Pinduoduo unveiled its own payment tool, Duoduo Pay, to lure users from Alipay and WeChat Pay. Nanjing authorities stepped up regulation of the community grocery e-commerce sector. Online retail penetration in China rose 25% to a quarter of the population in the first 11 months of this year compared with a year ago.
China’s e-commerce and retail market offers a fire hose of products, choices, business models, rapidly changing content, and more. Here’s what you need to know about China’s online retail market for the week of Dec. 10 – 16.
Pinduoduo unveils Duoduo Pay
Chinese e-commerce titan Pinduoduo on Thursday rolled out its own payment tool, Duoduo Pay, as it moves to close the service loop within its ecosystem for its 731 million users.
To activate the payment tool, Pinduoduo users have to register with their real names and then link a credit or debit card to their accounts. Duoduo Pay supports basic payment features such as account recharging and cash withdrawals. Its features are minimal compared with those offered by Alibaba’s Alipay and Tencent’s WeChat Pay.
Duoduo Pay is supported by Fufeitong, a Shanghai-based third-party payment service founded by the local Shanghai government to facilitate online payment of utility bills. Pinduoduo became a controlling shareholder after acquiring a 50.01% stake through a Shanghai-based subsidiary in January.
By luring users to its payment tool, Pinduoduo could both lower the cost for financial transactions—it paid RMB 516 million in 2019 to use Tencent’s WeChat Pay—and keep user payment information within its own system.
Payment is a crucial infrastructure service for Chinese tech giants that aim to keep users within its own service ecosystem. E-commerce giant JD.com, food delivery app Meituan, ride-hailing app Didi, and smartphone maker Xiaomi are all promoting their own payment options to attract users from WeChat Pay and Alipay. (36kr, in Chinese)
Community grocery e-commerce sizzles
Authorities in the eastern Chinese city of Nanjing rolled out on Dec. 9 a guideline targeting unfair competition and shadowy practices in the red-hot community grocery e-commerce sector.
- The watchdog warned tech firms to cease “dumping” products prices below cost, a practice platforms use to beat out competition. The authorities also prohibited the platforms from falsely advertising discounted prices and posting misleading product information.
- Management at top players including Alibaba, Meituan, Didi, Suning were summoned for a meeting, where they signed an agreement promising to comply with the rules. Competition between Chinese tech companies can turn cutthroat when battling for market share in an emerging sector, from ride-hailing to food delivery. (Jiemian, in Chinese)
JD.com poured a massive $700 million strategic investment into community grocery e-commerce platform Xingsheng Youxuan, the company announced on Friday. (Ebrun, in Chinese)
READ MORE: Covid-19, an opportunity for e-commerce
Pandemic a boost to China’s online retail
Growth in China’s online retail sales decelerated to 11.5 % year on year in the first 11 months of 2020 from 16.5% in the same period last year, according to data from China’s National Bureau of Statistics.
China’s online retail sales totaled RMB 10.54 trillion (around $1.61 trillion) in the same time period, according to the report. Sales during the period were 0.6% higher than those during the first 10 months, signaling a gradual recovery for the world’s second-largest economy.
More Chinese consumers shifted to online purchases during 2020, the report said, with online retail sales for physical goods accounting for 25% of total sales for retail consumer goods in the reporting period, up from 20.4% during the same period last year. (National Bureau of Statistics, in Chinese)