Low-end e-commerce platform Pinduoduo enters high-end grocery delivery

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Chinese social e-commerce platform Pinduoduo has injected an undisclosed amount of funding into high-end groceries platform Chongma Linli Group (虫妈邻里团), local media Ebrun reports (in Chinese).

The lesser-known Chongma Linli Group was established in 2012 by three community neighbors in Shanghai. The founders who are from affluent families set up their social commerce model in 2014 after selling fruit alongside their newly-purchased top-gear Tesla. The move increased community members’ trust in their products and attracted around 30 members per day to join their enterprise WeChat group.

Pinduoduo’s investment in Chongma Linli might be a signal of Pinduoduo’s next moves will be in premium products even though the company is commonly known for lower-end and even knock-off goods.

Slowly growing into a community grocery leader, Chongma Linli remains local but has expanded its businesses to over 100 high-end residential and corporate communities in Pudong District, the finance and economic zone of Shanghai.

Chongma Linli’s current services include delivery of fruit, snacks, vegetables, dairy, homemade delicatessens, and other groceries from factories and farms to families. The business has also set up community pick-up stores to display products and enhance consumer experience and is targeting around 1 million families in Shanghai.

According to latest data (in Chinese), the average expense a consumer spends on Chongma Linli is roughly RMB 300 ($43.8) per purchase, and around RMB 10,000 per year. The company hopes to increase that amount to RMB 20,000.

Chongma Linli’s model has taken a different path than other fresh food e-commerce ecosystems such as Alibaba’s Hema’s. On September 18, Hema released its operation data for the first time. Its 64 offline stores across China have served over 10 million consumers. Though Hema released good performance data such as the RMB 800,000 daily revenue per store which has been set up for over one year and a half, there were fiscal summary on costs to evaluate any loss or profit situation.

Pinduoduo has set up a model of social e-commerce which giants including JD.com also wish to follow.  The company went public in Nasdaq on July 26. Even though the company has landed itself in trouble over fake goods and even found itself under investigation by US lawyers, its stock performance is currently around 21.1% better than the $19 initial pricing.