Pinduoduo beats revenue estimates as online shopping demand soars

Pinduoduo beats revenue estimates as online shopping demand soars

The growth rate of active buyers in the 12 months ended March remained robust, reaching 628 million

China’s Pinduoduo beat first-quarter revenue estimates on Friday as more people shopped on its e-commerce platform during coronavirus lockdowns that have seen many bricks-and-mortar outlets closed.

Stay-at-home orders have boosted demand for online shopping as people stock up on groceries and food items from home and sellers too turn to online platforms to run down inventories.

The growth rate of active buyers in the 12 months ended March remained robust, reaching 628 million, representing an increase of 42 per cent year on year. It took PDD only five years to raise the number above 600 million, further narrowing the gap with competitor Alibaba, which reported on Friday that annual active consumers reached 726 million by the end of March.

“Covid-19 has unleashed powerful forces that are changing the way we live, work and play. This has compressed years of behavioural change and accelerated the adoption of online commerce at an unprecedented pace,” said Colin Huang, chairman and chief executive officer of Pinduoduo, during the earnings call on Friday. “Now more than ever, people are relying on online platforms to meet not just their discretionary needs, but for their critical needs.”

The company said its average daily orders since May are close to 65 million, compared with around 50 million before the pandemic outbreak.

Pinduoduo launched its live streaming service last November, allowing merchants to demonstrate their products and interact with potential consumers in real time. This has become an important new sales channel for many vendors amid lockdowns and social distancing measures.

“With Covid-19, we realised that the boundaries between virtual and physical worlds have blurred to an unprecedented degree,” said Huang. “We have found [live streaming] to be an effective tool in lowering the barriers to helping consumers overcome their aversion to buying certain products, including high-end jewellery or things like live lobsters,” said Huang.

People are seen at their desks at the headquarters of Chinese e-commerce firm Pinduoduo in Shanghai, China July 25, 2018. Photo: Reuters

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China’s Pinduoduo beat first-quarter revenue estimates on Friday as more people shopped on its e-commerce platform during coronavirus lockdowns that have seen many bricks-and-mortar outlets closed.

Stay-at-home orders have boosted demand for online shopping as people stock up on groceries and food items from home and sellers too turn to online platforms to run down inventories.

The growth rate of active buyers in the 12 months ended March remained robust, reaching 628 million, representing an increase of 42 per cent year on year. It took PDD only five years to raise the number above 600 million, further narrowing the gap with competitor Alibaba, which reported on Friday that annual active consumers reached 726 million by the end of March.

“Covid-19 has unleashed powerful forces that are changing the way we live, work and play. This has compressed years of behavioural change and accelerated the adoption of online commerce at an unprecedented pace,” said Colin Huang, chairman and chief executive officer of Pinduoduo, during the earnings call on Friday. “Now more than ever, people are relying on online platforms to meet not just their discretionary needs, but for their critical needs.”

The company said its average daily orders since May are close to 65 million, compared with around 50 million before the pandemic outbreak.

Pinduoduo launched its live streaming service last November, allowing merchants to demonstrate their products and interact with potential consumers in real time. This has become an important new sales channel for many vendors amid lockdowns and social distancing measures.

“With Covid-19, we realised that the boundaries between virtual and physical worlds have blurred to an unprecedented degree,” said Huang. “We have found [live streaming] to be an effective tool in lowering the barriers to helping consumers overcome their aversion to buying certain products, including high-end jewellery or things like live lobsters,” said Huang.INSIDE CHINA TECH NEWSLETTERGet updates direct to your inboxSUBSCRIBEBy registering, you agree to our T&C and Privacy Policy

Its net loss widened to 4.12 billion yuan (US$578 million) in the quarter ended March 31, from 1.88 billion yuan a year earlier.

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The e-commerce company – known for its deep discounts – said revenue rose 44 per cent to 6.54 billion yuan, beating estimates of 4.97 billion yuan, according to IBES data by Refinitiv.

However, quarterly revenue dropped sharply from the 10.79 billion yuan it reported for the fourth quarter last year.

Pinduoduo vice-president David Liu said the sequential fall in revenue was due to the company’s efforts in helping farmers and vendors on its marketplace get through difficult times.

“Pinduoduo supported small and medium-sized companies by offering the lower effective advertising rates, directed traffic that we could have otherwise monetised to dedicated channels for medical supplies,” Liu said.

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