Pinduoduo officially steps into the cross-border online shopping area, entering into an alliance with the American giant.
Image credit: 🇨🇭 Claudio Schwarz | @purzlbaum/Unsplash
On November 25, global Internet juggernaut Amazon opened a pop-up store on Pinduoduo – China’s third-largest e-commerce platform – focusing on providing value-for-money deals with a ‘Group Buying’ model. This means a group of buyers can team up to promote branded foreign products.
This Black Friday sales will last for five days, till November 30, including the two-day pre-sales period starting from November 25. The partnership between the two companies will continue until the end of this year.
“The Amazon Global Store pop-up store on Pinduoduo provides customers with a curated selection of about 1,000 overseas products with competitive prices, authenticity guarantees and convenient shipping,” an Amazon spokeswoman said in a statement.
This year, China's e-commerce players are especially active on the international online shopping scene. In previous years, Black Friday sales used to be the domain of offline stores and plazas, as well as those online platforms that specialize in cross-border e-commerce.
This year, all the dominant forces in the industry seem to want a slice of the ‘Black Friday’ field – right after having competed fiercely in the recent ‘Single’s Day’ campaign.
Apart from team-up with Amazon, Pinduoduo is starting the new round of its 'CNY 10 billion subsidy' program. JD.com is joining the table and matching its competitor’s raises in the round, matching the current subsidy amount.
Alibaba, however, is relying on its ecosystem, and has a big-picture regarding this Black Friday. On the one hand, TMall international announced that there will be more than 40 hot brands launching exclusive new products on the platform during the campaign. Apart from this, the platform also enables cross-border cold chain service all-around during this shopping festival, empowered by the Cainiao (菜鸟) Smart Logistics Network of the corporation.
The distribution of players on China's cross-border e-commerce area is in some ways similar to that of the domestic ones – especially in the sense that the business of the Alibaba and JD.com still recorded the top results, which strongly suggests their dominant positions.
According to iiMedia Research (艾媒咨询), NetEase Koala (网易考拉) – acquired by Alibaba for USD 2 billion in September – TMall international, and JD Worldwide (海囤全球) were the top three cross-border e-commerce players in the first half of 2019, recording a market share of 27.7%, 25.1%, and 13.3% respectively.
In this case, the motive for Amazon and Pinduoduo to team-up seems to be obvious. Apparently, this is a win-win deal for both parties.
Since July 18, 2019, the American e-commerce giant has been closing its marketplace on Amazon.cn, which connects mainland Chinese buyers and sellers, while other units of its local ventures – for example, Amazon Web Services, Kindle e-books, and cross-border operations – remained intact. A primary reason for Amazon’s failure in China lies in the fierce competition in the marketplace as well as the fact that the model of its business does not fit the local situation well enough.
Pinduoduo, the fast-growing e-commerce challenger to market leaders Alibaba and JD.com, has been stuck in a mire of selling cheap and counterfeit products ever since its listing. Also due to this reason, many top-tier brands averted their gaze from selling their products and opening official stores on the platform. This made it even more difficult to attract customers in top-tier cities, which then formed a vicious circle.
Upgrading its corporate image might not have been one of the most central issues for the young juggernaut years ago – but now it is.
To keep its high historical growth rate as it attempts to quickly catch up with Alibaba and beat JD.com overall, the company needs to build up a decent image and enlarge its boundaries – to tell its loyal customers that it can provide them with all categories of product, to attract more customers from first- and second-tier cities, to inform investors on the secondary market it is an outfit with a good reputation.
“If we cannot deter Pinduoduo from growing, then we let ‘inferior’ become a permanent label for it,” said a senior employee in Alibaba.
To team-up with Amazon is a smart idea in breaking into the cross-border e-commerce market. It would significantly add credence for consumers to buy branded goods with a high Average Selling Price (ASP).
On the other hand, it is also a good chance for the American giant to increase the power and influence of its Amazon Global Store and the ‘prime’ membership system in China, considering the fact that the service still counts for a relatively low market share at present.