more than 40 million yuan. Based on the refunded promotion fees from the platform, it is roughly estimated that the net profit has increased by 1%.

A children's shoe brand, Bumblebee, from Jinjiang started to expand on Pinduoduo last year and achieved sales of 30 million yuan. This year, it has opened 20 stores on Pinduoduo, with a sales target of 100 million yuan. Calculated in this way, it can get a refund of one or two million yuan in promotion fees this year.

Chen Honghuo, a shoe merchant from Jinjiang, has a factory with an annual production of nearly 600,000 pairs of shoes. Half of the production is for the supply chain, supplying various merchants, with an output value of more than 10 million yuan; the other half is for self - sales, with 1,000 - 2,000 pairs of shoes sold on Pinduoduo every day, and the annual sales volume is also more than 10 million yuan. Thanks to the waiver of promotion fees, the merchant can save 30,000 - 50,000 yuan every year.

This means that compared with the past, merchants can achieve greater sales with less investment. According to estimates from multiple media, the GMV growth rate of Pinduoduo in the first quarter reached 16%, driving the platform's single - quarter GMV to 1.07 trillion yuan. This means that the platform has driven a trillion - yuan consumer market through excess subsidies for new - quality products, achieving remarkable results in promoting consumption. Reflecting on the platform, Pinduoduo's advertising monetization rate has decreased, and the growth rate of advertising revenue has also slowed down.

The gap between Pinduoduo's actual revenue and the expected revenue is largely due to the lower - than - expected commission income. The platform's waiver of commissions and technical service fees for merchants is an important reason.

In the second quarter of last year, Pinduoduo announced that it would invest a resource package worth 10 billion yuan to strongly support new - quality merchants and industrial belts with product and technological innovation capabilities, and significantly reduce the transaction handling fees for high - quality merchants, with an estimated reduction of 10 billion yuan in the next year.

Subsequently, Pinduoduo was the first to launch the refundable technical service fee policy. The platform will refund 0.6% of the technical service fees proportionally for user refund orders. Later, the platform upgraded the policy, reducing the technical service fees for "buy now, pay later" orders from 1% to 0.6%, benefiting tens of millions of merchants.

A brand selling rice wine revealed that since Pinduoduo's fee reduction, the basic technical service fees for several stores have been reduced by 3%. Some merchants calculated that they can save more than 100,000 yuan a year just on technical service fees. Due to Pinduoduo's reduction or subsidy of merchant fees, its gross profit was also 5 billion yuan lower than the market expectation, reaching 54.7 billion yuan.

Chen Lei, Chairman and Co - CEO of Pinduoduo Group, said that although the investment in supporting merchants is recorded as an accounting expense, it is also a long - term investment. Compared with short - term performance, the company values the intrinsic value of the enterprise in the next 5, 10, or even longer periods.

As stated in the first letter to shareholders, Pinduoduo is not a traditional company and will not evaluate strategic decisions based solely on quarterly financial results. Between short - term performance pressure and long - term high - quality development, Pinduoduo has made a clear and firm choice. The fluctuating stock price is more like a note on the exploration path, which will eventually turn into a victory song when crossing the cycle.

02

Overcoming Difficulties Together

Looking back at Pinduoduo's ten - year rise, it couldn't have happened without the support of countless merchants and industrial - belt supply chains. This is also the core strength that enables Pinduoduo to withstand the fierce competition in the e - commerce industry.

If Pinduoduo is regarded as a lush forest, merchants are the big trees rooted in it. Their roots are intertwined, jointly absorbing nutrients and withstanding storms. Without the choice of these merchants to settle on the platform, there would be no sudden rise of Pinduoduo.

Perhaps deeply remembering its own origin, Pinduoduo always adheres to its original intention. While benefiting consumers, it also takes supporting merchants on the supply side as an important mission for development.

Take the past few years as an example. As soon as Co - CEO Zhao Jiazhen took office in 2023, he established a special project of the "Hundred - Billion Ecosystem", launched a support fund worth 10 billion yuan to support high - quality merchants, brands, and small and medium - sized enterprises; through resource tilting such as traffic, he assisted industrial - belt merchants in building a "digital new supply"; through creating popular products and accelerating digital development, he promoted the high - quality growth of small and medium - sized enterprises and high - quality merchants.

