Home Tech The meteoric rise of Temu and Pinduoduo, and what could finally stop them

The meteoric rise of Temu and Pinduoduo, and what could finally stop them

0 comments
The meteoric rise of Temu and Pinduoduo, and what could finally stop them

Tsai did not mention Pinduoduo by name, but since its inception, the shopping platform has never been merchant-centric like Alibaba did: it has always prioritized the user getting the lowest price online.

“In retail e-commerce, price wars are continuous and will never stop,” said Zhuang Shuai, retail analyst and founder of Bailian Consulting. “They are effective in the short term, but they are not an effective way to compete in the long term.”

Pinduoduo has even instituted policies that favor customers over merchants. Since 2021, Pinduoduo has allowed consumers to get refunds without returning the item, if what they received did not match the seller’s description. Tiktok’s Chinese counterpart Douyin introduced a similar policy in September 2023, as did Taobao and JD at the end of the year.

The platform is also moving into territory traditionally occupied by its competitors by welcoming distributors of established brands such as Apple and Louis Vuitton.

Competitors like JD, who were betting on being the destination for quality products and fast logistics, run the risk of their users being stolen. “JD is worried that it won’t be able to retain its current users and won’t be able to attract price-sensitive users,” says a former JD mid-level manager, who requested anonymity due to possible professional repercussions, of Pinduoduo’s rise. . On the homepage of its app, JD has started to imitate Pinduoduo by emphasizing discounts.

Pinduoduo has also made international expansion a priority by launching Temu for international markets, a step that many Chinese retail companies have not taken. It used to be okay for a Chinese brand to remain in the Chinese market; After all, the consumer base is huge. Instead of putting international expansion aside, Pinduoduo spent some time reported $21 million in ads at the SuperBowl earlier this year; The Wall Street Journal also reported that Temu was Meta’s largest advertiser in 2023, racking up $2 billion in spending. That drive has paid off; In the first half of this year, Temu spent more days. classified first in downloads on both the iOS App Store and Google Play Store in the US than any other app.

However, the company faces headwinds. In addition to potential US restrictions on cheap shipping, other countries and regions are moving in a similar protective direction. Brazil passed a law levy a 20 percent tax on purchases of up to $50 in June. The EU has considered eliminating its $150 tax-free threshold. In August, South Africa announced would introduce a value-added tax on low-value imported goods, which had previously enjoyed a concession.

CTR Market Research CEO Jason Yu says it is “very likely” that Temu will be affected if the United States goes ahead with it. “Competing with lower prices will not be a sustainable strategy for companies like Temu or Shein in the long term,” he says. “With the law change, its price advantage will be less obvious.”

All of this adds up to “a bleak outlook for cross-border online shopping in 2025,” says Tendolkar, the research analyst.

At least on the surface, Pinduoduo is not worried. A Pinduoduo spokesperson told WIRED: “If their (policy change) is fair, we believe they will not tip the competitive landscape.”

You may also like