Pinduoduo has become the second largest e-commerce platform in China.
Chinese leading online e-commerce marketplace Pinduoduo shows strong growth momentum according to its 2020Q1 financial result [1]:
Revenue--In the first quarter, Pinduoduo's revenue reached 6.541 billion yuan, a year-on-year increase of 44%.
Active buyers--In the previous 12 months ending March 31, 2020, Pinduoduo's annual number of active buyers reached 628 million, an increase of 42.9 million in a single quarter, and an increase of 185 million year on year.
GMV--In the previous 12 months ending March 31, 2020, Pinduoduo GMV reached 1,157.2 billion yuan, up 108% year on year.
Expenditure--As of the end of March, the average annual spending of active buyers on the platform reached 1842.4 yuan, a year-on-year increase of 47%.
In terms of market value (over $100 billion) and user number, Pinduoduo has become the second-largest e-commerce platform in China, only second to Alibaba, and firmly outpacing JD.
Pinduoduo has pioneered several new trends [2], including social e-commerce, team purchase, and consumer-to-manufacturer (C2M) that have revolutionized the online shopping in China. It has a huge consumer base in China’s lower-tier cities, which is considered a market of great growth potential.
As the Chinese cosmetic market is undergoing a booming period, the platform has targeted cosmetics cross-border e-commerce business through its cross-border e-commerce business platform -- Duoduo International.
What’s Duoduo International?
Pinduoduo established its cross-border e-commerce business platform Duoduo International in April last year, which is similar to Tmall Global under Alibaba Group. Duoduo International aims to provide consumers with affordable imported goods and provide one-stop market access solutions for global brands and trading merchants.
Pinduoduo has taken various approaches to gain ground in cross-border e-commerce business. In July, it launched the "National Brand Pavilion" plan by investing 1 billion yuan in consumption subsidies and resources to facilitate market access of overseas brands and products in China.
How will Duoduo International bring growth to imported beauty brands?
In 2019, the total number of active buyers in Pinduoduo was 580 million, with beauty users only reaching 190 million [3]. The leading customer group of Pinduoduo beauty products is young girls under 25 years old, and most of them come from the lower-tier cities. Pinduoduo is a “blue ocean” harboring enormous opportunities for international cosmetic brands.
The platform adopts the "0 commission, 0 deductions" model to attract overseas beauty brands and traders to settle in. To help new brands increase sales, Duoduo International will work with them to get familiar with the basic operation and maintenance mechanism, select products, prepare for brand debuts, report designated activities, and continuously optimize product marketing to ensure product exposure.
As the competition for online traffic intensifies, Duoduo International may bring some new opportunities for overseas beauty brands due to its strengths [4]:
Rich traffic--As the second-largest online marketplace in China by number of users, Pinduoduo can use big data to match target consumer groups accurately. Different from Tmall Global, which is more favorable to big players, Pinduoduo may be more suitable for foreign low-priced niche brands due to its substantial lower-tier market traffic.
Free resource support--Duoduo International is backed by various activities and resources on the platform.
0 commission--low threshold for entry.
Effective marketing--As the pioneer in social e-commerce, Pinduoduo is sophisticated in many marketing campaigns such as coupons, group buying, and subsidies, etc.
Supply chain--Pinduoduo has cooperated with warehouse, logistics, and major bonded areas to ensure the supply chain.
The platform has set a goal to surpass JD in the cross-border business of beauty makeup in 2020 [3].
Cross-border e-commerce has become a significant market entry channel.
The COVID-19 outbreak this year has dealt a blow to traditional offline and Daigou (an individual or a syndicated group of exporters outside China purchases commodities for customers in China) channels; therefore, online platforms become a crucial channel for overseas brands to expand their business.
Tmall Global has taken the lead in Chinese domestic cosmetics cross-border e-commerce business. In the past year, more than 500 new beauty brands made a presence in Tmall Global, 13 of which have sold over 100 million, and 33 sold over 10 million. Among these new brands, more than 120 overseas cosmetics brands debuted in the Chinese market through Tmall Global, covering the United States, Britain, Japan, Germany, Poland, Dubai and other countries [5]. In July alone, three overseas brands entered the China market through Tmall Global--Victoria Beckham Beauty, Too Faced under Estee Lauder and Yakult from Japan YAKULT Group.
In addition to Duoduo International of Pinduoduo and Tmal Global of Alibaba, JD International of JD plans to double down on cross-border e-commerce by building an end-to-end incubation ecology for overseas brands. Wan Li Mu, a newly launched global cross-border e-commerce platform, is also exploring potential users of imported luxury cosmetics brands by establishing its overseas supply chain and warehouse.
ChemLinked is committed to helping overseas brands win in the China market through a full cycle of services, including pre-market feasibility assessment, market entry, and post-market optimization. If you have an excellent product that requires a smooth entry in China, please contact us through chris@chemlinked.com.
***Disclaimer: All images used in this article are from the internet.
