Last year, Alibaba’s JD and Taobao e-commerce platforms offered consumers bigger discounts in a bid to compete with Pinduoduo. Neither has displaced Pinduoduo’s reputation for offering the cheapest option online. In an April interview, asked about its most serious competitors, Alibaba Group Chairman Joseph Tsai admitted that Alibaba was “falling behind” because “we forgot who our real customers are.”
Tsai didn’t mention Pinduoduo by name, but from the start the shopping platform has never focused on the merchant the way Alibaba has: It has always prioritized getting the consumer the lowest price online.
“In e-retail, price wars are continuous and will never stop,” said Zhuang Shuai, retail analyst and founder of Bailian Consulting. “They are effective in the short term, but not a long-term effective way to compete.”
Pinduoduo has even introduced policies that benefit customers to the detriment of merchants. From 2021 Pinduoduo allows users to get a refund without returning the item if what they received does not match the seller’s description. Tiktok’s Chinese counterpart, Douyin, introduced a similar policy in September 2023, as did Taobao and JD at the end of the year.
The platform is also entering territory traditionally occupied by its competitors, welcoming dealers of established brands such as Apple and Louis Vuitton.
Competitors like JD, who have staked their claim on being a destination for quality products and fast logistics, are at risk of having their consumers stolen. “JD is worried that it can’t keep its existing customers and also won’t be able to attract price-sensitive customers,” said a former mid-level JD manager, who spoke on condition of anonymity because of potential professional implications, about the rise of Pinduoduo. On the home page of its app, JD has started to copy Pinduoduo by emphasizing discounts.
PDD Holdings has also made international expansion a priority, launching Temu for international markets, a step many Chinese retail companies have not taken. It used to be good for a Chinese brand to stay in the Chinese market – after all, the consumer base is huge. Instead of making international expansion an afterthought, PDD Holdings spent a reported $21 million on SuperBowl ads earlier this year; The Wall Street Journal also reported that Temu was Meta’s largest advertiser in 2023, racking up $2 billion in spend. That push paid off; in the first half of this year, Temu spent more days ranked number one for downloads on both the iOS App Store and Google Play Store in the US than any other app.
However, the company faces headwinds. In addition to potential US restrictions on low-cost shipments, other countries and regions are moving in a similar defensive direction. Brazil passed a law imposing a 20 percent tax on purchases up to $50 in June. The EU is considering removing the $150 duty-free threshold. In August, South Africa announced it would introduce a value-added tax on low-value imported goods that previously enjoyed a discount.
CTR Market Research managing director Jason Yu says it is “very likely” Temu will take a hit if the US goes ahead with it. “Competing on lower prices will not be a sustainable strategy for companies like Temu or Shein in the long term,” he says. “With the law change, their price advantage will be less obvious.”
All this adds up to a “bleak outlook for cross-border online shopping in 2025,” says Tendolkar, the research analyst.
