Discount e-commerce giant PDD nearly doubles quarterly revenue, closing in on Alibaba as Meituan also chalks up growth

PDD Holdings, known for offering bargain prices on its Pinduoduo app in China and Temu in overseas markets, saw its revenue almost double in the third quarter of 2023 from a year ago, narrowing the gap between it and arch-rivals such as Alibaba Group Holding, owner of the South China Morning Post.

The online retailer, conceived in 2015 by founder Colin Huang Zheng as a provider of agricultural products and cheap consumer goods, on Tuesday reported a 94 per cent surge in third-quarter revenue to 68.8 billion yuan (US$9.6 billion), beating estimates, while its operating profit jumped 60 per cent to 16.7 billion yuan.

Revenue from “transaction services”, or the charges it collects from merchants for transactions on the platform, surged 315 per cent during the quarter.

In comparison, Alibaba reported sales of 224.8 billion yuan in the same quarter, up 9 per cent, while operating profit rose 34 per cent to 33.6 billion yuan. Rival JD.com reported 1.7 per cent growth in revenue to 247.7 billion yuan in the September quarter, while net income rose 33 per cent to 7.9 billion yuan.

PDD’s share price was up around 10 per cent in pre-trading in New York, giving it a market value of about US$170 billion, edging closer to Alibaba’s current market cap of US$200 billion.

Meanwhile, Chinese delivery services giant Meituan on Tuesday posted a 22 per cent jump in third-quarter revenue as a post-pandemic market rebound in the online food and travel segments contributed to growth.

Revenue for the quarter ended September 30 rose to 76.5 billion yuan from 62.6 billion yuan over the same period last year. Adjusted net profit for the quarter increased to 5.7 billion, up 62.4 per cent from a year earlier, marking the third consecutive quarter that the company turned a profit.

A food delivery courier for Meituan pick ups lunch orders at a restaurant in Beijing, China, on Tuesday, Aug. 22, 2023. Photo: Bloomberg

Meituan’s core local commerce segment, which includes a range of businesses such as food delivery, online travel and instant shopping, saw its revenue jump by 24.5 per cent from a year earlier, thanks to a recovery in the food and travel sectors.

Meituan said that peak daily order volume at its food delivery business recorded a new high of 78 million, doubling from three years ago, amid strong growth in the market.

Meanwhile, the company’s in-store and hotel and travel businesses were a highlight, growing gross transaction value by more than 90 per cent in the quarter from a year earlier, amid this year’s travel boom after Beijing scrapped strict anti-pandemic restrictions.

Soochow Securities analysts said in a pre-earnings research note that they expected Meituan to keep improving profitability, with the hotels and travel market seeing further recovery.

Meanwhile, Meituan has started investing heavily in live streaming and video content to engage users, offering subsidies to attract users and compete better with new rivals such as ByteDance’s Douyin.

Meituan said it has leveraged short videos and live-streaming sessions to promote meals from its partners. Brands including Chinese hotpot chain Haidilao and US coffee giant Starbucks are among the first batch to use these capabilities, building their online exposure and sales, Meituan said in July.

The Beijing-based company is exploring overseas market opportunities. It launched a sister brand named KeeTa in Hong Kong earlier this year and is reportedly considering the acquisition of German Delivery Hero’s Southeast Asia business, according to a Bloomberg report citing sources.