An increasing number of global brand distributors are making a beeline for Chinese e-commerce giant Pinduoduo (PDD), attracted by its explosive growth in active users and shopping orders, at a time when the COVID-19 pandemic has stalled economic activities around the world.
PDD sells everything from cat food to Cadillacs through its mobile app to almost 600 million buyers, which is almost double the number of people in the United States and ten times the population of Italy.
PDD took less than five years to surpass 1 trillion yuan ($144.6 billion) in the annual value of orders placed (GMV) — a feat unmatched in the e-commerce industry. The company generated an average daily order of 54 million parcels in 2019.
A multibrand distributor from northern Italy recently set up four flagship stores on PDD to distribute apparel, jewelry, snacks and household products. The company plans to introduce Chinese consumers to less familiar Italian brands that offer good value for money. For now, it is using PDD’s platform to sell products from known names such as Swarovski, Armani, Givenchy and Illy.
“We have set very high targets but are very optimistic that we will reach and even exceed them,” said a representative for the company, which has a range of businesses across Europe, and also distributes Italian goods to other European countries, such as Germany and France. “Expanding on Pinduoduo is an important part of our 2020 strategy.”
Back in Italy, businesses are cautiously picking up the pieces and opening doors after the country eased restrictions and lifted its lockdown earlier this month. One in 10 Italian retail businesses are at risk of failing, and as many as a third of shops in Milan may fail to reopen, according to the Confcommercio business lobby. Besides Italy, Germany and France are also in recession.
In China, local governments are working with businesses to encourage consumer spending and reboot the economy. PDD helped organize a shopping festival over the Labor Day holiday in May, roping in department stores and many of Shanghai’s businesses to run promotions and bolster consumer confidence. PDD also directed its livestreaming efforts to promote tourist destinations hit hard by the restrictions on domestic travel.
While China’s economy shrank in the first three months of this year, online shopping has stayed resilient as consumers become more conscious about spending and seek more bang for their buck.
The Italian distributor is looking forward to listing more of its products on the “10 Billion Yuan Subsidy” shopping channel on PDD, which features compelling deals and sees some of the highest traffic on the app. The company, which also distributes Lavazza coffee, Theramed toothpaste and Smeg blenders, may explore livestreaming on PDD to increase interaction with Chinese consumers and explain the features of some of its lesser-known imported brands.
The plethora of imported goods that consumers can buy on PDD continues to expand. A casual scroll of the international selection offered on the app shows listings for brands such as Sennheiser wireless headphones from Germany, Sulwhasoo beauty brand from South Korea, Pair acne cream from Japan’s Lion brand, Australia’s Swisse Liver Detox pills and even Kindle E-readers and Air Jordans, to name a few.
Last year, PDD partnered with Amazon to open a pop-up store during the Black Friday sales to offer 1,000 products directly from its global stores.
“Behind China’s booming e-commerce sector, evolving tools and services are radically changing online shopping by making it more exciting, more fun, more engaging for the Chinese buyers,” said Jialu Shan, Research Fellow at Global Center for Digital Business Transformation at IMD Switzerland. “The coronavirus outbreak just gave an unexpected boost to China’s social buying and live commerce industry.”