A Chinese e-commerce site called Pinduoduo, or PDD, is planning to raise at least $1 billion in a US initial public offering, as it fights for market share against giants including Alibaba Group Holding Ltd.
The Shanghai-based firm saw revenue more than triple to $278 million in 2017, according to its filing to the US Securities and Exchange Commission, under the name Walnut Street Group Holding Limited. Losses rose 55 per cent to $79.5 million while transaction volumes reached 141.2 billion yuan.
PDD has become one of the fastest-growing startups in China by creating a sort of Facebook-Groupon mashup, where people spot deals on products such as fruit, clothes or toilet paper, and then recruit friends to buy at a discount. It offers merchandise at up to 20 per cent cheaper than market price by letting consumers buy directly from manufacturers, cutting out middlemen, advertising and acquisition costs.
The company was founded by ex-Google engineer Colin Huang and counts Tencent Holdings Ltd. and Sequoia Capital China as backers.
Pinduoduo saw its valuation jump about 10 times in its previous round of fundraising in April. It raised more than $1 billion, at a valuation of about $15 billion, people familiar said at the time.
Besides its reputation for low prices, PDD has benefited from a large base of users in lower-tier cities. The idea behind PDD is to give people a different experience than at traditional e-commerce sites like Amazon.com or Alibaba, where shoppers tend to plug in a keyword and then pick out an item after sorting through a few options.
Pinduoduo’s daily active users surpassed that of JD.com in January and reached 55.9 million in June, according to research from Shenzhen-based consultant Jiguang. Alibaba’s Taobao app had 172 million daily active users and JD 34.3 million, it said.
Huang launched his career in Silicon Valley and then returned home to become a serial entrepreneur. His app is supposed to be more like a digital version of shopping at the mall with friends, where you can share ideas and get feedback from people you trust.