Tsai didn't mention Pinduoduo by name, but from its inception, the shopping platform has never been as merchant-centric as Alibaba: it has always prioritized offering the user the lowest price online.
“In retail e-commerce, price wars are constantly going on and will never stop,” said Zhuang Shuai, retail analyst and founder of Bailian Consulting. “They are effective in the short term, but not an effective way to compete in the long term.”
Pinduoduo has even implemented policies that favor customers at the expense of sellers. Since 2021, Pinduoduo has allowed consumers to get a refund without returning the item, if what they received did not match the seller's description. Tiktok's Chinese counterpart Douyin introduced a similar policy in September 2023, as did Taobao and JD at the end of the year.
The platform is also entering territory traditionally occupied by its competitors by welcoming dealers from established brands such as Apple and Louis Vuitton.
Competitors like JD, who assumed they were the go-to destination for quality products and fast logistics, are at risk of having their users stolen. “JD is concerned that it will not be able to retain its existing users or attract price-sensitive users,” said a former mid-market JD executive, who requested anonymity due to possible professional fallout, about Pinduoduo's rise. On the app's homepage, JD has started mimicking Pinduoduo by emphasizing discounts.
Pinduoduo has also made international expansion a priority by launching Temu for international markets, a step that many Chinese retail companies have not yet taken. In the past, it was fine for a Chinese brand to stay in the Chinese market; after all, the consumer base is enormous. Rather than making international expansion an afterthought, Pinduoduo reportedly spent $21 million on advertising during the SuperBowl earlier this year; The Wall Street Journal also reported that Temu was Meta's largest advertiser in 2023, spending $2 billion. That push paid off; in the first half of this year, Temu spent more days at the top spot for downloads on both the iOS App Store and Google Play Store in the US than any other app.
However, the company is facing headwinds. In addition to potential U.S. restrictions on low-cost shipments, other countries and regions are moving in a similarly protective direction. Brazil passed a law in June that imposes a 20 percent tax on purchases up to $50. The EU has considered removing the $150 tax-free threshold. In August, South Africa announced it would introduce a value-added tax on low-value imported goods that had previously received a concession.
Managing director of CTR Market Research Jason Yu says it is “very likely” Temu will take a hit if the US goes ahead with it. “Competing on lower prices will not be a sustainable strategy for companies like Temu or Shein in the long term,” he says. “With the change in law, their price advantage will be less clear.”
It all adds up to “a bleak outlook for cross-border online shopping in 2025,” says Tendolkar, the research analyst.
At least at first glance, Pinduoduo isn't worried. A spokesperson for Pinduoduo tells WIRED: “As their [policy change is] Frankly, we believe they will not change the competitive landscape.”
