Chen Lei, one of the founding members and the newly appointed chairman of Chinese social e-commerce platform Pinduoduo, says that the firm’s recent success reaffirms their belief that the mobile internet has accelerated the merging of online and offline spaces, which will in turn uncover new opportunities.
The company last week announced the resignation of founder Colin Huang, who will now focus his time on exploring new long-term opportunities and conducting research on food and life sciences, an area in which Pinduoduo has invested heavily to become the world’s largest grocer.
Chen, who has served as CEO since July 2020, is tasked with maintaining Pinduoduo’s extraordinary pace of growth. The company last Wednesday delivered robust results for last year’s fourth quarter, topping analysts’ estimates in becoming China’s biggest e-commerce platform by user numbers.
The number of annual active buyers in 2020 jumped 35% year-on-year to hit 788.4 million, beating Alibaba’s 799 million and JD.com’s 471 million. Monthly active users in the fourth quarter reached 719.9 million, representing a 50% jump year-on-year.
Furthermore, earnings increased 146% in the fourth quarter to 26.55 billion yuan (US$4 billion) year-on-year, the Shanghai-based company said.
During the earnings call, Chen noted that the Covid-19 pandemic has put Pinduoduo through “a tough test” since its founding six years ago. The pandemic also accelerated the “blending” of online and offline worlds, and has made the distinction between the two spheres increasingly irrelevant.
“With the advent of mobile Internet, the online/offline are just part of a single world, branded together more and more seamlessly and complementary with each other,” Chen said, citing an example of shrinking footprints at physical wet markets during the pandemic.
“Unlike with desktops, smartphone users could go online anywhere anytime and for any length of time. Users no longer had to carve out time and be confined to a specific place, which is common practice for desktop era. This is why six years ago, we insisted on developing a mobile-only platform for our users,” Chen said. Pinduoduo does not offer services through a desktop version.
Founded in 2015, Pinduoduo started out by popularizing group buying, in which lower prices are offered to groups of online buyers who invite friends and family to purchase the same item. It then offered community group buying, whereby a group of residents within the same apartment compound receive discounts by buying together in bulk. The location-based strategy’s popularity has surged among China’s online population.
Pinduoduo then spearheaded the evolution of social e-commerce that combines shopping with social media, drawing customers to the platform’s deals through their friends and family contacts on WeChat.
“Pinduoduo did one thing very well: we grasped the shift from searching to browsing” as a social activity, the Wall Street Journal quoted Chen Lei. The new chairman previously studied computer science at Tsinghua University in Beijing and obtained a Ph.D. in computer science from the University of Wisconsin-Madison, where he met Huang.
Moving forward, Pinduoduo is ramping up efforts in the fresh foods sector, which contributes 15% to its overall revenue and has always been a strategic priority for the company.
“We hope that in the next stage, Pinduoduo will become the world’s largest agriculture and grocery platform, and make groceries sourced around the world affordable and available to our users,” Chen said, noting that Pinduoduo is currently China’s largest agriculture platform.
Last August, Pinduoduo launched Duo Duo Grocery after observing that consumers were increasingly turning to online platforms to purchase produce during the pandemic. The next-day delivery service allows local farmers and distributers to sell directly to customers.
The company reported that consumers bought more than 270 billion yuan (US$41.4 billion) worth of agricultural products on Pinduoduo in 2020, doubling the figure from the previous year. A total of 12 million farmers sold their produce directly to consumers using the platform, the company said, giving new impetus to the global farm-to-table movement.