In 2015, a mobile app called Pinduoduo entered China’s e-commerce market offering super-cheap deals to consumers — and coming squarely into competition with the country’s biggest online retailers, Taobao and Tmall, which are both part of Alibaba Group. Now, Taobao is striking back with its own bargain-hunting app, The Beijing News reported Saturday.
Experts say the new mobile app, Taobao Special Offer Edition, is an attempt to maintain Taobao’s market share in China’s highly competitive online retail sector.
“It’s an obvious move for Taobao to launch a [new] sale version and prevent Pinduoduo from expanding,” Guo Shimin, an e-commerce analyst at consulting firm iResearch, told Sixth Tone. He added that many of Pinduoduo’s buyers and sellers previously did business on Taobao.
Pinduoduo is known for offering cheap deals, albeit with a catch: To get the best bargains, users have to invite more buyers, which helps the company maintain its low prices. Shoppers have stepped up in droves to promote the app in exchange for good deals, boosting the company’s customer base.
Taobao is now employing a similar business model, but it spares consumers from having to generate the customer pool. Instead, users are eligible for cash rewards of up to 10 yuan ($1.60) for successfully inviting others to use the app. However, some deals on Taobao’s new app weren’t particularly cheap, or even exclusive, when Sixth Tone tried the app on Tuesday. For example, a packet of marinated bean curd sold on Taobao Special Offer Edition for 18.9 yuan, while the same product was priced at 19.9 yuan on Taobao.
Since it debuted in 2015, Pinduoduo has become an alternative shopping outlet to China’s top three online retailers, Taobao, Tmall, and JD.com. In the second half of 2017, Pinduoduo had 1.08 million active daily users — well behind Taobao’s 3.29 million, but just exceeding JD.com’s 1.05 million.
But experts say it will take time to see if Pinduoduo still maintains its market share, or lose to behemoths like Taobao.
Cao Lei, director of the China E-Commerce Research Center, told Sixth Tone that it depends on how these two outlets cater to growing demographics such as elderly shoppers, as well as price-conscious consumers from third- and fourth-tier cities. These groups constitute a large share of China’s total online shoppers, he said, but tend not to be loyal to particular platforms or brands.
Taobao and Tmall together have an estimated 30 million users who are 50 or older, and the two companies are making concerted efforts to further target seniors.
“The battle for online retailers to win over [seniors and lower-tier residents] has just begun,” Cao said.
Editor: Bibek Bhandari.
(Header image: A woman uses the Taobao Special Offer Edition app, Shanghai, March 20, 2018. Yang Guang for Sixth Tone)