Pinduoduo's wild growth phase is fading, and hidden concerns are emerging in succession.

This is not only reflected in the growing number of people questioning Pinduoduo's low-price strategy but also in Pinduoduo's latest third-quarter financial report.

According to Pinduoduo's latest third-quarter financial report, revenue reached 99.4 billion yuan, a year-on-year increase of 44%. Compared with the previous quarter, revenue growth slowed and was lower than the market's estimated 102.83 billion yuan.

Profit reached 25 billion yuan, a year-on-year increase of 61% and a quarter-on-quarter decrease of 22%. Adjusted earnings per American depositary share (ADS) for the third quarter were 18.59 yuan, lower than the market's estimated 20.19 yuan.

It is evident that both Pinduoduo's third-quarter revenue falling below market expectations and its sharp quarter-on-quarter decline in profits are direct manifestations of the company's development entering a downturn.

Due to Pinduoduo's third-quarter financial report falling short of expectations, Pinduoduo's U.S. shares plummeted by more than 14% pre-market on the day the report was released.

This shows the capital market's concerns about Pinduoduo's current development situation.

Although Pinduoduo attributed its third-quarter financial report falling short of expectations to measures such as "platform discounts," "e-commerce expansion into the west," and "support plans for new merchants," a deeper analysis reveals that there may be bigger issues in the report that warrant attention.

As the saying goes in "Bian Que Meets Duke Huan of Cai," "The disease is in the bone marrow, where life and death are determined; nothing can be done." Pinduoduo's problems may also be deeply rooted and not easily solved.

The low-price strategy dominated by the "Billion Subsidy" program is starting to backfire

Pinduoduo has always had a fascination with the "Billion Subsidy" program.

This has been the case during both the e-commerce boom and the e-commerce reshuffle periods.

On the surface, Pinduoduo aims to deliver more high-quality products to consumers through the "Billion Subsidy" program, allowing them to enjoy the low-price benefits of e-commerce.

However, as more issues with the "Billion Subsidy" program emerge, it is becoming increasingly clear that Pinduoduo's so-called "Billion Subsidy" is merely a tool to attract and harvest consumer traffic, rather than providing consumers with good products and experiences.

Even as more people began to question the "Billion Subsidy" program, some consumers still believed that the products subsidized by Pinduoduo were of high quality.

However, when Wuliangye exposed fake products in Pinduoduo's "Billion Subsidy" channel, people began to realize that the program was merely a tool for Pinduoduo to attract and harvest traffic, not to provide consumers with good products and experiences.

As a result, people began to reflect on Pinduoduo's "Billion Subsidy" strategy.

Ultimately, Pinduoduo's "Billion Subsidy" strategy is merely a continuation of its low-price strategy. Through this approach, Pinduoduo encourages consumers seeking low prices to place as many orders as possible on its platform, thereby increasing transaction volumes.

For Pinduoduo, the "Billion Subsidy" is merely a marketing tactic.

When people do not truly understand the essence of the "Billion Subsidy," they may simply believe that products purchased through it are of high quality.

However, as more inferior products begin to appear in Pinduoduo's "Billion Subsidy" channel, the program, which once brought significant traffic and transactions to Pinduoduo, is now facing increasing scrutiny.

In summary, Pinduoduo's low-price strategy, dominated by the "Billion Subsidy," is starting to backfire. This is because it has not only failed to improve Pinduoduo's platform ecosystem but has also failed to provide consumers with genuine benefits. Instead, it is merely a marketing tactic for Pinduoduo to increase transactions and harvest traffic.

It is foreseeable that as Pinduoduo's "Billion Subsidy" program faces increasing scrutiny, its previously revered existence will begin to have a backfiring effect.

As this backfiring effect becomes more prevalent, Pinduoduo's traffic faces the risk of decline, and its entire business model will encounter unprecedented challenges.

The platform matching model prioritizing efficiency is beginning to collapse

One of the key reasons for Pinduoduo's early wild growth was its platform matching model prioritizing efficiency, which still has significant advantages.

Whether it's Pinduoduo's support for agriculture, rural areas, and farmers or its social e-commerce strategy, ultimately, they are all aimed at maximizing matching efficiency and scaling the platform.

In an era of abundant traffic, especially when information asymmetry existed, Pinduoduo's efficiency-prioritizing platform model could indeed achieve certain results.

As e-commerce's impact on people's lives deepens, especially when the information barriers between upstream and downstream are broken, Pinduoduo's efficiency-prioritizing development model begins to collapse little by little.

