🛍️ Pinduoduo: Overtaking Alibaba
The social commerce giant is shaking up China's Big Tech
Greetings from San Francisco! 👋🏼
A warm welcome to the recent additions to our community!
Over 65,000 How They Make Money subscribers turn to us weekly for business and investment insights. Glad you're here.
Pinduoduo (PDD), a company born only in 2015, has recently eclipsed Alibaba in market cap, marking a seismic shift in the global e-commerce landscape.
PDD's remarkable ascent has not gone unnoticed, capturing the attention of hedge funds as one of their top picks this past quarter. Did you miss the update? You can find our full recap here. 👇
Even Alibaba’s co-founder, Jack Ma, couldn’t help but acknowledge Pinduoduo’s rise, stating in a forum post:
“Congratulations to Pinduoduo for their decision-making, execution and efforts of the past years. The people willing to reform for the future, and the organizations willing to pay any price and sacrifice are the ones that are truly respected.”
With competitors like Shein and PDD's international shopping app Temu gaining traction, Jack Ma’s call for Alibaba to “correct course” underscores the changing tides in e-commerce.
Pinduoduo combines shopping with social interaction, an intriguing approach that deserves a deeper dive. After receiving many requests from the community, let’s get into the details.
Pinduoduo means “together, more savings, more fun.”
Founded by Colin Huang, a former Google engineer, Pinduoduo offers more than just online retail. It’s a blend of shopping and social interaction that has redefined the marketplace. It’s an experience:
Feed-based: Similar to scrolling through Instagram or TikTok.
Dynamic: Tailored recommendations based on user preferences.
User-centric: Mirrors the engagement of a social app.
Interactive & fun: Encourages sharing and connectivity.
Pinduoduo’s ascent relative to Alibaba’s collapse is nothing short of astonishing, particularly in the context of their IPOs:
Alibaba: $22 billion raised in 2014 at a $168 billion valuation.
Pinduoduo: $1.6 billion raised in 2018 at a $24 billion valuation.
The journey ahead for PDD remains to be seen, but its current path is undeniably impressive, similar to Alibaba's in 2017.
Today at a glance:
How Pinduoduo makes money.
The rise of Temu.
Key quotes from the earnings call.
What to watch looking forward.
1. How Pinduoduo makes money
What Sets Pinduoduo apart?
Pinduoduo stands out in the crowded e-commerce space with its innovative team purchase and social shopping models. If these concepts are new to you, the short video below offers a clear explanation.