China’s largest agricultural-focused technology platform Pinduoduo is preparing for cross-border e-commerce and the United States is set to be the first stop for the new service debut in September, according to the Chinese technology media outlet LatePost on 17 August.
Following in the footsteps of SHEIN, the Chinese online-only ultra-fast fashion giant, the transboundary service also picked Panyu (a district in the prefecture-level city of Guangzhou, which is also the starting point of SHEIN’s supply chain) as its home base and merchants have been asked to send the goods they are listing to designated local warehouses, where further procedures such as product selection and pricing will be completed by the platform.
While the US has been the biggest global market for SHEIN, Pinduoduo also sees the country’s potential for broader retail e-commerce consumption and decided to present American consumers with online merchants from all categories. However, low-priced, day-to-day necessities and home-use products that Pinduoduo prides itself on in the Chinese market will still be the focus for the overseas online marketplace.
As a result of the pandemic and the impact it has had on consumer behaviours, online shopping continues to gain traction as the world is recovering and the US has been catching up strongly in the e-commerce race since 2020. With the market estimated to hit $1.61 trillion by 2025, this has resulted in a compound annual growth rate of over 15% between the period of 2020 and 2025, the fastest growth of all global markets, as per market research company eMarketer.
Meanwhile, the Chinese challenger is also believed to be gaining a slice in the foreign territory with its low-price strategy, which has also contributed to SHEIN’s overseas success. Moreover, although the US market is so far largely dominated by local market leader Amazon who holds more than 40% of the market share, confidence has been shown, which is down to Pinduoduo’s “zero entry and commission fee” policies for merchants.
This sharply contrasts with the high service fees charged by Amazon, which can be as much as 30% of the total sales income, naturally adding to Pinduoduo’s appeal to business users, according to a retailer on Amazon quoted by LatePost. While replicating SHEIN’s approach to the overseas market, it remains to be seen how these strategies will play out for Pinduoduo and whether the platform can pull off another momentum in China’s cross-border e-commerce history.