eCommerce: Marketplaces

PDD Holdings: Earnings Announcement Confirms Steep Growth

PDD Holdings released its earnings for the fourth quarter and fiscal year 2023. The results show steep growth over the past year, continuing PDD's steady upward path. We examined what makes the conglomerate stand out among the others, including the performance of its two domains, and

Article by Nadine Koutsou-Wehling | March 25, 2024


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PDD Holdings Earnings: Key Insights

  • Pinduoduo's Low-Cost Strategy: Affordability is key for the conglomerate, which started out selling low-cost items to consumers in rural China.

  • Various Sources of Income: In addition to transaction fees, PDD earns through advertising and marketing services to merchants. Prices are kept low through aggregated order volumes.

  • Steep Revenue Growth Through 2023: PDD Holdings' most recent earnings announcement confirms the company's continued revenue growth, which has particularly surged during Temu's 2023 expansion.

PDD Holdings recently released its fourth quarter and fiscal year 2023 results: The numbers show that the conglomerate is continuing its upward path of the past years. After surpassing Alibaba as the most valuable NASDAQ-listed company based in China in November 2023, PDD Holdings is a competitor for Alibaba, Shein and Amazon to watch out for. 

As the parent company that manages the eCommerce domains and, it is worth taking a closer look at PDD Holdings' domains and their performance in terms of revenue and GMV.

What Is Pinduoduo’s Strategy?

Pinduoduo, which means "together, more savings", was founded in 2015 by former Google employee Colin Huang. The eCommerce site reached remote populations in China, where the established platforms at the time, namely Alibaba and JD, hit roadblocks. 

More specifically, Pinduoduo leveraged the following factors:

  • Affordability: Pinduoduo's initial hallmark was low prices, with deep discounts and the occasional free item. The platform first sold groceries at cheap prices and then ventured into other categories, maintaining the low-cost strategy all throughout. 

  • Social Referrals: Huang has a background in the gaming industry, and this experience is said to have inspired him to create Pinduoduo's system, which uses network effects to find new customers. Users earn rewards by adding their social circle to the site, a win-win situation. 

  • Broad Access: Pinduoduo allowed customers early on to refer acquaintances and pay for their orders via WeChat, Tencent’s widely used app with a 90% penetration rate. This allowed PDD to reach older consumers in rural areas who did not have the experience or skills to install a new eWallet and connect their bank accounts, making it easier for them to participate without additional effort.

After focusing on serving a large user base in remote locations, PDD expanded its operations to urban markets where Alibaba and JD operated. Their sales focus was on higher-end products, while PDD competed with low costs. 

To attract consumers, a low pricing strategy can clearly be a competitive advantage. But how does PDD Holdings ensure that its revenues keep growing?

How Does PDD Holdings Make Money?

In addition to platform fees, there are other sources of revenue for the conglomerate. These include

  • Transaction fees: For every sale made through either or, PDD Holdings takes a commission. The exact fee depends on factors like product category and seller performance.  

  • Advertising: Sellers pay to promote their products on the platform, akin to retail media advertising elsewhere. 

  • Merchant and Marketing Services: Pinduoduo interacts with merchants through an online bidding system that determines the price and placement of the item on the platform.

Pinduoduo keeps prices low by aggregating consumer orders before routing them to merchants, thereby leveraging volume discounts. The lower prices increase the number of shoppers who want to buy on the platform, which in turn increases the discounts generated by orders at scale.

Revenue Growth and Temu’s Rise

PDD's revenues continued to grow throughout the pandemic and during the economic downturn in the years that followed.

Revenue Development of Pinduoduo, Inc., 2018-2023

As a newer player, PDD’s revenues are at a lower level than what Alibaba generates, but the rise is significantly steeper each year. Certainly, its strategy of focusing on affordability has been particularly successful during this period, as consumers were looking for cheap prices to cope with the rising cost of living in an inflationary environment. 

PDD's fourth quarter results highlight Temu's extraordinary rise over the past year. While revenue has been growing steadily since before the pandemic, the leap from 2022 to 2023 reflects the great value the international shopping app has brought to PDD Holdings. The conglomerate did not specify how much revenue it generated from transactions on Temu in 2023, but it does suggest that it has invested heavily in the app, with cost of revenue up 192% year-over-year. 

Apparently, boosting the app’s international profile is considered more important than its profitability at the moment. And the strategy appears to be on track. The number of visits to shows that the site’s traffic has surged in 2023:

Number of Visits on, 2023

Temu is PDD Holding's international site, designed to succeed where Alibaba has failed. The group is competing with both international and domestic players, the former including Amazon and Shein.

PDD Holdings: Steady GMV Growth on Pinduoduo and Temu

A closer look at gross merchandise volume (GMV), which measures marketplace activity over a given period, shows that it mirrors the steady revenue growth shown in the previous section.

eCommerce Gross Merchandise Volume (GMV) Development of Pinduoduo, Inc. by Domains, 2019-2024

The chart visualizes how Pinduoduo’s domestic domain accounts for the bulk of its GMV, while Temu’s GMV development over the past few years is comparatively small. registered transactions in the hundreds of billions, which multiplied further during the pandemic years and after. 

More precisely, in 2019, US$146 billion eCommerce transactions were conducted on the site, which already approached US$500 billion in 2022. By comparison, Temu saw marketplace activity of around US$300 million that year, having launched the site in September. By 2023, this figure was US$14 billion, while generated US$580 billion in transactions. 

The positive trend is expected to continue in 2024, with an expected marketplace activity of US$654.5 billion on and US$30 billion on 

Note that GMV does not equal the revenue PDD Holding makes, which takes a percentage of GMV as a fee for platform provision.

China Globe new (blue) Unsplash

PDD Holdings’ Earnings: Wrap-Up

PDD Holdings’ latest announcement corresponds to the collective outcry that its shopping platform Temu has stirred over the past year. With Alibaba’s revenues fluctuating, and Amazon facing criticism that its site has fallen prey to low-cost merchants and fake reviews, PDD Holdings emerges as the winner of last year. 

However, one should not be too quick to judge the outcome. While Temu gained popularity and saw steep growth in 2023, it is questionable whether the low-price, low-quality strategy is viable in the long run. PDD Holdings has invested heavily in promoting the shopping platform, but sustaining its growth is another story, especially for consumers in countries that are used to different values.

Sources: Nikkei AsiaPDD HoldingsTechinAsiaTechnode