Temu owner Pinduoduo says it has tripled net profit in first quarter of 2024

Consumers are well and truly hooked on Chinese e-commerce giant Temu, with the company posting its latest insane profits on Wednesday.

Chinese e-commerce giant Pinduoduo has announced its net profit for the first quarter has more than tripled, as the Temu owner continues to boost its competitiveness in its home market and abroad.

Pinduoduo is one of China’s leading online retailers — owing largely to its success in reaching consumers in rural areas with a diverse offering of low-cost products.

The company’s overseas platform, Temu, has surged since its September 2022 launch to become one of the most popular online shopping sites in the United States, propelled by a marketing strategy that featured multiple prime-time Super Bowl advertisements.

Pinduoduo said net profit for the first three months of 2024 was $3.88 billion (A$5.38bn) , up 246 per cent from the same period last year.

The Shanghai-based firm added that sales in the first quarter were $112 billion (A$168bn), an increase of 131 per cent from the same period in 2023.

Temu expanded last year into the EU market, where the platform quickly amassed an average of 75 million monthly active users.

But the shopping app has also encountered turbulence, such as in March this year, when a promotional campaign in Britain and France backfired due to concerns over data privacy.

In April, regulators in South Korea opened an investigation into Temu on suspicion of unfair practices including false advertising and poor product quality.

Earlier this month, European consumer rights groups accused it of manipulative sales techniques and a lack of transparency about traders on the platform.

Despite the setbacks, Pinduoduo remains the newest competitor to established e-commerce juggernauts, including Amazon in the United States and Alibaba in China.

Chinese e-commerce giant Pinduoduo announced Wednesday its net profit for the first quarter more than tripled, as the Temu owner continues to boost its competitiveness in its home market and abroad.

The latest results come after the firm announced in March near-double annual profits in 2023, a year in which it briefly surpassed Alibaba — owner of Chinese e-commerce behemoth Taobao — in terms of market capitalisation for the first time.

Pinduoduo was on Tuesday valued at around $202 billion (A$303bn) , compared to Alibaba’s $209 billion (A$314bn).

In pre-market trading on the Nasdaq on Wednesday, the company’s stock price rose around 8 per cent.

Pinduoduo’s executive director and co-CEO Jiazhen Zhao said in a statement: “This year is critical for us to deepen the execution of our high-quality development strategy.

“We will focus our efforts on improving the overall consumer experience, strengthening our supply chain capabilities, and fostering a healthy platform ecosystem.”

Temu defends use of Aussie data

Temu has defended its collection and use of Australians’ data as it faces increased scrutiny across the globe.

Research company Roy Morgan says 1.26 million Australians are shopping each month on Temu “thanks to a mix of ultra-cheap prices, free delivery and aggressive marketing and media spend”.

Australian cybersecurity expert Susan McLean had raised concerns about the security risks shopping on these types of websites in April.

Temu is also under increased scrutiny in the United States, Europe and elsewhere over its business practices, advertising and handling of user data.

In response to concerns about its use of customers’ personal data, Temu told news.com.au it collects “the minimum information necessary” to manage and complete orders, deliver services and process payments, communicate with the user about their orders, products, and offers that might interest them, and personalise the user’s shopping experience and make product recommendations.

“We are always transparent about the potential collection of data,” a statement said.

“If there’s a chance we might use the user’s information for a specific purpose, we’ll inform them. This aligns with the strict standards set by app marketplaces like Apple’s App Store and Google Play.

“While we disclose all potential data collection, in practice we only collect and use the absolute minimum needed to operate our service effectively.

Temu has defended its collection and use of Australians’ data as it faces increased scrutiny across the globe.

“As part of Nasdaq-listed PDD Holdings Inc, we adhere to rigorous regulatory oversight. Our commitment to privacy informs every aspect of how we handle user data.”

Temu said its app security practices had been “independently verified to meet rigorous global standards” and it used ethical hackers to “proactively identify and report vulnerabilities”.

From a user perspective, Temu said it used multi-factor authentication and actively combated phishing scams and identity theft as a member of the Anti-Phishing Working Group.

Ms McLean said another concern was the number of emails customers receive after shopping on Temu, which encourage the purchase of more products. She advises to never click those links.

“You don’t really know if the link is legitimate and you don’t know what’s going to happen if you click on it,” she said. “And we always say if you’re going to purchase a particular product, the best place to purchase that from is the website of the brand itself or a platform like Amazon, something that is a legitimate platform where you’re highly unlikely to be hacked or scammed.”

Originally published as Temu owner Pinduoduo says it has tripled net profit in first quarter of 2024