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Tencent eyes Pinduoduo’s turf · TechNode Insider


As China’s economy is experiencing a big hit from the coronavirus pandemic, internet giants like Tencent are looking into lower-tier markets for new growth opportunities. In 2025, physical goods in lower-tier markets will account for 45% of total online retail sales in China, or some RMB 8.1 trillion (around $1.25 trillion), Xingye Research estimates. This would represent a compound annual growth rate (CAGR) of 18.3% from 2018 to 2025 (although these estimates were made before the disruption of the coronavirus outbreak). 

Group buying has proved a successful selling medium in these markets, and Pinduoduo is its king. In recent years, major e-commerce players have launched group-buying platforms to tap into Pinduoduo’s shopper demographic. JD.com set up its group-buying mini program on Wechat in June 2018 and launched a group-buying app Jingxi in April 2019. Suning.com established its own group-buying app in July 2018.

Seeing the great success of group-buying players like Pinduoduo and Jingxi on Wechat, Tencent itself has started to roll out a group-buying mini program. In doing so, it is stepping into Pinduoduo’s turf. The two companies have worked in synergy since 2016 when Tencent led Pinduoduo’s Series B.  

Insider

Deborah Weinswig is CEO and Founder of Coresight Research. Additional contributions by Eliam Huang.

TechNode Insider is a new virtual space where those in the know on China tech discuss what’s really going on and what’s around the corner. We’re in beta now, but Insider applications will open soon.

Pinduoduo’s partnership with WeChat has been an important factor for Pinduoduo’s success. It helped the relatively new e-commerce platform keep customer acquisition costs low, fueling its expansion.



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