![]() ![]() It had previously doubled its losses to $77 million in 2017. The company saw a net loss of $29.5 million the first quarter of 2018 alone, bringing it on track to post its largest full-year loss yet. Investors should also note that PDD is not yet profitable. A diaper maker under the name Daddy's Choice, which is based in Beijing, alleges that Pinduoduo is selling a counterfeit version of its product. The company also saw a complaint filed against it in a New York federal court in the days before its IPO. While PDD has boosted investments to curb the issue, more needs to be done. ![]() The company has faced numerous complaints domestically about the quality of its products and the numerous counterfeits listed. PDD currently boasts an annual gross merchandise volume of $38.5 billion, representing an astounding 600% year-over-year growth.Īlthough Pinduoduo's momentum has been startling, the platform is not without its issues. PDD's annual gross merchandise volume reached $14.7 billion in just 2 years, a feat which took Alibaba BABA subsidiary Taobao 5 years and JD.com JD 10 years, according to TechCrunch reports. For those unfamiliar, group buying refers to the practice of offering products at a specific price point provided a minimum number of users make the purchase. Another key factor is the company's use of group-buying, a concept which will remind many investors of Groupon GRPN. Pinduoduo's rapid growth has been possible thanks to aggressive social media sharing campaigns. Large metropolitan areas like Beijing and Shanghai fall under tier 1, while tier 3 and 4 cities are smaller economies. China utilizes a tiered system that divides its cities into four categories based on GDP. According to data from research institute Jiguang, 56% of Pinduoduo's users are located in cities at or below tier 3. PDD maintains a direct-to-consumer model that keeps shipping prices and bulk orders cheaper. Pinduoduo sells many products in bulk, such as a 10-box bundle of tissue for $1.90 and bedsheets for $1.50. Product offerings range from home appliances to groceries, and discounts can run as high as 90%. The application is backed by Tencent TCEHY and offers extremely low-priced products aimed at discerning consumers in less developed regions of China. ![]()
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