Pinduoduo’s losses widen as e-commerce player offers incentives to attract higher-quality merchants
- Decision to offer higher quality merchants more traffic and discounted commission fees came after Pinduoduo was hit by a spate of criticism after IPO
Chinese e-commerce firm Pinduoduo saw losses widen almost five-fold in the third quarter, as the company continues to spend on incentives aimed at attracting higher quality merchants to its platform to distance it from an association with inferior-quality goods.
Revenue for the three months ended September 30 jumped seven-fold to 3.4 billion yuan (US$490 million), although net losses for the company increased to 1.1 billion yuan, up about 496 per cent compared to the same time last year.
Sales and marketing costs increased about 7 times to 3.2 billion yuan, and the cost of online marketplace services jumped 4 times to 774.7 million yuan. Pinduoduo also incurred nearly 10 times more in research and development expenses as it sought to fight counterfeit products on its platform.
“Though our monetisation rate continued to improve, it was partially offset by the strategy we announced in the last quarter after rewarding higher quality merchants with more traffic,” said Colin Huang Zheng, chief executive and chairman of Pinduoduo.
“We hope to create a virtuous cycle whereby high quality merchants who will provide value for money products with good user experiences are rewarded, attracting more high quality merchants to our platform.”