Ago tripled net profit in the first quarter, says Pinduoduo owner

BEIJING: Chinese e-commerce giant Pinduoduo announced Wednesday that its first-quarter net profit more than tripled as owner Temu continues to increase its competitiveness in the domestic market and abroad. Pinduoduo is one of China’s leading online retailers – largely due to its success in reaching rural consumers with a diverse range of low-cost products.

The company’s overseas platform, Temu, has seen tremendous growth since its launch in September 2022 and has become one of the most popular online shopping sites in the United States, thanks to a marketing strategy that included multiple prime-time Super Bowl ads.

Pinduoduo said net profit for the first three months of 2024 was $3.88 billion, up 246 percent from the same period last year. The Shanghai-based company added that first-quarter sales were about $11.2 billion, an increase of 131 percent compared to the same period in 2023.

Last year, Temu expanded into the EU market, where it said its shopping app was averaging about 75 million monthly active users across the 27-country bloc. However, the development of shopping apps has also faced turbulence. In March, a promotional campaign in the UK and France backfired due to data privacy concerns. In April, regulators in South Korea launched an investigation into Temu on suspicion of unfair practices, including false advertising and low-quality products.

Earlier this month, European consumer rights groups accused it of using manipulative sales techniques and a lack of transparency regarding traders on the platform.

Despite its setbacks, Pinduoduo remains the latest competitor to established e-commerce giants including Amazon in the United States and Alibaba in China. Domestically, Pinduoduo is increasingly successful with low-cost products as Chinese consumers cut back on their spending amid an economic slowdown and high youth unemployment.

In March, the company announced annual profits nearly doubling in 2023, the year it briefly overtook Alibaba – the owner of Chinese e-commerce giant Taobao – in terms of market capitalization for the first time. Pinduoduo’s share price rose by about eight percent in Wednesday’s pre-market trading on the Nasdaq stock exchange. It was valued at about $202 billion on Tuesday compared to Alibaba’s $209 billion.

Pinduoduo co-founder Chen Lei indicated that there is still room for growth. “Our global business is still in the exploratory stage and there is much work to be done,” he said. Pinduoduo executive director and co-CEO Jiazhen Zhao said this year will be “critical” for “deepening the execution of our high-quality development strategy.” “We will focus our efforts on improving the overall consumer experience, strengthening our supply chain capabilities and supporting a healthy platform ecosystem.” –AFP