Can Pinduoduo’s Acceleration Threaten Its E-Commerce Rivals?

What Happened 

According to Forbes’ Real-Time Billionaire Rankings, the founder and CEO of the e-commerce platform Pinduoduo, Huang Zheng, is China’s second richest man. Currently, Zheng, also known as Colin Huang, has a net worth of $45.4 billion dollars. This follows China’s 6.18 Mid-Year Shopping Festival where Pinduoduo was expected to have healthy sales growth. While the company failed to release any sales figures from the event, according to Nasdaq, its shares have doubled, increasing the Pinduoduo’s market capitalization to over $104 billion this week.

The Jing Take

Formed in 2015, Pinduoduo has the English tagline: Together, More Savings, More Fun. In fact, the site’s group buying function, which sees consumers form purchasing clusters to secure lower prices, is a major attraction — in particular among price-conscious netizens from lower-tier cities. It is accessible via China’s most popular app, WeChat, and relies on social buying: where buyers share links to items over social media and word of mouth recommendations.

In the face of competition, Alibaba and JD.com, both with wider net income streams, have started to double down with rival strategies such as consumer-to-manufacturing. Moreover, they dominate top tier cities. While wanting a good price is not dictated by where you live, Pinduoduo lacks the logistics prowess of its rivals. Plus, if luxury taps group buying, it will likely avoid Pinduoduo — initially anyway. However premium brands could fare well on China’s fast-growing e-commerce start-up. And if Pinduoduo can continue its success rate, this could well be a gateway entry point for luxury companies to consider down the line.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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E-Commerce