not vested
Pinduoduo Inc (PDD US) - Charting the next chapter
Despite its relatively shorter operating history in comparison to its major peers, Pinduoduo (PDD) has made big strides in China’s e-commerce market, especially in lower-tier cities, and is the largest e-commerce platform by active buyers in China (as at 1Q21).
PDD adopts a team-purchase model, which helps to aggregate consumer orders and increases bargaining power.
This model’s success can also be attributed to its unique social features, which relies on Weixin and QQ, its own social network (Pin Xiao Quan) and gamification features.
Within the Community Group Purchase (CGP) market, we believe that PDD’s Duo Duo Maicai (DDMC) has proven to be a nimble innovator.
Despite these positives, we do highlight a number of factors that keep us on the sidelines.
In CGP, we believe PDD’s relative weakness is in offline execution. Another source of near-term uncertainty also relates to founder Colin Huang’s departure from the board.
In branded GMV, management notes that it has made steady progress with brands, but the challenge remains on educating brands on the incremental value that the PDD platform can bring.
We also highlight that PDD and 3 other CGP companies were also fined RMB1.5m in March 2021 for breaching the country’s price law. HOLD.
Source: OCBC