Pinduoduo Jumps Into the Cross-Border E-Commerce Arena

What's Going On

Group-buying social commerce platform Pinduoduo is quietly recruiting select merchants to sell cross-border e-commerce items on its platform. 

Rumor has it that the company will allocate separate resources for cross-border merchants and the start-up costs for sellers will be lower than those of other platforms.

Both brands and multi-brand retailers will be able to launch stores on Pinduoduo. It has been reported that Nestle, Unilever, Swisse, Biostime, Gerber, and even Japanese CBEC platform Inagora have submitted applications. 

Why is Pinduoduo Entering Cross-Border E-Commerce?

Although most of Pinduoduo's users are in smaller-tier cities, a good chunk of its gross merchandise value (GMV) comes from customers in first-tier cities. But since Pinduoduo built its reputation on the back of selling to poorer consumers in smaller cities, it lacks higher-end products such as beauty and cosmetics. 

This is where cross-border e-commerce comes in.

Though tier-1 cities such as Beijing and Shanghai may seem saturated with merchants selling cross-border e-commerce products, Pinduoduo has the chance to differentiate itself on both the customer and merchant side.

Pinduoduo customers use group-buying (often through WeChat) to purchase large volumes of products at low prices, so the user intent is different from other platforms.

On JD.com and Tmall, customers already have a strong idea of what they're looking for and simply search for products in the built-in search engine. 

This new stream of user traffic could provide relief for merchants who may be losing money on incumbent marketplaces such as JD Worldwide and Tmall Global, where there are many sellers competing on price and selling the same products.

While it's still early, stay tuned to see how upstart Pinduoduo will fare against its bigger competitors in the cross-border e-commerce market.