We Maintain PDD's Narrow Moat Supported by Pinduoduo's Network Effect
PDD Holding is the second-largest e-commerce platform in China by gross merchandise volume in 2025, by our estimate. PDD is a social e-commerce platform that encourages users to enjoy lower prices by teaming up to make purchases. Easier sharing of PDD deals with social contacts through Tencent’s social network leads to lower traffic acquisition costs versus peers. The firm focused on low-tier cities and white-label merchants, followed by the CNY 10 billion program launched in 2019 to subsidize consumers for higher-priced products such as Moutai, Apple iPhones, and agricultural products. PDD aims to offer good value across various categories and price points. To increase average revenue per user, PDD uses subsidies to induce consumers to make purchases in categories they haven’t purchased in before.
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