LatePost Exclusive | In the new consumer environment, Pinduoduo returns to the "basic market" of grocery shopping

Temu shifts to contraction, the main e-commerce platform is focusing on essential consumer goods, while Duoduo Grocery is growing rapidly.

Written by丨Shen Fangwei

Illustrations丨Huang Zhenxin

Editor丨Huang Junjie

According to LatePost, Pinduoduo’s GMV growth in Q2 this year fell below 10% year-over-year, the first time in its history. Other major platforms also saw significant drops in growth. Only Douyin E-commerce was ahead of Pinduoduo, but its monthly growth rates in several months have also dropped to near 10%.

Due to tightened global regulations, Pinduoduo’s overseas arm Temu is no longer pursuing rapid growth this year, instead focusing on compliance issues. In multiple European and American markets, GMV has declined by more than 30%.

In the new consumption environment, Pinduoduo is shifting to essentials for growth. Several Temu mid- and senior-level executives have moved back to China to work on Duoduo Grocery. The core management is now paying direct attention to this older line of business. Duoduo Grocery’s revenue is expected to exceed 400 billion yuan this year, generating billions in profit.

According to the Q2 financial report released on the evening of August 24, Pinduoduo’s revenue grew by 8% to 112.4 billion yuan over last year, half the investor market expectation but still far surpassing Alibaba and JD.com. Meanwhile, the company reported another “other loss” of 7.4 billion yuan for the quarter, with no explanation in the statement.

In the past decade, Pinduoduo hasn’t lost a competitive business battle yet: from breaking out with low-price e-commerce to pioneering community group buying and cross-border e-commerce. Every time, it outpaced rivals by finding market gaps faster, capturing significant share with superior efficiency and low prices. But as its competitors shift from other internet firms to a new consumption paradigm, Pinduoduo can no longer achieve 20% growth in domestic e-commerce and has turned to more fundamental products.

The perfect consumption storm, even the platform with the lowest prices cannot withstand it

Last year, e-commerce platforms saw increases in both performance and profits, largely due to 300 billion yuan in national subsidies. This year, subsidies fell to 250 billion yuan and are shifting more to offline channels. The AI race and ongoing wars have pushed up various raw material prices, raising product costs. Housing prices haven’t rebounded and sales in sectors like furniture are obviously down.

The shock is evident in financial statements across multiple listed industries. Xiaomi’s mobile and hardware revenue fell by 11.3% in Q2; Hisense and Haier saw revenue slip 5–10%, with net profits dropping even more; leading home furnishing firms like Oppein and Sophia forecast profit drops of 50–80% year-over-year.

Price increases continue. Thousand-yuan smartphones have largely disappeared, with Chinese phone manufacturers cutting more than 100 million units from their production plans this year. Even Apple, with its strongest grip on supply chains, cannot suppress prices—the new Mac mini has gone from about 3,000 yuan with subsidies to roughly 6,000 yuan. Price hikes have directly led to falling sales volumes.

Key e-commerce categories—consumer electronics, appliances, home improvement and furnishings—are all in decline. The recovery in fashion, beauty, and everyday essentials compared to last year cannot offset this trend.

Growth rates for major Chinese e-commerce platforms have all dropped sharply this year. One platform disclosed a H1 GMV growth of about 7%, but in reality, it was only 3.5%—as many bundled orders driven by coupons were eventually returned. People at another platform said their actual GMV growth was also only in the low single digits. Douyin e-commerce GMV growth was over 30% last year, but for several months in the first half this year it has approached 10%.

The slowdown in growth does not shake Pinduoduo’s fundamentals. By staying out of food delivery wars and not building AI computing centers, Pinduoduo is the internet company with the healthiest cash flow—operating cash inflow hit 25.7 billion yuan in Q2. As of the end of June, cash and cash equivalents exceeded 450 billion yuan, bringing in 13.5 billion yuan in interest and investment returns in Q2 alone.

In recent years, Pinduoduo always found ways to sustain high growth: scooping up residual inventory through dealer networks, fostering competition with platform rules, and incentivizing merchants to clear stock at lower prices. Now, they are out of new tricks too.

In Q2 this year, consumer electronics—which accounts for over a fifth of Pinduoduo's core platform revenue—dropped more than 10% YOY. According to sources close to the company, even with subsidies or prices that undercut competitors by dozens or even hundreds of yuan, it is unable to move digital appliances. As a result, domestic e-commerce GMV growth slipped below 10% for the first time in Q2, far off the previously set 20% domestic e-commerce growth target for the year.

