Pinduoduo is seeking offline retailers to join its platform as the e-commerce titan tries to expand into on-demand retail businesses, local media outlet Beijing Business Today reported on Monday.
Why it matters: As a latecomer to the game, Pinduoduo enters a crowded sector that already includes established incumbents such as Meituan, Ele.me, and JD Daojia.
- Shanghai’s Covid outbreak since March has prompted companies to rethink the importance of last-mile delivery capabilities, which is a weak point for Pinduoduo and is plaguing many major online grocers to deliver on time during the outbreak. At the usual time, on-demand retailers offer 30-minute or one-hour delivery as a standard service, but such promises became unsustainable during lockdowns.
Details: Pinduoduo is recruiting local offline retailers, front-end warehouse operators, wholesalers, and couriers in China’s first-tier cities of Shanghai, Beijing, and Shenzhen.
- For starters, the platform will focus on fruits, especially more perishable ones like watermelon and durian, a poster obtained by Beijing Business Daily reads. On-demand retail for more product categories such as gifts, flowers, and cakes is also being tested, the report added.
- Pinduoduo expects potential fruit retail partners to have the delivery capabilities to fulfill intra-city orders they receive through the e-commerce app within 24 hours. The delivery timeline is currently expanded to 48 hours during the pilot period.
- In other words, the platform will not take care of delivery for offline retailers like its rivals Meituan and Ele.me. Pinduoduo will only serve as a central platform for the retailing partners to access users. Pinduoduo claimed to have 868.7 million annual active users in 2021.
- Pinduoduo assured retailers in the poster that the delivery won’t be challenging to handle because they will divide the market into small delivery areas to the level of city districts and counties to make the business feasible for retailers.
- Pinduoduo didn’t respond to TechNode inquiries on the matter when contacted Wednesday afternoon.
Context: Pinduoduo has been adopting an asset-light approach to e-commerce since its establishment in 2015. While pushing to help more farmers access a wider market, the company has gradually moved to invest in logistics, warehouses, and other infrastructure since 2020.
- In February, Pinduoduo tested a pickup service to receive and send parcels on users’ behalf through partnerships with major couriers to expand its delivery capabilities. But the service was soon suspended because the firm hadn’t filed for a license to run a delivery business in China.
- The market scale of China’s on-demand retail market is expected to reach RMB 900 billion ($140 billion) by 2024, data from research agency iResearch shows.
- Nearly all of the major e-commerce companies have tapped into the market. The annual transacting users on Meituan’s on-demand retail service Instashoping reached around 230 million in 2021. Last year, JD launched a one-hour delivery service in partnership with Dada Group, the company behind JD Daojia and backed by JD and Walmart. Alibaba operates a range of services in the sector from Tmall Supermarket to Ele.me and Taoxianda. And in January, ByteDances’s Douyin piloted a logistics service called Yinzunda.