Pinduoduo's Price Wars: E-commerce Giant Faces Tough Competition and Profit Pressures

PDD Holdings, the parent company of China's e-commerce platform Pinduoduo and the international platform Temu, reported surpassing revenue expectations despite a drop in net profit due to heightened competition and strategic investments. The company's U.S.-listed shares rose by 1%, driven by its focus on bolstering spending to sustain growth.

Amid China's efforts to boost domestic consumption amid economic challenges, leading e-commerce players such as Pinduoduo, JD.com, and Alibaba have initiated aggressive pricing strategies, spurring a price war. Notably, PDD Holdings has been increasing investments in merchant support and U.S. presence through its subsidiary, Temu, impacting its profit margins.

Temu has shifted towards a 'fully-managed' model to exert greater control over product selection and pricing in the U.S. market. However, competition from Amazon remains intense, affecting profit stability even as PDD's revenue rose 7% to 103.98 billion yuan in the last quarter.

(With inputs from agencies.)