Temu’s owner Pinduoduo tripled net profit in the first quarter

Chinese e-commerce giant Pinduoduo Holdings Inc (拼多多) yesterday announced 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, becoming one of the most popular online shopping sites in the U.S. thanks to a marketing strategy that included multiple prime-time Super Bowl ads.

Photo: Reuters

Pinduoduo said net profit for the first three months of the year 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, up 131 percent from a year earlier.

Last year, Temu expanded into the EU market, where its shopping app averaged about 75 million monthly active users in 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.

Last month, 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 the setbacks, Pinduoduo remains the latest competitor to established e-commerce giants including Amazon.com Inc in the US and Alibaba Group Holding Ltd (阿里巴巴) 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 a nearly double annual profit for the previous year, a year in which it briefly overtook Alibaba – owner of Chinese e-commerce giant Taobao (淘寶) – in terms of market capitalization for the first time. It was valued at about $202 billion on Tuesday compared to Alibaba’s $209 billion.

Pinduoduo co-founder Chen Lei (陳磊) 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-chief executive officer Zhao Jiazhen (趙佳臻) 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.”