Amazon is launching a storefront on Chinese social ecommerce platform Pinduoduo in an effort to retain a presence in a market that we predict will have ecommerce gross sales of USD2.0 trillion, or twice the size of the US ecommerce market, by 2024. The pop-up will run until the end of December and carry a selection of about 1,000 products. Amazon closed its Chinese marketplace in July, having found it difficult to gain traction in the face of intense competition from entrenched players Alibaba and JD.com.
Last week, Pinduoduo reported that GMV sales for Q3 rose by 144% year-on-year, reaching USD117.5 billion, while operating losses more than doubled to USD390.6 million. As the platform continues to build popularity rapidly, the average number of active monthly users nearly doubled, rising by 85% to 429.6 million. Additionally, China’s digitally addressable population is set to expand from 598 million to 707 million during our five-year forecast period to 2024. A tie-up with Amazon would be important for Pinduoduo to build a relationship with overseas retailers and boost its reputation among shoppers as it aims to expand its presence in higher-tier cities.
CPGs should work with Pinduoduo through Amazon to establish early brand affinity with China’s rising and newly-addressable online consumers of urban, provincial and rural China. Brands must capitalize on Chinese consumers’ perceived quality of Western products, prioritizing their most quality-sensitive SKUs, developing strong content and transparency, and investing heavily in advertising campaigns on and off the platform.
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