On May 27, PDD Holdings Inc released its financial report for the first quarter of 2026. The data shows the company achieved total revenue of 106.2 billion yuan, an increase of 11% year-over-year. Net profit attributable to ordinary shareholders was 12.5 billion yuan, a decrease of 15% year-over-year. The company attributed the profit decline primarily to continued investments in the "Billion in Support" initiative and its strategic focus on supply chain development, marking the substantial advancement of the "Rebuild PDD in Three Years" strategy proposed late last year.
The report indicates that PDD's transaction services revenue reached 56.3 billion yuan in the quarter, growing 20% year-over-year. For the first time, this segment surpassed online marketing services revenue to become the largest source of income, reflecting the continued rapid growth of PDD's cross-border e-commerce business. This trend suggests significant future market potential and growth space for its self-operated brands. Marketing revenue growth for the quarter was only 2.5% year-over-year, significantly below market expectations of 8% and the industry average for the period. This was mainly due to a series of fee reductions for merchants under the "Billion in Support" plan, which impacted the advertising monetization rate for the quarter, as PDD channeled substantial subsidies into the transformation and upgrading of its supply chain system.
**New Pinduoduo Deepens Implementation: Billions Invested in Supply Chain Branding** As the core vehicle for the "Rebuild PDD in Three Years" strategy, the New Pinduoduo business entered its first full quarter of deepened development in Q1. PDD formally established a dedicated New Pinduoduo company in Shanghai to build a brand self-operation model. An initial cash injection of 15 billion yuan has been completed, with plans to cumulatively invest 100 billion yuan over the next three years to fully advance the branding upgrade of China's supply chains.
Unlike traditional platform models, New Pinduoduo adopts a self-operated model of "platform customization, factory direct supply, and exclusive buyout distribution," transforming the platform's role from a "transaction facilitator" to an "industrial operator." Currently, the New Pinduoduo team is deeply embedded in industrial frontlines, accelerating the integration of supply chain resources from PDD and Temu. The focus is on three categories: apparel, home goods, and outdoor products, collaborating with globally renowned IPs for deep co-creation to build a brand matrix targeting different markets. It is understood that the first batch of self-operated branded products is expected to be launched in the US and European markets in the third quarter of this year, with no domestic sales planned for now.
"This year is a critical window for supply chain transformation and upgrading. Branded development is the necessary path for Chinese manufacturing to break through the dilemma of homogeneous competition," stated Chen Lei, Co-Chairman and Co-CEO of PDD Group. He noted that compared to the domestic market, the brand development in global e-commerce is still in its early stages, with unmet user demand for high-quality, differentiated brands across different markets. New Pinduoduo aims to drive the supply chain leap from "OEM production" to "brand creation" through systematic brand incubation, opening new value space for Chinese manufacturing.
It is noteworthy that the advancement of New Pinduoduo is not isolated but built upon the industrial foundation accumulated over years by PDD's "Billion in Support" plan. In recent years, this plan has helped numerous industrial belt merchants transition from "selling a lot" to "selling well," accumulating rich experience in supply chain collaboration. This experience will directly translate into the core competitiveness of New Pinduoduo, while also providing new overseas channels for industrial belt merchants, forming a virtuous cycle of "platform empowerment - industrial upgrade - brand globalization."
**"Billion in Support" Continues to Escalate: From Industrial Belts to Rural Value Reconstruction** In the first quarter, PDD's "Billion in Support" merchant-benefit policies maintained high-intensity investment. Initiatives such as "Duoduo Quality Specialties," "New Quality Supply," and "E-commerce Westward Advancement" were iterated and upgraded, extending support from single product sales to the entire industry chain.
The "2026 Duoduo Quality Specialties" campaign launched in mid-March focused on improving the quality and efficiency of the agricultural product supply chain. Unlike before, this upgrade is not limited to helping sell agricultural products but delves into upstream and downstream links like cultivation, cold chain logistics, and deep processing to enhance the value chain in agricultural regions. Initial projects have been implemented in multiple special agricultural regions nationwide, including Nanning's Wogan oranges, Hainan pineapples, Tongren matcha, and Ningxia goji berries. Through standardized production, branded operation, and full-chain traceability, more high-quality agricultural products are achieving better prices.
In the manufacturing sector, the new round of the "New Quality Supply" campaign has entered industrial belts such as Zhangzhou snacks, Zhengzhou skincare, Yiwu jewelry, and Qingdao enamel. It guides merchants to shift from "large and comprehensive" batch production to "fewer and finer" customized production. Many traditional "screwdriver factories" have gradually upgraded to smart factories with platform support, beginning to focus simultaneously on product design, technology R&D, and brand building. Data shows that over 60% of merchants participating in the plan have achieved improved product gross margins, with some enterprises significantly enhancing their brand premium capabilities.
Addressing high logistics costs and delivery difficulties in western regions, PDD continues to advance its "E-commerce Westward Advancement" policy. By covering secondary logistics transfer costs, the platform has significantly reduced the circulation costs for industrial belt goods. Taking the Zhongshan lighting industry as an example, the shipping cost for a large ceiling lamp from Zhongshan to Gansu dropped from around 40-50 yuan to about 10 yuan, driving an average annual order growth of over 30% for merchants in western regions.
Building on this, PDD also fully launched a free "Delivery to Villages" courier service in the first quarter. By establishing county-level transfer warehouses and village-level collection points, it aims to bridge the "last mile" of rural logistics. By the end of March, this service had achieved coverage in over 70% of administrative villages in some counties in Henan province. This not only brings more villages into the "free shipping zone" but also creates numerous local job opportunities.
**Compliance and Innovation in Parallel: Upholding the Platform's Developmental Values** While increasing strategic investment, PDD treats safety and compliance as the prerequisite for all development. In the first quarter, it continued to upgrade its platform governance system, with a focus on strengthening food safety guarantees. The platform introduced over 20 governance measures, including operational qualification compliance reviews, food advertising governance, live-streaming scenario controls, and food database construction. The handling time for non-compliant stores was reduced to an hourly level, forming a comprehensive "technology patrol + manual review + social supervision" governance system.
Regarding agricultural technology investment, the finals of the fifth "Duoduo Agricultural Research Science and Technology Competition" officially opened in the first quarter. The self-designed plant factories of the four finalist teams have been completed and put into use. The teams will explore intelligent cultivation solutions for cash crops like strawberries, targeting goals of "high quality, high yield, low cost, and low energy consumption." Since its inception in 2020, the competition has become a vital platform for agricultural research innovation and commercialization, attracting hundreds of top global research teams. Several technological achievements have been applied in agricultural regions across the country.
"This year marks the beginning of PDD's second decade and is a crucial year for initiating the comprehensive reshaping of our organization and culture around 'high-quality development for the new decade,'" stated Zhao Jiazhen, Co-Chairman and Co-CEO of PDD Group. The new leadership team will prioritize safety and compliance, base actions on social responsibility, and focus on high-quality development to drive profound changes in business, teams, internal processes, and organizational management. The platform will continue to increase long-term investment in the supply chain, responding to societal concerns with solid actions and verifiable results to create more positive value for users, industry, and society.
Industry analysis suggests that PDD's shift from early traffic-driven growth to its current supply-chain-driven approach reflects the Chinese e-commerce industry entering a new development stage centered on industrial upgrading. Although short-term profits are affected by strategic investments, in the long term, the strategic focus on the supply chain may build a more robust competitive moat for the platform.
Comments