Investment Analysis of Pinduoduo's Moutai Group Procurement to Deepen Moat and Digital Costco Model

Based on the data and information I have obtained, I will conduct an in-depth analysis for you on the investment logic of Pinduoduo deepening its moat through initiatives such as Moutai group procurement, as well as the sustainability of this digital Costco model.

Pinduoduo is implementing a precise user structure upgrading strategy through subsidies for high-end brands such as Moutai group procurement. According to data, Pinduoduo’s ‘10 Billion Subsidies’ zone reduced the group purchase price of 53-degree 500ml Feitian Moutai to 1499 yuan during the 2025 ‘Double 11’ period, which is the same as the official guide price of Kweichow Moutai [2]. The core value of this initiative lies in:

By subsidizing high-end products, Pinduoduo is acquiring the top 1% of high-value consumers. These users usually have stronger consumption power and brand awareness, and are scarce resources competed for by e-commerce platforms. Through hard currency products like Moutai, Pinduoduo has achieved strategic penetration from lower-tier to higher-tier markets.

Pinduoduo acts as a ‘consumer agent purchaser’, providing consumers with high-end products at lower prices through scale bargaining power. This model reconstructs the profit distribution mechanism of traditional retail and transfers brand premiums to consumers.

According to the latest financial data [0], Pinduoduo has shown strong financial strength to support this strategy:

• Net profit margin nearly 30%:
  The net profit margin in 2024 reached 29.30%, significantly higher than Alibaba (about 15%) and JD.com (2-4%) [3]
• ROE as high as 29.30%:
  Demonstrates excellent capital efficiency
• Strong cash flow:
  The net cash flow from operating activities in 2024 was approximately 153.8 billion yuan, significantly higher than the net profit of 112.4 billion yuan in the same year [3]

The core elements of the Costco model include: membership system, low gross profit, selected SKUs, and bulk procurement. Pinduoduo has carried out digital upgrading and localization innovation:

• The iron rule of gross profit margin not exceeding 15% [3]
• 76.2 million paid members worldwide in 2024, with a renewal rate of 90.5% [3]
• Single SKU sales are about 3.9 times that of Sam’s [3]

• Free membership system lowers the threshold, and value creation is achieved through product subsidies
• Digital algorithms enable personalized product recommendations and dynamic pricing
• Social e-commerce model enhances user stickiness and dissemination effect

Pinduoduo has established a strong user network effect through group buying and social communication. The more users participate, the stronger the bargaining power, which can provide more favorable prices, thereby attracting more users.

Long-term accumulated user behavior data has become an important competitive barrier. These data can support more precise product recommendations, more efficient supply chain management, and more optimized subsidy strategies.

In 2024, PDD’s marketing expenditure reached 111.3 billion yuan (mainly for overseas spending of the Temu business) [2], which is equivalent to Alibaba’s 115.1 billion yuan [2], but with higher operational efficiency, Pinduoduo achieved better profit conversion.

High-end user acquisition is highly dependent on subsidy investment; once subsidies are reduced, it may lead to user churn. The long-term ROI of initiatives such as Moutai group procurement needs continuous verification.

There is uncertainty about the depth and sustainability of cooperation with top brands like Moutai. The price of Feitian Moutai fell sharply to 1399 yuan in 2025 [4], which may affect the brand’s attitude towards e-commerce channels.

Competitors such as JD.com and Alibaba are also strengthening their 10 billion subsidy efforts; JD.com’s initiatives such as opening third-party logistics and relaxing POP malls in 2024 [2] directly impact Pinduoduo’s price advantage.

The current PDD stock price is $105.00 [0], with a P/E ratio of 10.11x [0], which is at a historically low level. The consensus target price of analysts is $140.50 [0], with an upside potential of about 33.8%. Considering the company’s strong profit growth and moat deepening trend, the current valuation is attractive.

Increase the lifetime value (LTV) of individual users through high-end user acquisition
The Temu business is developing rapidly in overseas markets, with the number of users approaching 500 million [1]
Application of AI and big data technologies in product recommendation, supply chain optimization, etc.

The core investment logic of Pinduoduo lies in reconstructing the retail value chain through digital means, while maintaining the low-price advantage and penetrating into the high-end market. Initiatives such as Moutai group procurement are not simple price wars, but strategic investments in user structure upgrading and supply chain deepening.

• Changes in the proportion of high-end users and consumption frequency
• ROI and conversion rate of the 10 Billion Subsidies
• Depth and breadth of cooperation with top brands
• Profit improvement progress of international business

The investment logic of Pinduoduo deepening its moat through initiatives such as Moutai group procurement is valid. This digital Costco model has the potential to continuously create competitive advantages, but it is necessary to continuously pay attention to changes in subsidy efficiency, user retention, and competitive situation.

In the short term, external public opinion storms have limited impact on actual business; in the long term, Pinduoduo is building a broader moat through user structure upgrading, supply chain deepening, and international expansion. For investors with a long-term vision, the current valuation level provides a good investment opportunity.

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[0] Jinling API Data - PDD Company Financial Data and Stock Price Information
[1] Star Map Financial Research Institute - Moat Analysis Theoretical Framework
[2] Huxiu - Flash Sale War 2025 Industry Competition Analysis
[3] Digitaling - In-depth Analysis of Costco Model
[4] Fortune Account - Analysis of Feitian Moutai Price Decline
[5] Sina Finance - Baijiu Price Inversion Trend Report