While most e-commerce companies only deliver to towns, Pinduoduo started promoting deliveries to villages as of Q4 last year—orders are consolidated at county hubs and delivered to every village the following day. The platform subsidizes more than one yuan for every parcel.

According to county-level franchisees in Shaanxi, Sichuan, etc., they deliver 3,000–4,000 packages daily, averaging 60–100 per administrative village. A source near a courier company estimates that J&T, China Post, Zhongtong and others are now partnering with Pinduoduo, delivering millions of packages for them.

In developed cities, Pinduoduo has launched next-day delivery. In recent years, courier firms have built warehouses for e-commerce logistics and provide storage and fulfillment, but hit stagnated growth and lacked clients. Pinduoduo encourages merchants to stock goods in cloud warehouses to speed up delivery and label them “next-day delivery” to attract consumers. Merchants who can guarantee next-day delivery themselves can also apply for this tag.

Pinduoduo’s main site now also offers international free shipping services to Southeast Asian countries like Malaysia, Vietnam, and Singapore. From brooms and buckets to refrigerators and TVs, most goods are shipped for free. Central warehouses in Guangdong dispatch dozens of standard containers a week by sea to destinations, then delivered by postal companies like J&T. These small goods are 20–30% cheaper than on local platforms, but the wait time is 1–2 weeks.

An employee at Shopee observed a continued rise in Pinduoduo shipments to Southeast Asia this year. This business mainly serves the local Chinese population, the app doesn’t support multiple languages, and has limited impact on other platforms, but is already competing with Temu.

The product breadth of Pinduoduo’s marketplace now ranks second only to Taobao in China. It is no longer just a place for cheap products. In recent years, it has used subsidies and scale to improve fulfillment. Next-day delivery, direct-to-village courier, home delivery in Hong Kong, free shipping in Southeast Asia...they’ve done all they can. Yet, its GMV could not hold to the 20% growth goal and now has dropped to single digits.

Overseas growth faces regulatory constraints, entering a waiting period

After the Covid-19 outbreak, Chinese cross-border e-commerce firms like Temu and Shein used tax-free small parcel shipments to sweep global markets, breaking growth records. However, this explosive expansion also triggered regulatory backlash overseas.

Last year, the US began levying taxes on cross-border small parcels, ending Temu’s fully managed logistics model. In May of this year, the European Commission fined Temu 200 million euros for not effectively preventing the sale of prohibited goods—this is just the first of four ongoing investigations, with the others still pending. Multiple European countries have also launched probes into Temu, Shein, and AliExpress.

This year Temu is shifting to the defensive: compliance first, then expansion, to avoid provoking even more regulation.

Multiple merchants targeting the US and European markets told us their order volumes on Temu have dropped by 30%–50% year-over-year. Analysts estimate that from Q2 this year, Temu’s European GMV has fallen around 30%, with parcel volumes down 40–50%, directly hitting its profitability and growth targets.

In March, Pinduoduo announced the “New Pindu” plan, targeting higher quality, more compliant private labels. According to previous reports, “New Pindu” works with brands like Bosideng to offer exclusive buyouts, prepayments, and inventory takeovers, using certainty to attract suppliers to participate.

Products sold overseas under the “New Pindu” label

The first batch of clothing was sourced from brands such as Bosideng, without carrying the Bosideng label. It is not yet clear which brand name these will be sold under. In June, “New Pindu” registered the new brand “Bemuvo” and launched its namesake store, featuring lower-priced items currently only available in Japan and Canada.

Pinduoduo stated that “New Pindu” aims to recreate another Pinduoduo in three years. However, in Q2 this year, some Temu mid- and senior-level executives have returned to China to support Duoduo Grocery, and Pinduoduo’s core management has also started to pay attention to Duoduo Grocery.

Fresh groceries and daily essentials replicate “100 billion yuan subsidy”, starting with selling Sam's Club products

Discretionary spending is getting harder, so Pinduoduo is pivoting to daily necessities.

As of June 2025, after Meituan withdrew, Pinduoduo became the ultimate winner in community group buying. By absorbing Meituan Preferred’s groups and adding its new ones, it added about 1 million groups in the past year, now totaling around 3 million, covering major cities, thousands of counties, and tens of thousands of townships and villages—establishing infrastructure no rival possesses.

