Pinduoduoemployeescelebratethefirm鈥檚NasdaqlistingonJuly26inShanghaiVCGJustwheneveryonethoughtChina鈥檚ecommercemarketwasbeingdominatedbyAlibabaandJD,adarkhorseemergedfromtheshadowsandblazedatrailintothetradingspotlightamidawaveofcriticism.
OnJuly26,Pinduoduo,anonlinediscountshoppingplatform,waslistedontheNasdaqat$19perAmericandepositaryshare(ADS)andclosedat$26.7perADS,soaringmorethan40percentonitsfirsttradingday.ThestellarperformancehaselevatedPinduoduointotheranksoftopChineseInternettechfirmslikeAlibaba,Tencent,Baidu,Xiaomi,JDandNetEase.
Foundedonlythreeyearsago,theShanghai-basedonlinegroupdiscounterhasaccumulated343.6millionactivebuyerswithinthe12-monthperiodendingonJune30,with262.1billionyuan($38.38billion)ingrossmerchandisevolume(GMV).Inthesecondquarter,itsmonthlyactiveusershit195million,up17percentfromthepreviousquarter.
WiththePinduoduoapp,peoplecannowbuygoodsatcheaperpricesiftheyrecruitfriendstobuythesameitem.Therearealsoflashsales,freegiftsandcouponsforgettingfriendstofollowcompaniesonsocialmedia.
TheinitialsuccessofPinduoduo鈥檚Nasdaqdebutsuggestedinvestorconfidenceinitssociale-commercebusinessmodel.
Despitethis,aseriesofallegationsthatproductssoldonitsplatformarecounterfeitorsubstandardhavethrownPinduoduointothecenterofanonlinemaelstrom.Moreurgentlythanever,thecompanyneedstointensifyeffortstoeliminatecounterfeitgoods,analystswarned.
Anewmodel
Asamatteroffact,PinduoduosawitsannualGMVsurpass100billionyuan($14.65billion)in2017.IttookJD10yearsandTaobaofiveyearstoreachthesamelevel.
鈥淧induoduohasgrownsoquicklybecausetheydidthreethingsreallywell.TheyspenttimestudyinghowChineseconsumersengageindigitalcommerce,especiallyhowtogetaccesstomillionsoffirst-timedigitalshoppers.Theyinnovatedanentirelynewbusinessmodelandtechnologythatnooneelsehadattempted,鈥漵aidMichaelZakkour,VicePresidentofChina/AsiaPacificstrategyandglobaldigitalpracticesatconsultingfirmTompkinsInternational.
鈥淭hirdly,PinduoduoleveragedtheinvestmentbyTencenttoensurethatthecompanyisavailableanddrivenbyWeChat,whichprovidesanaudienceof1billionpeople,鈥漐akkourtoldBeijingReview.
WhenPinduoduocameintobeingin2015,thetraditionalInternetandmobileInternete-commercemarkethadbeencompletelyoccupiedandmajorplayerslikeAlibabaandJDhadbeguninvestingheavilyofflineinanefforttowinmorecustomersviabrick-and-mortarstores.
However,Pinduoduopioneeredanewpath:sociale-commerce,aformofonlineretailwhichreliesonsocialnetworkstoassistinthebuyingandsellingofproducts.Thecompanyfocusesongroupdeals,whichincentivizescustomerswithdiscountsiftheyinvitefriendstobuyalongwiththem.
ThewayPinduoduoachieveditsbusinesssuccessisquiteunique.鈥淭hemodelisnew,differentandfresh.It鈥檚agreatexampleofanideaandtechnologymadeinChinaforChina.Itaddstothediversityoftechnologies,toolsandecosystemsfordigitalcommerceinChinaandbeyond,鈥漵aidZakkour.
Stormofcriticism
Despitethissuccess,theallegationsofcounterfeitproductspersist.OnJuly28,Skyworth,aChinesetelevisionmanufacturer,releasedastatementonSinaWeibo鈥攁Chinesepremiermicro-bloggingportal鈥攄emandingPinduoduostopsellingcounterfeitversionsofitsproductsonitse-commerceplatform.Thecompanysaiditreservestherighttosuethesociale-commercediscounterforsellingfakeproducts.
Followingthat,ZhengYuanjie,arenownedChinesefairytaleauthor,claimedonSinaWeibothattherewerepiratedcopiesofhisbooksonsaleontheplatform.HedemandedPinduoduostopsellingthemandwantedthesellerspunished.
OnAugust1,theStateAdministrationforMarketRegulationannouncedthatcloseattentionhadbeenpaidtomediareportsaboutcounterfeitgoodssoldbyPinduoduoandaskedrelevantauthoritiestoinvestigatetheclaim.
Itsaiditwillstepupeffortstocrackdownontheillegalpracticesofproducingandsellingcounterfeitgoods.Theregulatorwillfightthemanufactureandsaleoffakeorinferior-qualitycommodities,theinfringementontrademarksandillegaladvertising.
Italsourgedtheoperatorsofonlinetradingplatformstofulfilltheirlegalobligations,protectthelegitimaterightsandinterestsoftrademarkownersandconsumers,andactivelycooperatewithmarketregulatoryauthoritiestocarryoutrectification.Theonlinetradingplatformsthatfailtofulfilltheirlegalobligationswillfacestrictpunishment,theregulatorwarned.
Inthefaceofthefallout,PinduoduoheldapressconferenceinShanghaionJuly31,makingitclearthattheywouldintensifyeffortstoeliminatecounterfeitgoods.
鈥淪inceitsfounding,Pinduoduohasbeenstrivingtofightcounterfeiting,鈥漵aidHuang.
AccordingtoareportonprotectingtherightsandinterestsofconsumersreleasedbyPinduoduo,in2017,thecompanytook10.7millionquestionableproductsoffitsecommerceplatform,interceptedroughly4,000linksthatinfringedonconsumers鈥檙ightsandinterests,deleted125productsaftercomplaintsfromconsumers,andjoinedhandswithmorethan400brandstoobtainevidenceofandcombatcounterfeiting.
鈥淚nthepast,oneofthereasonsPinduoduowasabletogrowsoquicklywasthattherequirements,assurancesandcertificationsneededtosellontheapplicationarenotasrigorousastheyareonTmallorJD,鈥漐akkournoted.
鈥淭hishaspresentedachallengeintermsofpolicingintellectualpropertyrights,鈥漢esaid,addingthatPinduoduomustcontrolthisissueassoonaspossible.
Healsopointedoutthatthecompanyshouldkeepitsfocusoninnovationtorealizesustainabledevelopment.
鈥淚tneedstoaddnewtools,newmodelsandnewpartners.Otherwise,thereisariskofthemodelbeingatemporaryfadthatcouldfalloutoffavorwhenthenextnewmodelcomesalong,鈥漐akkourwarned.
Pinduoduo鈥檚apponasmartphoneandthePinduoduowebsiteWEIYAOCopyeditedbyFranciscoLittleCommentsto