Pinduoduo’s reputation as fake seller endures as Apple seeks to halt sales

Chinese social e-commerce upstart Pinduoduo can’t rid itself of its reputation as a counterfeit seller. The social e-commerce site has denied that Apple is seeking to cut off distributors from supplying its products to the platform due to concern over counterfeit products in response to media reports about the dispute.

The Alibaba rival maintained “all the latest iPhones models and other Apple products available on Pinduoduo are authentic and sold at the lowest price across all platforms,” (our translation) according to a statement from the company shared to TechNode late Monday. Every iPhone delivered to customers comes with its official invoice from the resellers, the company said.

Pinduoduo, which is not on Apple’s authorized online reseller list that include JD, Tmall, and Suning, sources inventory from the company’s authorized offline distributors, according to the company. Chinese media reported on Monday that Apple asked several such distributors to suspend their partnership with Pinduoduo, or risk losing coveted distributor status. Apple declined to comment on the matter.

Pinduoduo did not respond to TechNode inquiries about its Apple distributors.

More than 1.1 million iPhones have been sold through Pinduoduo since the Nov. 11 Singles’ Day promotion in 2018 at prices featuring discounts ranging from RMB 500 (around $75) to RMB 1,000 lower than the average market price, according to the social e-commerce platform.

As the latest e-commerce sensation in China, Pinduoduo has recorded remarkable growth since its establishment in 2015, forming a formidable challenge to market incumbents like Alibaba and JD. However, its exponential growth has been tempered by ongoing scrutiny for offering poor quality and counterfeit goods.

As a listed company, Pinduoduo has been trying to shake off its poor image in seek of longer-term, sustainable growth, as well as pressure from the government. Chinese regulators launched a probe in August following media reports of third-party vendors selling counterfeit goods on its group-discount marketplace.

Pinduoduo shut down 1,128 stores and removed 4.3 million listings in a week beginning Aug. 2. In a similar effort, the company increased merchant oversight in December to further address the issue.

The social e-commerce firm is facing another, more pressing, problem: free cash flow. Spending on sales and marketing, which include discount promotions, significantly outpaced revenue growth in 2018 as it invested in cultivating greater user recognition through online and offline advertising campaigns and promotions, according to the company’s 2018 financial report.