Amazon will launch a storefront on Chinese social e-commerce platform Pinduoduo, people familiar with the matter told TechNode on Sunday.
Why it matters: While Amazon appeared to have drawn down its business in China earlier this year amid fierce competition with rivals such as Alibaba and JD.com, a partnership with e-commerce upstart Pinduoduo could help the US e-commerce giant to retain a presence in one of the world’s biggest consumer markets.
- The deal grants Amazon access to Pinduoduo’s 429.6 million monthly active users.
- A tie-up with Amazon, meanwhile, would be important for Pinduoduo to build a relationship with overseas retailers as well as expand its product categories. This could be particularly critical for the Tencent-backed social e-commerce app, which is feeling the squeeze from “forced exclusivity” in competition with other marketplaces for sellers.
- The Amazon brand helps boost Pinduoduo’s reputation as a platform for bargain-hunters as it moves to expand its presence in higher-tier markets.
- Pinduoduo’s users from first-tier cities spend well over RMB 5,000 ($710) per year, based on annualized figures for the third quarter of 2019, company founder and CEO Colin Huang has said.
Details: The new storefront will launch Sunday evening at midnight, according to the source.
Context: Amazon announced in April that the company would be shutting down its China e-commerce marketplace to sharpen focus on its cross-border selling and cloud computing service businesses in the country.
- Amazon China held less than 1% share of China’s total e-commerce market as of June 2018, according to market research institute eMarketer (in Chinese).
- “Amazon’s commitment to China remains strong,” the company said in a statement in response to the withdrawal in April.
- Pinduoduo posted weaker-than-expected third quarter earnings on Wednesday due to slowed revenue growth and wider losses, specifically citing heightened forced exclusivity practices in the industry.