In 2024, Pinduoduo further increased support for enterprises and merchants, implementing numerous relief and support measures in all aspects of platform operation, merchant business, industrial transformation, and logistics upgrade, ultimately helping more than tens of millions of merchants improve operational efficiency and reduce costs. The logistics support measures for remote areas promoted double - digit growth in order volume. The first phase of the high - quality merchant support plan covered a large number of high - quality merchants and brands in 1,000 agricultural and industrial areas across the country, helping them transform towards high - quality development.

At the 2024 earnings call in March this year, Pinduoduo executives said that the company noticed that in some industries, some merchants were facing homogeneous competition, squeezing corporate profits and harming innovation and investment. Therefore, as a platform connecting manufacturers, merchants, and consumers, the company launched a series of policies to support high - quality suppliers, encouraging merchants to invest more in products and services by reducing fees and simplifying operations.

Facts also prove this. As we can see, the competition in the Chinese e - commerce industry has further intensified. Facing the current downward market pressure, it is not easy for individual merchants to get through the difficult times alone. At this time, the boost from the platform is even more important.

At the beginning of this year, Pinduoduo foresaw that the merchant group would face more pressure, and also saw the long - term value of high - quality development. So the management made up its mind and made the strategic decision of the "Trillion - Yuan Support".

At this quarter's earnings call, Chen Lei also emphasized, "We must firmly support our merchants and jointly build a more resilient future. If we stand by and do nothing, merchants may be crushed by external shocks. Only when merchants achieve growth can consumers get high - quality products and services, and the platform can achieve long - term and sustainable development."

He said that the management team firmly believes that in such a rapidly changing market environment, in the face of merchants' difficulties, Pinduoduo has the responsibility to increase investment, giving priority to the interests of merchants and consumers rather than the platform's short - term interests. They also believe that these investments will ultimately build a stronger and higher - quality merchant ecosystem. Although this will put pressure on Pinduoduo's profitability in the short term and even for a long time, these investments are worthwhile in the long run.

Zhao Jiazhen, Executive Director and Co - CEO of Pinduoduo Group, said that the company requires all departments to work in unison and fully invest in this new strategy, giving priority to the interests of users and merchants, and striving to provide more certainty for merchants to promote the stable transformation of the industry.

In the first quarter of this year, Pinduoduo also established a "Merchant Rights Protection Committee", led by Zhao Jiazhen himself, coordinating various departments of the platform to comprehensively study merchants' needs, continuously optimize the merchant service mechanism, and improve the platform's ecological construction.

On March 5, the "Merchant Rights Protection Committee" held its first merchant symposium, with dozens of merchant representatives from various industries such as fresh produce, alcohol, daily necessities, and sports goods participating. After in - depth exchanges with the participating merchants, the "Merchant Rights Protection Committee" launched four major upgrade measures such as the "regular communication mechanism" and the "early - warning function for illegal operations" to further protect merchants' rights and interests.

Ten years ago, in the wave of rising consumption, a large number of small and medium - sized merchants had nowhere to go. It was Pinduoduo that provided a low - threshold entry and "fool - proof" operation model, allowing them to settle on the platform at a low cost and solve their sales problems. The gathering of merchants, in turn, accumulated users and abundant traffic for Pinduoduo.

Ten years ago, the story of e - commerce has changed in many ways. The only thing that remains unchanged is that in difficult times, e - commerce platforms like Pinduoduo and merchants stand together through thick and thin.

03

The New Journey of "Comprehensive Merchant Benefit"

In the Internet arena, "boundary - lessness" has become the core path for platform expansion and value growth. After an Internet company grows into a giant, it often extends beyond its business scope. E - commerce companies start doing food delivery, content, and entertainment, while content companies venture into e - commerce and lifestyle services...

However, Pinduoduo is an exception. For ten years, it has always focused on e - commerce itself. After the company achieved profitability,