Chinese group-buying e-commerce star Pinduoduo announced a strategic partnership with one of the largest electrical appliance retailers in China, GOME Retail. As part of the agreement, PDD will subscribe to $200 million in GOME convertible bonds and integrate GOME’s product range, logistics and after-sales customer service with the PDD platform.
The integration will involve bringing the entire GOME product range with world-renowned brands like Haier, Midea, Toshiba and Siemens, on PDD at the same, or lower price. GOME will also cooperate with the e-commerce company on supply chain upgrade in order to tailor it to consumer needs and preferences. The deal is an important milestone for PDD’s consumer-to-manufacturer (C2M) model, where consumer demand and preferences are aggregated through e-commerce to help manufacturers customize their product design prior to manufacturing.
The deal also marks PDD’s first strategic investment and follows a sales promotion campaign jointly held by both companies on March 31 that involved more than 6,000 items across 10 product categories, including household electronics, computers and related products, beauty and cosmetics, and general merchandise.
The deal is also likely to cement PDD’s reputation as the go-to-platform for affordable electronics and exclusive deals. Last year the company made waves by selling subsidized iPhone 11 at a price significantly lower than other platforms. This year, millions of consumers flocked to the platform to place orders for the latest iPhone SE.
The investment in GOME comes in the wake of the $1.1 billion share placement by PDD to long-term investors last month. The company is using the raised funds to finance growth, upgrade the shopping experience for users and offer more subsidized products.