Chinese e-commerce company Pinduoduo (NASDAQ: PDD) is to raise up to USD 6.1 billion to invest in agricultural logistics infrastructure and responsive manufacturing as the company believes that consumer behavioral changes accelerate the online migration of retail, according to a press release on Wednesday.
The company, with 731.1 million annual active buyers, expects to use the proceeds to strengthen its balance sheet and pursue growth by making strategic investments in infrastructure, expanding business operations, making future acquisitions and entering partnerships.
Online grocery shopping has taken off in China after the COVID-19 lockdown in the first quarter pushed many households to seek alternative ways to buy their daily necessities. The online shopping habit has stuck but the current logistics system was optimized to deliver sturdy manufactured goods rather than perishables like agricultural produce, according to the company.
Pinduoduo has launched Duoduo Maicai earlier this year, a next-day, self pick-up grocery service, to capitalize on this new trend.
Beyond the business side, Pinduoduo has formed alliances with universities and research agencies to advance agricultural technologies.
The company has also co-held the Duo Duo Smart Agriculture Competition with China Agricultural University in July with the aim of developing planting methods for strawberries that are best suited for the conditions, using either advanced AI technologies or horticultural know-how.
Pinduoduo entered a research collaboration with Singapore Institute of Food and Biotechnology Innovation to develop a cost-effective test for contaminants like pesticides.
Beyond its agricultural business, Pinduoduo has also been expanding its consumer-to-manufacturer plan to support brand development for original equipment manufacturers, incubate new sub-brands under well-known brands, support new emerging brands, and rejuvenate heritage brands in the consumer products sector such as kitchenware and cosmetics.