Taking Pinduoduo's "Agricultural Land Cloud Matching" model as an example, through this model, Pinduoduo breaks down the barriers between consumers and agricultural products, maximizing the matching efficiency between the two.

As a result, the transaction efficiency of agricultural products on the Pinduoduo platform has been significantly improved.

However, while efficiency has improved, people have found that the products they purchase have not improved significantly; only the matching efficiency has increased.

Through the issues with the "Agricultural Land Cloud Matching" model, we can see that merely focusing on efficiency and matching while neglecting upstream industrial transformation and downstream consumer concerns will only lead to Pinduoduo's fleeting success.

As more problems emerge in the efficiency-prioritizing platform matching model, the once thriving Pinduoduo platform begins to face increasing challenges.

Although Pinduoduo is now aware of the issues with its efficiency-prioritizing development model and has begun platform governance, it may take a long time for such governance to truly take effect.

If such governance fails to produce results, it may even drag Pinduoduo into a quagmire.

The scaled development prioritizing traffic is starting to hit a wall

As the e-commerce industry enters a period of deep reshuffling, especially when the scaled-prioritizing development model encounters a ceiling, merely focusing on increasing traffic volume faces increasing difficulties and challenges.

This has become a consensus in the entire e-commerce industry. Finding new development opportunities in the existing market and obtaining new growth through in-depth mining has become a consensus in the e-commerce industry.

However, against this backdrop, we still see Pinduoduo's fascination with traffic.

This can be glimpsed from Pinduoduo's third-quarter financial report.

Zhao Jiazhen, Executive Director and Co-CEO of Pinduoduo Group, stated, "In the past quarter, we introduced a series of discount and support measures to promote cost reduction and revenue increase for merchants through cash refunds and discounts, pushing industrial belts into a new stage of high-quality development."

Similarly, in mid-August this year, Pinduoduo concentrated implemented a package of "Billion Discount" measures, successively launching multiple service fee refund rights, reducing pay-after-use service fees, merchant deposit fees, and withdrawal thresholds, comprehensively reducing operating costs for merchants.

In addition, Pinduoduo also promoted the "E-commerce Expansion into the West" plan, with Pinduoduo's platform bearing the logistics transfer fees for orders in remote areas, significantly reducing the express delivery fees for merchants sending orders to remote areas.

Ultimately, Pinduoduo's attempts to increase merchant volume through these measures are still traffic-focused thinking.

If we summarize and define Pinduoduo's series of measures, it is not difficult to see that it is still pursuing a scaled development strategy prioritizing traffic and attempting to achieve growth by expanding its platform.

Although Pinduoduo can achieve certain growth and continue its previous development model through such a disguised capital operation model, when this model fails to produce equivalent results, especially when it fails to drive Pinduoduo's scaled growth, its scaled-prioritizing development model may hit a wall.

If Pinduoduo attempts to increase the scale and volume of upstream merchants through a series of actions but hits a wall, it will also face greater challenges in its attempts to grow the downstream consumer base.

In July this year, the issue of the disappearance of group leaders of Kuantuantuan, a group-buying tool under Pinduoduo, exposed the problems and embarrassments Pinduoduo encounters in pursuing traffic scale.

According to the "Consumer Electronics Magazine," multiple Kuantuantuan group leaders encountered difficulties in withdrawing funds.

When a senior group leader tried to withdraw about 30,000 yuan in costs and profits, Kuantuantuan rejected the withdrawal due to incomplete group leader information.

After submitting a series of additional materials but still unable to withdraw, the group leader contacted Kuantuantuan's official customer service for a solution, but with little effect. When contacting Pinduoduo's customer service for assistance, they were directed to contact Kuantuantuan's customer service.

In addition, the Downward market , once proudly boasted by Pinduoduo and represented by young people outside the Fifth Ring Road, is also facing the challenge of traffic scaled growth hitting a bottleneck.

Ultimately, Pinduoduo's mere focus on traffic and scale without rooting in industry or paying attention to new technologies will inevitably lead to increasing obstacles.

Conclusion

Pinduoduo's third-quarter financial report is a magnifying glass.

Through it, we see not only Pinduoduo's declining performance in the third quarter but also significant issues and hidden concerns in Pinduoduo itself and its current strategic approach.

Ultimately, Pinduoduo's stubborn adherence to its previous development model has led it to its current embarrassing situation.

For Pinduoduo, if it cannot fundamentally address issues with its platform, model, and tactics but merely avoids the critical issues, it may face even greater storms in the future.

When Pinduoduo's illness "goes deep into the bone marrow," there may be nothing that can be done.

As the vortex begins to engulf Pinduoduo, it will no longer be magical.