Biz / Tech

Pinduoduo files for IPO in US

Chinese social media-based e-commerce firm Pinduoduo has filed for a US$1-billion initial public offering in the United States.

Chinese social media-based e-commerce firm Pinduoduo has filed for a US$1-billion initial public offering in the United States, joining the IPO rush of a number of Chinese unicorns such as Xiaomi and on-demand local services firm Meituan Dianping.

Tencent-backed Pinduoduo, which was set up in Shanghai in 2015, allows users to participate in group buying deals with deep discounts through social networking sites, and has been quickly evolving to challenge the dominant position of market leaders Alibaba and JD.

The company's revenue, which comes from merchants' advertising and transaction commission, increased by 37 fold in the first quarter this year from the year-earlier period to 1.38 billion yuan (US$219 million), according to its prospectus filed to the Securities and Exchange Commission on Saturday.

Its gross merchandise value, the total amount of goods sold, reached 66.2 billion yuan in the three months ended March this year, nearly half of its full-year GMV of 141.2 billion yuan from 2017.

The Shanghai-headquartered Pinduoduo didn't specify its share pricing or its intended listing time. Apart from Tencent, its major shareholders include Gaorong Capital, Banyan Partners Funds and Sequoia Funds.

Its team purchase model, in which friends and family members invite more potential buyers so the team purchase price becomes even lower, has been an effective solution to aggregate consumer demand and link them with merchants and manufacturers.

Consumers in the lower-tier cities has been embracing this model which offers them cheap goods such as US$1 toilet paper packs and bed sheets at US$5 as well as cheap fresh food and agricultural products.

Founder and CEO Huang Zheng said in a letter to shareholders that it seeks to evolve its "team purchase" formats in the future for different user scenarios.

Earlier this month, it has been involved in disputes with merchants which said it has been executing improper product quality evaluating standards and freezing their trading accounts and deposits.

Pinduoduo said the fines from those merchants selling under-qualified products go entirely into its consumer compensation fund and it would continue its efforts to improve the efficiency and quality of the supply chain.


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