E-commerce firm Pinduoduo posts bigger quarterly loss as operating costs surge
- The Shanghai-based company saw operating expenses more than double to US$1.2 billion in the third quarter
Chinese e-commerce services provider Pinduoduo reported a bigger-than-expected quarterly loss on Wednesday because of higher operating expenses, sending the company’s shares down 13 per cent before the opening bell in the United States.
The Nasdaq-listed firm’s net loss widened to 2.3 billion yuan (US$327 million) in the quarter ended September 30, from 1.1 billion yuan a year earlier. Revenue rose 123 per cent to 7.5 billion yuan. Operating expenses of Pinduoduo more than doubled to 8.5 billion yuan in the quarter, as sales and marketing costs surged 114 per cent.
“We continued to invest in our users throughout the third quarter, and stepped our marketing up a notch from the second half of September,” said Colin Huang Zheng, the founder, chairman and chief executive of Pinduoduo, in a statement.
The Shanghai-based company, which has gained a big following in China on the back of strategies such as offering consumers deeper discounts on mostly generic products if they buy in groups, blamed the larger-than-expected loss on the so-called “choose one from two” practices, according to a statement sent to Reuters.
China’s market regulator earlier this month told Pinduoduo, Alibaba Group Holding, JD.com and other e-commerce platform operators to stop the practice, which requires merchants to sign exclusive cooperation agreements that prevented them from selling products on rival platforms. Alibaba is the parent company of the South China Morning Post.