The Choice of the Contrarian: Pinduoduo, Absent from the "Food Delivery War", Exchanges Profits for Ecosystem

Before the U.S. stock market opened on August 25th, Pinduoduo released its financial report for the second quarter of 2025.

The financial report shows that in Q2 of 2025, Pinduoduo achieved a revenue of 104 billion yuan, a year - on - year decline of 7%. During the same period, the Non - GAAP net profit attributable to the parent company was 32.7 billion yuan, a year - on - year decline of 5%. Overall, Pinduoduo's revenue and profit still maintained a downward trend this quarter.

With the intensification of the food delivery war in the second quarter, other major competitors increased their investments, and their profit margins declined significantly. In a horizontal comparison, Pinduoduo subsidized merchants with real money this quarter. At the earnings conference, the management's firm stance on future industrial ecosystem investment further demonstrated Pinduoduo's determination to increase investment through the "100 - billion support" plan.

So, how is the quality of Pinduoduo's financial report this quarter? What can the company rely on to break the situation after staying out of the instant retail competition?

Slowing revenue and declining profit year - on - year

From the revenue side, in Q2 of 2025, Pinduoduo recorded a total revenue of 104 billion yuan, a year - on - year increase of 7%. The revenue growth rate has declined for two consecutive quarters, but this quarter's performance is basically in line with market expectations.

Looking at the breakdown, Pinduoduo's online marketing service revenue in the quarter was 55.7 billion yuan, a year - on - year increase of 13%. The growth rate slowed down slightly compared with the previous quarter, mainly due to the deterioration of the overall e - commerce competitive environment and the growth pressure brought by national subsidies to the platform. The domestic main website increased the subsidy support in the second quarter. During the same period, the transaction service revenue was 48.3 billion yuan, a year - on - year increase of 0.7%, and the growth rate slowed down significantly. The main reason is the change in the revenue recognition caliber caused by the transformation of the global business structure from full - custody to semi - custody.

Overall, after the domestic e - commerce industry entered the stock competition stage, the basic business of leading e - commerce platforms like Pinduoduo has entered a stable development stage, which also indicates that Pinduoduo's high - growth period has basically ended in the long - term past.

Currently, the slowdown in Pinduoduo's revenue growth rate compared with other platforms is more due to the relative disadvantage of channels under the national subsidy policy. Looking forward, it is expected that benefiting from the narrowing of national subsidies, there is still room for growth in Pinduoduo's core online marketing service revenue. Overseas, in the face of sudden pressure, the company quickly made adjustments this year. By accelerating the expansion of semi - custody and other business models and exploring emerging markets such as Europe and the Middle East, it stabilized the overseas business.

From the profit side, in Q2 of 2025, Pinduoduo recorded a Non - GAAP operating profit of 27.7 billion yuan, a year - on - year decline of 21%. The decline rate narrowed significantly compared with the previous quarter. The corresponding operating profit margin was 27%, an increase of 8 percentage points compared with the previous quarter. During the same period, the company's Non - GAAP net profit attributable to the parent company was 32.7 billion yuan, a year - on - year decline of 5%. The corresponding net profit margin was 31%, which also improved significantly compared with the previous quarter.

Specifically, there are two major factors contributing to Pinduoduo's better - than - expected profit in the quarter. First, the growth rate of marketing expenses declined significantly. According to the financial report, in the second quarter, Pinduoduo's marketing expenses were 27.2 billion yuan, with a year - on - year increase of less than 5%. Compared with 33.4 billion yuan in the previous quarter, it decreased by 6.2 billion yuan. It is speculated that this is mainly due to the slowdown of the platform's subsidies for the main website, which implies that the impact of national subsidy policies on Pinduoduo's e - commerce channels may be narrowing. Second, the interest income recovered to 10.4 billion yuan this quarter, making up for the low - base disturbance in the first quarter.

