Most Chinese families in the 1970s aspired to own the “Four Big Things” — a wristwatch, a bicycle, a sewing machine and a radio. Owning these items was a preserve of the privileged and it was widely believed at the time that no girl should marry if the groom-to-be did not have a watch. Not any watch, but a hand-winding mechanical time piece from Shanghai Watch.
Along with Shanghai Watch, Bright Dairy, Warrior Shoes, Bee and Flower Soap and Phoenix Bicycle are among the 222 Shanghai laozihao, or time-honored brands, that have been hallmarks of quality and style for over half a century. But they have seen their sales decline over the past decade as global brands with more generous advertising budgets flooded local retail malls.
In time of announcement, Pinduoduo, the new e-commerce platform with 418.5 million annual active users, announced it would participate in initiatives led by the Shanghai Municipal Government to reinvigorate 100 local Shanghai time-honored brands over the next three years. Pinduoduo, will invest over 1 billion yuan($147 million) in marketing support to help boost sales of these heritage brands.
“Heritage brands not only have great sentimental value, they have significant economic potential yet to be unlocked,” Pinduoduo said. “It is our responsibility to support and revitalize these quality local brands to benefit our consumers. Our Duo Duo University will provide tech and e-commerce support for these brands, helping them appeal to e-shoppers/consumers on our platform.”
Pinduoduo launched a pilot in early 2019 to work with five recognized heritage brands. Bee and Flower, a Shanghai sandalwood soap brand founded in the 1920s, launched its flagship store on Pinduoduo in January. It has launched multiple products, including herbal shampoo and conditioner, exclusively on Pinduoduo.
“Our sales have soared nearly four times since January, and we sold over 1 million yuan ($147,000) worth of products on Pinduoduo,” Yang Ming, e-commerce manager of Bee and Flower, said. “The growth is tremendous and Pinduoduo is the fastest-growing e-commerce channel we have worked with.” Bee and Flower is now launching a new product line exclusively for consumers on Pinduoduo.
Pinduoduo will help heritage brands to upgrade their products and supply chain capabilities. Currently, only a few dozen heritage Shanghai brands have fully-fledged e-commerce strategies. Since January, over 100 heritage brands have participated in the e-commerce courses provided by Duo Duo University, which aim to help brands identify digital solutions to promote their brands online. Through big data analysis of consumers’ preference, heritage brands can customize their products to appeal to more Pinduoduo users, and in the long run, can reduce marketing, production, logistics and inventory costs.
“Opening a flagship store on Pinduoduo will connect these heritage brands to over 400 million consumers,” said Pinduoduo. “The operational costs for a flagship store are approximately 10 to 15 percent lower than other e-commerce platforms which is significant for these heritage brands as they can now invest more in product development to attract customers across the country.”