Alibaba has relaunched Juhuasuan, as a way to prevent too many Ali users from turning into Pinduoduo users
The race to lower tier booming market is ongoing. Hangzhou-based e-commerce giiant the company’s group-buying and flash-sale platform, by repositioning it as the top destination for Chinese consumers, especially those in lower-tier cities, looking for quality goods at competitive prices. Recently, Alibaba has relaunched Juhuasuan, as a way to prevent too many Ali users from turning into Pinduoduo users. Juhuasuan, formed in 2010 as an independent Alibaba business similar to US-based Groupon, has over the years evolved into a marketing platform for flash sales and daily deals used by merchants with virtual storefronts on Tmall and Taobao Marketplace, Alibaba’s giant C2C site.
The target? Beating Pinduoduo in lower tier cities. But Hangzhou-based tech giant had no so great success. In December, Juhuasuan launched a “ten-billion-yuan subsidy” plan due to compete with Pinduoduo’s market operation strategy. The company stated: “Juhuasuan’s ‘ten-billion-yuan subsidy’ will continue, and will be further intensified in the future.
As is not diffcult to understand, behind Juhuasuan’s business plan there is the support of Alibaba platforms such as Tmall supermarket and T-mall international. On Dec 12, Juhuasuan successfully attracted more than 5 million visitors. In sinking markets in third-tier cities and below, year-on-year transaction growth reached 41%, but still far from Pinduoduo numbers.
For Pinduoduo, the competitive pressure is very obvious, because not only Juhuasuan but JD.com is trying to merge in lower tiers market race too. Beijing – based e-commerce has launched last year in november Jingxi, an update from its predecessor named JD Pinguo, which is aimed primarily at Chinese consumers and small-town shoppers with ultra-affordable items.
Jingxi offers flash sales and items at a special price. Furthermore, buyers can enjoy huge discounts both when they share an article with their friends, or simply by adhering to an ongoing group purchase contract on the app.
However, what could help distinguish Jingxi is the Factory-to-Consumer (FoC) model that, the service, offers in an attempt to provide cost-effective, yet quality items. For Pinduoduo, the competitive pressure is very obvious, because Juhuasuan and Jingxi both touch the core interests of Pinduoduo.