Pinduoduo, which actively "slows" down, explores a new paradigm of long-termism

In the business world, balancing short-term profit release with the long-term health of the business ecosystem is an eternal proposition. Especially in the current market environment, factors such as insufficient short-term effective demand still exist, and companies may need to make choices between short-term returns and long-term sustainable development.

Despite the trend of many companies shifting towards business contraction and defense to optimize profit indicators by reducing costs, Pinduoduo (PDD.US), which has been known for its high growth in recent years, seems to be preparing to go against the tide. Rather than blindly pursuing short-term profits, Pinduoduo appears to be a true long-term thinker, willing to pay a significant current price for long-term health, even if it means inevitably sacrificing short-term profits.

Recently, Pinduoduo disclosed its Q2 2024 financial report. The data shows that in the second quarter, Pinduoduo's total revenue was 97.1 billion yuan, an 86% year-on-year increase; net profit attributable to shareholders was 32 billion yuan, a significant 144% increase year-on-year.

The financial data curve is still steep, but compared to the high expectations of the market for Pinduoduo, a company that has shown "accelerated growth" in recent years, Pinduoduo in the second quarter seems to have "slowed down." However, in the context of being in an era of "high-quality development," Pinduoduo, which has already entered a new scale level, is now investing more energy in building its platform ecosystem, which is actually a wise move. After all, the long-term competitiveness of a platform depends on a healthy and nutrient-rich "soil," and Pinduoduo's investment of billions to support new quality merchants and conduct merchant ecosystem governance will undoubtedly bring long-term positive effects.

"Inclusiveness": Creating Win-Win New Opportunities for Upward and Goodness

In the new normal of economic changes both internally and externally, how to maintain strategic stability, do well in one's own affairs, and even achieve high-quality development is the "must-answer question" facing all companies.

Taking Pinduoduo in the increasingly competitive e-commerce industry as an example, the increasingly diversified consumer demand requires Pinduoduo to keep pace with the times, actively adjust its strategies to meet consumer needs.

In Pinduoduo's business values, a "strong supply chain" has always been an important prerequisite for serving consumers well. In order to meet the increasingly diversified consumer demands, Pinduoduo has been actively innovating in the supply chain in recent years.

In the second quarter, Pinduoduo's "Agricultural Cloud Action" continued to penetrate major agricultural areas across the country, helping specialty agricultural products establish their origin brands, striving to bring more high-quality agricultural products into thousands of households.

For example, May is the season when lychees are listed every year. However, this year, due to adverse weather conditions, lychees in production areas such as Guangdong and Hainan have seen a significant reduction in production, with well-known varieties like Feizixiao experiencing a nearly 40% year-on-year production decrease, leading to a several-fold increase in market prices In response to this situation, PDD's "Nongyun Action" collaborates with product merchants to promote billions of subsidies for local lychee from the source, allowing consumers to enjoy affordable and high-quality lychee through large subsidies and full cold chain services.

During the highly anticipated 618 promotion period, PDD went all out to actively stimulate consumer enthusiasm. Data shows that in the first week of the promotion, the number of merchants benefiting from PDD's billion-yuan subsidies increased by over 90% compared to the same period last year, with the number of agricultural product merchants increasing by 83%.

At the same time, in response to the national policy call, PDD invested 1 billion RMB in the first week of the promotion to support the rural distribution of household appliances and trade-in programs, unlocking a "cashback" new gameplay for consumers. Many new brands and traditional Chinese brands have also achieved significant growth during this process. For example, Skyworth achieved sales exceeding 100 million RMB within two months of joining PDD through popular refrigerators and color TVs.

Additionally, it is worth mentioning that PDD also attaches great importance to the role of technological innovation in empowering platform development. In Q2, PDD's R&D investment increased by 6% year-on-year to 2.9 billion RMB. This increase is mainly attributed to PDD's new round of investment in operations and research and development. For example, during the period, PDD further empowered the manufacturing industry's supply chain with digitalization and successfully launched customized products for certain niche categories.

"Vision": Anchoring Long-term Reinvestment in Platform Ecosystem

Collins proposed an important point in his classic work "Built to Last": "Vision is a prerequisite for successful enterprises."

Zhito Finance App believes that at the current time point, the significance of corporate vision may be more important than ever. Taking the e-commerce industry as an example, the internet traffic dividend has dissipated, and the competition between platforms continues to intensify. In the current industry value reconstruction, there may be conflicts between short-term profit indicators and long-term development goals, requiring companies to make choices between immediate benefits and "poetry and the distant horizon."

Through PDD's latest financial report, the company has clearly provided the "answer." To support the sustainable development of the platform ecosystem, PDD announced that it will increase efforts to invest in and support high-quality merchants in the next 12 months.

It is reported that PDD will invest a billion-yuan resource package to support new high-quality merchants and industries with product and technological innovation capabilities, significantly reduce transaction fees for high-quality merchants, with an expected reduction of up to 10 billion RMB in the next year. Additionally, PDD will continue to enhance positive incentives for high-quality ecological development, improving the quality and efficiency of the supply chain in all aspects.

The latest news shows that PDD has been actively advancing related work with strong execution. For example, PDD has successively introduced resource position technology service fees and promotion software service fees with refundable benefits for merchants.

In addition to vigorously supporting key merchants, PDD will also resolutely carry out ecological governance of the platform and merchants, crack down on illegal cheating merchants, and promote the industry to eliminate the dross and retain the essence, creating a more effective and healthier ecological environment for new high-quality merchants. Considering PDD's rapid expansion in recent years, the company's proactive approach to slow down for ecological governance seems more like a prudent move to consolidate its foundation, which holds profound significance for the long-term sustainable development of the platform Looking at the various measures taken by PDD, the company's future development strategy is actually very clear.

Indeed, influenced by increased support and governance efforts, the company's short-term profits may fluctuate. However, in the long run, empowering merchants and giving back will obviously benefit PDD in promoting the construction of high-quality supply. At the same time, a higher quality platform ecosystem will ultimately promote the formation of a positive commercial ecosystem cycle. More importantly, in this process, industrial merchants, consumers, and platforms will all benefit in the long term. At that time, such a win-win situation will obviously be welcomed by all sectors of society