Pinduoduo Trading Platform Beware Of Tighter E-commerce Competition

The competition for e-0commver is getting tighter and every platform is starting to pay attention to it, including Pinduoduo. (photo: unsplash)

JAKARTA - Chinese e-commerce platform Pinduoduo Inc reported its first quarterly profit on Tuesday as shoppers stayed online despite the easing of lockdowns during the COVID-19 pandemic.

Pinduoduo, which has the largest e-commerce user base in China, said its profitability going forward is likely to be affected both by intensifying competition and investment in agriculture sector initiatives launched on Tuesday, Aug. 24.

Since its founding in 2015, the Nasdaq-listed company has become a competitive player in China's booming e-commerce space through an approach that combines social media with online shopping to offer attractive discounts.

In the three months to June 30, they reported net profit attributable to common stockholders of 2.41 billion yuan (372 million US dollars) compared with a net loss of 899.3 million yuan last year and revenue of 23.05 billion yuan. .

Pinduoduo's profitability has helped comfort investors at a time of intense scrutiny by China of domestic tech companies over concerns over data privacy and anti-competitive behavior. Its share value has more than halved since February.

"We don't expect profitability to continue," Tony Ma, vice president of finance, told analysts on his mid-year earnings report. "We don't think this quarter's profitability should be an indicator, or a reference for our future investments in user-minded sharing and agriculture-focused infrastructure."

Chairman and Chief Executive Chen Lei said he expected competition in China's already "very dynamic and vibrant" e-commerce sector to intensify.

"We see more platforms entering the e-commerce space, so competition is increasing, and will continue to increase," Chen said.

The company said it is launching a 10 billion yuan initiative to meet needs in the agricultural sector and rural areas and profits from the second and next quarters will be allocated to the initiative, "until the total commitment of 10 billion yuan is met".