by Smart Brief
This article was originally published by SmartBrief.
The world’s biggest retail market is getting even bigger.
To boost e-commerce consumption in China, leading e-commerce giants are expanding beyond metropolises to pursue China’s less-developed areas.
We take a look at the different strategies Alibaba, JD.com and Pinduoduo are using to win over these customers, and the lessons US retail companies can apply to reach Chinese consumers hungry for products Made in the USA.
Alibaba invests $1.4 billion in group-buying subsidies
Juhuasuan is Alibaba’s group-buying e-commerce platform; it is a separate app but also has entry points on Alibaba’s Taobao and Tmall platforms.
Starting in 2019, Alibaba began to involve Juhuasuan in China’s lower-tier cities. The e-commerce platform is an increasingly important part of Alibaba’s strategy to fend off Pinduoduo, an e-commerce platform that encourages group buying.
In December 2019, Juhuasuan launched a $1.4 billion US subsidy plan to fund group-buying promotions, similar to that of Pinduoduo.
The way it works is simple – customers are entitled to steep discounts if they can get a friend to purchase the same product, in essence using one customer as an evangelist for the product.
From the merchant’s point of view, the money goes towards subsidizing product discounts rather than spending on ads to gain traffic. Read more.