In terms of the change trend, Pinduoduo's profit growth rate still maintained negative growth for two consecutive quarters. In particular, the decline rate of operating profit, which can better reflect the actual operating situation, was still as high as 21% this quarter.

The downward trend of profit reflects Pinduoduo's active strategic choice. That is, the company is giving more profits to merchants and investing real money in the upgrading of the industrial ecosystem through preferential merchant programs such as the "10 - billion reduction" and the "100 - billion support".

Since last year, a series of preferential merchant programs have saved a huge amount of operating costs for merchants. Among them, the refund of promotion service fees alone exceeded 10 billion yuan. These "reduction + support" investments have had a substantial impact on Pinduoduo's short - term profit performance to a certain extent, affected the preference of the capital market, and intensified stock price fluctuations.

But in the long run, the continuous investment has improved the platform ecosystem, laying a solid foundation for the company's long - term healthy growth and high - quality development. As co - CEO Chen Lei said, "Compared with short - term performance, we pay more attention to investments that can bring long - term returns to the platform ecosystem. This is also the reason why we actively give up profits and insist on long - term support for the ecosystem."

Pinduoduo, the "Contrarian", Deeply Cultivates the E - commerce Ecosystem

Since the beginning of this year, with the intensification of competition in the e - commerce industry, in order to seek new growth curves, the giants have extended the battlefield to food delivery and instant retail. In the second quarter, the melee among Alibaba, Meituan, and JD.com became increasingly fierce, and the food delivery war reached a white - hot stage. However, behind this fierce competition, Pinduoduo, like a "contrarian", stayed out of the territorial dispute.

Theoretically, there are two typical models for a company's sustainable growth. One is to continuously expand horizontally to broaden the business boundary and drive continuous scale growth with new growth momentum. The other is to vertically deepen and improve the operating efficiency of the core business, and achieve long - term profit maximization through innovation and efficiency.

Obviously, compared with the expansion model of other giants seizing new markets, Pinduoduo has chosen to "grind away" at the e - commerce business. But this focus does not mean stagnation. On the contrary, Pinduoduo is trying to reconstruct the industry's growth logic through meticulous operations.

After the e - commerce industry entered the stock competition stage, the pain point of the industry is not the slowdown of traffic growth, but the fact that the homogeneous supply on the merchant side cannot effectively meet the increasing diverse needs of consumers.

In this context, it is a more practical and rational choice for the platform to shift the strategic focus to supply - side reform. And Pinduoduo has spared no effort in optimizing the supply and is at the forefront of the industry.

Since last year, Pinduoduo has continuously promoted the construction of a high - quality e - commerce ecosystem through a series of preferential merchant measures such as the "10 - billion reduction", the "E - commerce Goes West", and the "Support for High - Quality Merchants". On this basis, in April this year, it further intensified the "100 - billion support" plan, planning to invest more than 100 billion yuan in funds, traffic and other resources in the next three years. This means that Pinduoduo's support for merchants has been upgraded from simple "cost reduction" to more comprehensive assistance including brand optimization, product upgrading, and model innovation.

The core of the 100 - billion support plan is to accurately understand the pain points and difficulties in merchants' production and operation, make targeted investments according to actual needs, and help these small and medium - sized enterprises achieve a "quality leap". Ultimately, through the optimization of the platform's supply side, it will break the information gap between merchants and consumers and build a healthy e - commerce ecosystem where the platform is efficient, consumers are satisfied, and merchants make profits.

The Fujian Strait Tiger, a slipper brand founded in Jinjiang in 2021, is a typical case of Pinduoduo's support plan.

This enterprise was once one of many slipper foreign trade processing factories in Jinjiang. Later, under the impact of the decline in foreign trade orders, it tried to shift from exports to domestic sales through e - commerce platforms. But at that time, since the enterprise mainly produced white - label flip - flops, which lacked design and were highly homogeneous, it soon got caught in a price war, severely squeezing the profit margin.