Without a national rival, Duoduo Grocery’s revenue rose and commissions fell. Last year, partners managing warehouse-to-group deliveries earned 0.5–0.6 yuan per order; now it’s generally under 0.4 yuan. Group leader commissions have dropped from 2–3% to 1–2%.

Orders for Duoduo Grocery are placed today and picked up tomorrow, which is cheap but not as convenient as convenience stores or home delivery by couriers. Industry insiders previously thought it suited lower-income markets. Yet this year, multiple East China cities have seen 30–50% growth. Many Duoduo Grocery staff are surprised, saying business has been booming since the Chinese New Year, making it difficult to keep up.

Some of this growth comes from a broader product range. Duoduo Grocery now sells 3,000–4,000 SKUs, covering almost all essential items. In midwestern counties and even townships, users can buy refrigerated milk and fresh meat on the platform.

It is no longer focusing solely on low prices: many “white-label” items have been delisted, subpar small merchants removed, more branded goods offered, and suppliers are required to match the quality standards of Yonghui, RT-Mart, and Meituan Xiaoxiang Supermarket for delivery.

Duoduo Grocery does not run a delivery fleet itself but uses group leaders for door-to-door service. Last year, delivery in key cities of East China started at 29 or 39 yuan; this year, the minimum dropped to 9 or 19 yuan—enabling delivery for even one or two items.

Previously, we learned that Duoduo Grocery’s revenue is expected to reach 400 billion yuan this year, generating over 10 billion yuan in profit. The business was previously led by Dongzao. In April this year, another core manager took over, shifting performance reviews from market share to three indicators: gross margin, low prices, and grocery sales as a proportion of local total retail sales.

She divided Duoduo Grocery into 12 major regions, with each manager responsible for 2–3 provinces. Regions are not delineated geographically; for example, Beijing, Tianjin, and Sichuan belong to the same one. With managers spanning various markets, best practices are shared, and headquarters has tighter control over product allocation.

Pinduoduo’s main platform is also selling more essentials. It previously won consumer trust by subsidizing iPhones, Moutai, Lamer, and Dyson, but essentials are even harder—food and daily goods require much more consumer trust. Pinduoduo’s solution remains introducing more brands, this time Sam’s Club products.

Since this year, Sam’s Club’s private label Member’s Mark has appeared widely in Pinduoduo’s “10 billion yuan subsidies.” These are exclusive to Sam’s, priced 10–20% below comparable supplier products. Users can buy them on Pinduoduo without a Sam’s Club membership, with further subsidies of 5–10% or more.

Just like subsidized iPhones were never authorized by Apple China, these products are not officially authorized for distribution by Sam’s Club China either. About 10–15% of Sam's annual supply is routed to personal and corporate resellers, who add a small markup. Pinduoduo sources from these resellers, adds a further 5–10% subsidy, and achieves the lowest prices online.

Pinduoduo did not copy Temu’s “New Pindu” private label approach in domestic e-commerce. Instead, it is spending money and traffic to push widely trusted Sam’s Club products to consumers.

After a decade, Pinduoduo is temporarily shifting from all-out expansion and full-speed growth to prioritizing safety and a focus on fundamental consumption sectors.

Following the “ghost delivery” and violent law enforcement resistance incidents last December, which resulted in a 1.522 billion yuan fine for Pinduoduo, numerous employees from different business units told us that management’s attention on compliance this year is far above business growth.

This year, Pinduoduo required any merchant with annual sales exceeding 100,000 yuan to upload their business license, no longer allowing “one license for multiple stores”; encourages merchants to pay taxes with cash subsidies; requires merchants to provide brand authorization or trademark for goods sold. As a result, 200,000–300,000 active merchants have left the platform. Duoduo Grocery, which used to sell low-priced adult products and live animals (chickens, ducks, rabbits, bullfrogs, etc.), has gradually delisted these over the past year.

This caution and commitment to security are evident elsewhere too. In Q2 this year, Pinduoduo purchased two buildings in Xiong’an, Hebei and Shanghai—the first major fixed asset acquisitions since its founding 10 years ago, as it had only ever leased but never bought property before.

Cover image source: “

Mountains May Depart”

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