Pinduoduo Heats Up Rivalry in China With Amazon Partnership
Pinduoduo, which posted high losses for the third quarter, is expanding its buyer base through a deal with Amazon, kicked off during Black Friday.
Pinduoduo Inc. (Nasdaq: PDD) is further disrupting the dominance of the two online retail giants in China, now selling products from Amazon Inc.'s (Nasdaq: AMZN) pop-up store.
The Amazon Global Store, launched last week on Pinduoduo, will run until the end of the year and sell 1,000 overseas products, according to a Reuters report.
Thus, Pinduoduo, as it expands in various directions, is further heating up the rivalry against top Chinese online retailers, JD.com (Nasdaq: JD) and Alibaba Holding Group Ltd. (NYSE: BABA; HKEX: 9988).
The four-year-old discounter platform, launched by an ex-Google engineer, continues to see high losses, however. Last month, Pinduoduo reported revenue of $1.1 billion in the third quarter on a net loss of $326.7 million. By contrast, JD scored $2.2 billion in revenue and income of $77 million. Alibaba, meanwhile, posted revenue 16 times that of PDD and 8 times that of JD. Alibaba's income was $9.9 million for the third quarter.
As of May, Alibaba and JD.com accounted for 73% of consumer product sales in China, while Pinduoduo had just 7%, according to data from online research company, Statista.
Already in October, however, PDD's founder and chairman Huang Zheng said the platform's gross merchandise volume (GMV) has surpassed that of JD, as reported by news medium KrAsia. Zheng did not disclose specific results, however.
China's three top online retailers participated in the Black Friday sales last week, seeing continuous demand for imported products in China, as Caxing Global reported today. JD.com posted surging sales in cosmetics and imported baby formula, Caixin said. Alibaba's Tmall reported 40% sales growth on Nov. 25 to 26, when it held sales ahead of America's Black Friday. Pinduoduo, meanwhile, kicked off its sales with Amazon that week.
Earlier in November, during China's largest shopping festival, Singles' Day, Pinduoduo sold more than 400,000 most iPhones, David Liu, the vice president of strategy for the company, told analysts a week ago following its third quarter results. The company did not disclose its full results for the festival.
Alibaba set a record on Singles' Day with gross merchandise volume (GMV) reaching $38.4 billion, while JD.com beat its last year totals, posting $29.2 billion in sales.
Just yesterday, Alibaba said it would raise an additional $1.7 billion after the underwriters on its initial public offering in Hong Kong last week have fully exercised the over-allotment option.
Pinduoduo's shares dropped 32 cents on Tuesday to $35.57 per ADS, while JD.com closed 1% lower, at $31.56 per ADS and Alibaba's stock slipped by $1.26 to $193.74 apiece.