Home goods exporter bets on China consumers as overseas demand plummets

Home goods exporter bets on China consumers as overseas demand plummets

Staff Writer
Staff Writer
Pinduoduo Content Team
June 5, 2020

This is part of a series of profiles of sellers on Pinduoduo (PDD).

After graduating from university in 2013 with a degree in international business, Ms. Xu decided to strike out on her own and made her way to Yiwu, a hub for wholesale traders in Zhejiang province.

Armed with a laptop and lots of gumption, she sourced Scandinavian-style home goods from wholesalers in Yiwu and sold them to customers overseas. Business was good and within a few years, she had her own office and warehousing space, an upgrade from the cramped space she had rented when she first started out.

Then the coronavirus hit.

“The virus situation worsened dramatically at the end of February, and I felt down listening to negative news every day,” said Xu, who was forced to shut down her store of seven years. “Many factories began to stop production, the pandemic overseas got more serious by the day. Logistics costs kept rising while orders kept falling. The stock was piling up in the warehouse, and we fretted about the rising inventory levels.”

Xu is one of many Chinese merchants who had prospered from the booming cross-border trade, capitalizing on China’s role as the factory of the world to supply goods to consumers in overseas markets. But the trade war between the U.S. and China, as well as the coronavirus pandemic, had dented consumer demand, forcing many of these export-oriented factories, wholesalers and cross-border e-commerce businesses to seek refuge in the domestic market.

Read also: Italian distributor seeks China market as Europe enters recession

Like others in the same predicament, Xu began to consider turning to China’s vast domestic market. She had noticed more mentions of PDD on the WeChat social network and on television commercials featuring the marketplace’s distinctive jingle. Some of her friends operated stores on PDD and recommended that she try it out.

Founded in 2015, PDD operates an online marketplace for third-party merchants, connecting them with 628.1 million consumers across China who use the platform to buy everything from carrots to Cadillacs. The company took less than five years to surpass 1 trillion yuan in annual GMV and 600 million users, an unprecedented feat in the e-commerce industry.

Image for post
Xu’s home goods store on Pinduoduo

Attracted by the substantial support that PDD was extending to export-oriented merchants to turn to the domestic market, Xu applied to open a flagship store for her home goods brand, which she had registered in 2017.

Read also: Ex-soldier livestreams his way to glittering e-commerce success

Xu was clear about the market positioning of her brand, which was targeted at women in the age range of 18 to 37 years who are looking for a Scandinavian-style creative home goods brand to “help beautify their surroundings”.

At the beginning, she began to sell the products almost at cost to build a foundation for sales volume. But as the store orders began to grow steadily, the return on investment improved day by day. She also tried out livestreaming to boost engagement with her customers.

To succeed on PDD, merchants need to develop their own style and branding, and make customers feel the professionalism when they enter the store, she said. Her target for 2020 is to make the top sellers list in the home furnishings category.

“Previously, I always thought that Pinduoduo was just a platform for cheap goods, and that you will win if your prices are low,” Xu said. “With monthly sales of 150,000 yuan, there’s still a distance between us and the top stores, but we are full of confidence and giving it our all. We look forward to the future.”