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Supply Chain News: Chinese eCommerce Giant to Enter US Market



Pinduoduo Model Encourages Group Buying to Lower Prices

Aug. 24, 2022


SCDigest Editorial Staff

A high percentage of Americans probably know the name of giant Chinese ecommerce giant Alibaba.

Supply Chain Digest Says...

Pinduoduo became adept at reducing costs by cutting out supply chain middlemen and encouraging group buying. Shein also built its empire on the back of an ultraefficient supply chain.

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A smaller but perhaps still substantial may be familiar with Alibaba rival

But which large Chinese ecommerce platform is coming soon to the US soon? That would be virtually unheard of Pinduoduo.

In September, Pinduoduo is expected to launch a cross-border ecommerce platform that will target the American market, according to Bloomberg and Reuters.

Chinese web site first reported the news last week and said that Pinduoduo intends to replicate the model used by Chinese fast-fashion firm Shein to attract American consumers.

Company executives reportedly has briefed its merchants but details have not yet been finalized, company sources told Reuters.

According to Yahoo, after Pinduoduo launched in 2015, the firm quickly found a niche in China’s ecommerce market by bringing more social and video game–like elements to online shopping.

That includes Pinduoduo’s pioneering “group buying” platform, in which consumers are given the option to buy products directly or they could recruit their friends to purchase bulk orders directly from manufacturers to reduce the cost.

Pinduoduo founder Colin Huang said in the company’s 2018 IPO prospectus that his goal was to create a model combining aspects of Costco with Disneyland.

Pinduoduo became especially popular in second- and third-tier Chinese cities where consumers were more budget conscious, and nearly doubled its revenues in 2020 amid pandemic-inflicted lockdowns. Pinduoduo says it has 882 million active buyers in China, nearly equal to Alibaba’s 903 million.

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On the surface, the business model of Pinduoduo, an agriculture-focused ecommerce company, bears scant resemblance to that of Shein, a fast-fashion retailer. But there are similarities between the two firms.

Pinduoduo became adept at reducing costs by cutting out supply chain middlemen and encouraging group buying. Shein also built its empire on the back of an ultraefficient supply chain.

LatePost reports that Pinduoduo hopes to replicate Shein’s model of having customers engage directly with Pinduoduo’s platform instead of sellers’ platforms when buying products.

The company is launching the US strategy during a time when the American market may look increasingly appealing amid an increasingly challenging environment in China and the breakout success of Shein.

Do you have any reaction to this report on Pinduoduo? Let us know your thoughts at the Feedback button below (email) or in the Feedback section.




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