Later, with the help of Pinduoduo's consumption data, Fujian Strait Tiger accurately identified the preference of young consumers for Crocs. Riding on the wave of Pinduoduo's support for merchants, the brand innovatively designed personalized Crocs with styles such as the "post - apocalyptic style" and the "sports style", winning the favor of the young group. Now, the annual sales volume of Fujian Strait Tiger's shoes on Pinduoduo has reached tens of millions of pairs, and nearly a hundred pairs are sold per minute on average.

Moreover, with the "differentiated" competition and the "production based on demand" business model, Fujian Strait Tiger has achieved light - operation on the Pinduoduo platform. The funds saved through cost reduction and efficiency improvement are reinvested in R & D and brand building, forming a virtuous cycle. While ensuring scale expansion, it has also improved profits.

The example of Fujian Strait Tiger is a beautiful spark in the collision between Pinduoduo's industrial support plan and the Jinjiang shoe industry supply chain. It is also a representative of the transformation of the Jinjiang shoe industry from traditional low - value - added processing "manufacturing" to brand "intelligent manufacturing" with independent innovation capabilities, but it is not an isolated case. Driven by the "leading goose effect", a group of high - quality Jinjiang shoe merchants with product and technological innovation capabilities are standing out with the support of Pinduoduo, accelerating the high - quality transformation of the entire Jinjiang shoe industry belt.

And the Jinjiang shoe industry is just an epitome of Pinduoduo's numerous industrial support plans. As more and more industries are revitalized on Pinduoduo, it not only indicates the upgrade of Pinduoduo's ecological environment and business model, but also reflects its contribution to the real economy and its support for the high - quality development of industries.

▲ With the support of the 100 - billion plan, the sales of the Jinjiang children's shoe brand Bumble Bee are expected to exceed 100 million yuan this year. (Photo by Zhan Zhao)

Face Short - Term Risks and Build Up Strength for Long - Term Growth

As mentioned above, in the face of the industry's growth pressure, Pinduoduo did not follow its competitors to expand the battlefield. Instead, it focused on building a healthy ecosystem for its core e - commerce business and tried to break the industry's involution through incremental innovation.

In essence, the food delivery war is an expansion of the business boundaries of Internet giants. The purpose is to grab incremental market share through horizontal layout, create new growth curves, and continue the company's high - growth potential when the growth of traditional e - commerce business slows down.

But expanding new markets inevitably involves capital and resource investment. So the short - term result is that the investment in instant retail has greatly restricted the capital efficiency and focus of e - commerce giants such as Alibaba and JD.com on their core businesses. For Pinduoduo, which is not involved in this, it means a precious time window has emerged, allowing the market to better digest the short - term impact of the "100 - billion subsidy plan" on the company's profits.

This is also the reason why Pinduoduo's financial performance was relatively outstanding compared with other competitors this quarter. However, looking forward, there is still a lot of uncertainty about this relative advantage in performance.

Judging from the management's statements at the earnings conference, increasing platform investment to help merchants tide over difficulties is not only a responsibility that Pinduoduo can and must undertake at present, but also a key measure for it to build a healthy merchant ecosystem and create long - term value. This means that compared with the short - term stability of financial performance, continuous investment in the merchant side is Pinduoduo's long - term strategy.

Looking forward, in the short term, considering the increase in subsidy investment, the growth of platform costs and expenses will inevitably erode the company's profit performance and magnify the volatility of its performance.

But in the long run, the slowdown of growth, the imbalance between supply and demand, and the intensification of homogeneous competition are urgent problems in the e - commerce industry. The only way to solve these chronic problems is to drive efficiency improvement through supply - side innovation, which will lead to changes in the platform ecosystem and create a positive cycle on both the supply and demand sides. Ultimately, the results of this transformation will also benefit the platform itself, but the cost is also obvious, that is, it is necessary to sacrifice some profits to support the growth of merchants.

At present, for Pinduoduo, how to balance the relationship between short - term profitability and long - term sustainable growth may be the key for the capital market to evaluate it in the future.