Taobao launches Special Offer Edition with discounted goods. Will unicorn Pinduoduo keep dominating the market for low-cost goods for the elderly and third and fourth-tier cities?
The conversations surrounding cross-border e-commerce are often about high margin products and luxury goods. While it’s true that the highest income earners have the greatest spending power, the majority of global e-commerce consumers occupy a more humble demographic.
In China, one e-commerce platform has dominated the market share for low-income and elderly consumers: Pinduoduo. This Shanghai-based unicorn was started by Colin Huang, a former Google executive who returned home to China after making his career in Silicon Valley.
Pinduoduo is a cross between Facebook and Groupon that Huang hopes reinvents the experience of shopping at the mall with friends. This unique application of social commerce paid off for Huang – PDD raised more than US$100 million in Series A and has an approximate valuation of US$1.5 billion two years after its founding.
Taobao Tejia deals aren’t anything to write home about – yet.
Pinduoduo offers users bargain-basement prices on products with a catch – they have to invite friends to also purchase the product making the sticker price cost-effective for vendors through bulk purchases. Thanks to its array of low-priced offerings ranging from 5 to 30 yuan (US$.80 – $6), PDD became popular with the elderly and citizens inhabiting third and fourth tier cities.
Now, Taobao has laid out a similar model, Taobao Tejia, or Taobao Special Offer Edition. Users accumulate points when they invite friends to use the app. Although tech blog Sixthtone reported that Taobao Tejia products aren’t particularly good deals – the price of a packet of bean curd on Tejia was 18.9 yuan and 19.9 yuan on the regular Taobao platform.
Will Taobao Tejia beat out Pinduoduo? Experts say that depends on how well each platform can cater to elderly and third and fourth-tier demographics, which exhibit brand and platform loyalty. Pinduoduo has become the top alternative to China’s big three – Taobao, Tmall, and JD.com. In the second half of 2017 PDD had 1.08 million active daily users outpacing JD.com’s 1.05 million and Taobao’s 3.29 million.
For those who tend to favor the underdog, Taobao vs. PDD will be an exciting match to watch.
MORE ON THIS TOPIC