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.
Outpaced by local rivals, Amazon struggles to remain relevant in China