Mark Tanner
24 March 2021 0 Comments

Back in August 2018 we were happy to report that China’s seemingly impenetrable ecommerce duopoly had fallen. In less than three years, ecommerce platform Pinduoduo (PDD) had come from nowhere to surpass’s daily user count.

The latest quarterly results show that PDD has broken another unimaginable milestone in 2020: its 788.4 million annual active buyers outdid both Alibaba’s 779 million customers and’s 471 million. The news tops off what has been a toast-worthy few months for 1980-born founder Colin Huang who recently overtook Alibaba’s Jack Ma and Tencent’s Pony Ma to become China’s second-richest person on the Bloomberg Billionaires Index.

To mark the monumental occasion, Huang has resigned from the helm. Effectively quitting while he is ahead, he is “stepping back from day-to-day management to work on the company’s long-term strategy” and “pursue research in the food and life sciences.” There has been much speculation that he will have been watching Jack Ma’s fall from grace and will be acutely aware that the higher his profile gets, the more he will be under the watchful eye of the authorities. PDD’s model of flogging cheap goods has already been called out numerous times, and just this month has been fined for discounting veges too much and selling pirated books at 30-40% of the price of the genuine copyright versions. On the bright-side, in February PDD was praised by Beijing with Alibaba and Meituan for helping alleviating poverty.

Huang is stepping down at a time when PDD has plenty to celebrate, but also an awful lot of work still to do. Although PDD had more customers last year, they collectively bought just $4 billion of GMV (Gross Merchandise Value), versus $33.9 billion on Alibaba. Although Pinduoduo has been working on pushing up customers’ average spend by providing attractive sign up options for foreign brands and even discounting almost $200K off Rolls-Royce Phantoms. Yet during 2020, annual spending per active buyer grew just 23% from ¥1,720 ($264) to ¥2,115 ($325) – $27 a month. There is still some way to go before the average PDD customer is stocking up on foreign goods.

Another challenge for PDD will come from an Alibaba’s Taobao Deals. This month, Alibaba ended the age-old Ali-Tencent standoff to launch a Taobao Deals WeChat Mini Program to tap into WeChat’s virality and appropriateness for group buying and private traffic. WeChat Mini Programs have played a massive part in Pinduoduo’s success – attracting more than 630 million monthly active users.

Although user spending is still low, food, beverage and FMCG brands in particular should be closely watching the platform. PDD’s journey to become the world’s largest ecommerce platform by users has been largely driven by grocery shoppers. Consumers bought ¥270 billion ($41.5 billion) worth of agricultural products on PDD last year, double the sales of 2019.

The platform is pinning its continued growth on supermarket goods, and has set its next goal of “becoming the world’s largest agriculture and grocery platform”. It is making “groceries sourced around the world affordable and available to it users”. PDD has trained 100,000 “new farmers” about operating an ecommerce businesses prompting many digitally savvy youths to return to their hometowns and set up online businesses. It is committed to training 100,000 more farmers. PDD is also hoping to tap into its large, social nature to expand into other services such as match-making.

PDD’s formidable growth provides many lessons about how to succeed in China. At the rate it is growing, it may soon provide many opportunities for foreign brands too. Watch this space!

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