Pinduoduo, a leading agriculture platform in China, said it will require continuous spending to meet rapidly changing consumer needs as user growth moderates.
The online marketplace operator reported total revenue rose 7% to 23.8 billion yuan (US$3.8 billion) for the three months ended March 31, 2022. The number of active users on the platform reached 881.9 million, nearing the 1 billion mobile internet users in the whole of the country.
“At this current scale, it is inevitable for us to see slower user growth,” said Jun Liu, VP of Finance at Pinduoduo. “We will continue to focus on how to serve our users better and deepen the trust users place in us, which will involve continuous spending.”
Once one of China’s fastest-growing companies, Pinduoduo shifted gears last year by moderating its sales and marketing expenses and boosting its R&D spending, mainly by hiring more experienced engineers to bolster its technology team. The company has made investing in food and agricultural systems a key strategic priority to improve productivity and efficiency, which would benefit consumers, farmers, and society.
One of the consumer needs that have emerged in recent years is the surging demand for fresh food ordered through e-commerce. To ensure that waste and costs are minimized, Pinduoduo has been investing in developing agri-focused infrastructure together with partners. The existing logistics system is geared toward moving manufactured goods, rather than fragile perishables. The investments have enabled Pinduoduo to introduce next-day delivery of fresh groceries, using the proprietary technology that matches local demand with supply and calculates the most efficient routes to deliver the package.
Another recent trend is the expectation by consumers for deliveries to continue taking place over important holidays like Chinese New Year, when many businesses take a break. This year, Pinduoduo partnered with its merchants and logistics service providers to offer uninterrupted delivery services.
The result was a surge in demand for high-quality agriculture produce from consumers who previously were dissuaded by lengthy delivery times, high costs and wastage, according to Chen Lei, Chairman and Chief Executive Officer of Pinduoduo.
“We constantly think about how we can leverage our platform to create more value for our consumers and bring more benefit to society,” said Chen. “A key plank of our strategy has been to develop a tech-driven agricultural infrastructure that is responsive, sustainable and that can meet the needs of different stakeholders.”
The company is also investing in the long term, through the organizing of events like the annual Smart Agriculture Competition, which serves as a bridge connecting academia and industry to come up with technology that benefits growers. The contest also doubles up as a showcase for young talent and their ideas on the future of agriculture.
At the recently concluded competition, which Pinduoduo organizes together with China Agricultural University and Zhejiang University with technical guidance from the UN’s FAO and Wageningen University and Research, participating teams were given the task of developing cost-effective technology that is easy to use and suited to the needs of smallholder farmers.
