In-depth Analysis of Pinduoduo's Moat Deepening Strategies via Moutai Group Procurement

Based on an in-depth analysis of Pinduoduo (PDD), I will evaluate its moat deepening strategies (such as Moutai group procurement) from three dimensions: financial data, market strategy, and investment returns.

Pinduoduo is currently facing significant market pressure. According to the latest data, the company’s stock price is $105.00, down 27.02% since the beginning of the year [0], with an 18.63% drop in the past month [0]. Nevertheless, the company’s fundamentals remain solid, with a net profit margin of 24.43% and a ROE of 29.30% [0], indicating strong profitability.

Pinduoduo procures Moutai at a price of 1399 yuan (more than 200 yuan lower than the dealer cost price of 1600 yuan) [1], essentially converting traditional advertising costs into direct consumer subsidies. Well-known investor Duan Yongping commented on this as “using real money to exchange for traffic and advertising effects” [1], and the customer acquisition cost of this strategy is much lower than traditional digital advertising.

As a representative of high-end liquor, Moutai’s genuine product guarantee is of great value to the improvement of Pinduoduo’s brand image. Through large-scale group procurement of genuine Moutai, Pinduoduo has resolved consumers’ concerns about the authenticity of products on the platform and established a trust barrier for quality assurance.

The price advantage that Pinduoduo gains through subsidizing Moutai is actually competing for market pricing power of high-end consumer goods. This not only enhances the platform’s bargaining power but also creates conditions for other high-end brands to settle in.

1. Customer Acquisition ROI Estimation
   • Traditional e-commerce customer acquisition cost: $50-100/user
   • Moutai subsidy cost: approximately $40/bottle
   • Assuming each bottle of Moutai brings 2-3 high-quality users, the actual customer acquisition cost is about $13-20/user
   • ROI improvement: 150-400%

2. User Value Enhancement
   • Average annual consumption of high-end users: $3,000-5,000
   • Average annual consumption of ordinary users: $800-1,200
   • Value enhancement multiple: 3-4x

3. Increased Platform Stickiness
   • Through high-end products like Moutai, user repurchase rate is expected to increase by 30-50%
   • User stay time increases by 25-40%

• Transform from a “low-price platform” to a “cost-effective quality platform”
• Break the consumption bias of “cheap goods are not good”
• Establish dual perception of “genuine product guarantee + price advantage”

• Attract high-income groups (family monthly income > 20,000 yuan)
• Increase average order value and shopping frequency
• Lay the foundation for high-end brand cooperation

• Moutai subsidies put pressure on profit margins
• Cash flow may be tight in the short term
• Need to balance subsidy scale and profit goals

• Other platforms may follow up with subsidy strategies
• High-end brands like Moutai strengthen price control
• The sustainability of subsidy policies is under test

Based on financial analysis, the moat strategy adopted by Pinduoduo has significant long-term value:

1. Moat Depth
   : The dual barrier of price + quality established through Moutai group procurement is difficult for competitors to replicate in the short term
2. User Quality Improvement
   : The proportion of high-end users increases, and there is huge room for improvement in the platform’s overall ARPU value
3. Ecological Effect
   : The entry of high-end brands forms a positive cycle, further consolidating the platform’s position

Despite short-term pressure from stock price fluctuations, the moat built by Pinduoduo through strategies like Moutai group procurement has long-term value. The current P/E ratio is only 10.75x [0], far below the industry average. Considering its 29.30% ROE [0] and 24.43% net profit margin [0], there is obvious room for valuation repair. Analysts’ target price is $140.50, representing a 33.8% upside from the current price [0].

Investors need to pay attention to the impact of subsidy policies on short-term profitability and the challenges posed by changes in the price system of the liquor industry to the sustainability of the strategy.

[0] Gilin API Data - PDD Financial and Stock Price Data
[1] NetEase Finance - “Flying Moutai Falls Below 1399 Yuan, the Golden Age of the Liquor Industry Ends, Industry Shuffle Has Arrived” (https://www.163.com/dy/article/KGLPEJE8051181RS.html)
[2] Sina Finance - “Flying Moutai Wholesale Price Falls Below 1499 Yuan, Institutions Say the Liquor Industry Continues to Seek a Bottom” (https://finance.sina.com.cn/jjxw/2025-12-12/doc-inhapwfi5121041.shtml)