Tsai didn’t mention Pinduoduo by name, but since its inception, the shopping platform has never focused on the seller the way Alibaba did: Its priority has always been to provide users with the lowest price online.
“In retail e-commerce, price wars are constant and will never end,” says 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 introduced policies that favor customers to the detriment of sellers. As of 2021, Pinduoduo allows consumers to get a refund without returning a product if what they received was not as described by the seller. 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 entering territory traditionally occupied by its competitors, welcoming dealers from established brands such as Apple and Louis Vuitton.
Competitors like JD, which counted on being a destination for high-quality products and quick logistics, are at risk of stealing from their users. “JD is concerned that it will not be able to retain current users and will not be able to attract price-sensitive users,” says one former middle-level JD manager who requested anonymity due to potential professional consequences. due to the development of Pinduoduo. On the home page of its app, JD began to mimic Pinduoduo by emphasizing discounts.
Pinduoduo has also made international expansion a priority, bringing Temu to international markets, something many Chinese retail companies have not done. It used to be okay for a Chinese brand to remain in the Chinese market – after all, the consumer base is huge. Instead of treating international expansion as a side issue, Pinduoduo spent reported $21 million in advertising during the SuperBowl earlier this year; The Wall Street Journal too reported that Temu was Meta’s largest advertiser in 2023, with spending of $2 billion. This push paid off; in the first half of this year Ago spent more days ranking first to download on the iOS App Store and Google Play Store in the US than any other app.
However, the company is facing difficulties. In addition to potential restrictions on low-cost shipping in the U.S., other countries and regions are moving in a similar protective direction. Brazil passed the act imposing a 20 percent tax on purchases up to $50 in June. The EU was considering abolishing the $150 duty-free threshold. South Africa in August announced would introduce a value added tax on imported low-value goods that previously benefited from relief.
CTR Market Research managing director Jason Yu says it’s “very likely” Temu will suffer if the US does so. “Competing on a lower price will not be a sustainable strategy in the long run for companies like Temu or Shein,” he says. “As the law changes, their price advantage will become less obvious.”
All this adds up to a “bleak outlook for cross-border online shopping in 2025.” says Tendolkar, Research Analyst.
At least on the surface Pinduoduo isn’t worried. A Pinduoduo spokesperson tells WIRED: “If their [policy change is] fair, we believe they will not disrupt the competitive landscape.”