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Home » The Meteoric Rise of Temu and Pinduoduo—and What Might Finally Slow Them Down
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The Meteoric Rise of Temu and Pinduoduo—and What Might Finally Slow Them Down

News RoomBy News Room4 October 20243 Mins Read
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Tsai didn’t mention Pinduoduo by name, but from its beginnings, the shopping platform has never made the merchant its focus like Alibaba did: It has always prioritized getting the user the lowest price online.

“In retail ecommerce, price wars are continuous and will never stop,” says Zhuang Shuai, retail analyst and founder of Bailian Consulting. “They’re effective in the short term but not a long-term effective way to compete.”

Pinduoduo has even instated policies that favor customers to the detriment of merchants. Since 2021, Pinduoduo has allowed consumers to get refunds without returning the item, if what they got didn’t match the seller’s description. The Chinese counterpart to Tiktok, Douyin introduced a similar policy in September 2023, as did Taobao and JD at year end.

The platform is also edging into territory traditionally occupied by its competitors by welcoming dealers for established brands like Apple and Louis Vuitton.

Competitors like JD, which banked on being the destination for quality products and fast logistics, are at risk of their users being stolen. “JD is worried it can’t retain its existing users, and also won’t be able to attract price-sensitive users,” says one former mid-level JD manager, who asked for anonymity because of potential professional repercussions, about Pinduoduo’s rise. On its app homepage, JD has begun aping Pinduoduo by emphasizing discounts.

Pinduoduo has also made international expansion a priority by launching Temu for international markets, a step that many retail Chinese companies haven’t taken. It used to be fine for a Chinese brand to stay within the Chinese market—after all, the consumer base is huge. Rather than make international expansion a side thought, Pinduoduo spent a reported $21 million on ads at the SuperBowl earlier this year; The Wall Street Journal also reported that Temu was Meta’s single biggest advertiser in 2023, racking up $2 billion in spend. That push has paid off; in the first half of this year, Temu spent more days ranked first for downloads on both the iOS App Store and Google Play Store in the US than any other app.

The company is facing headwinds, though. In addition to the potential US curbs on cheap shipments, other countries and regions are moving in a similar protective direction. Brazil passed a law levying a 20 percent tax on purchases up to $50 in June. The EU has considered scrapping its $150 duty-free threshold. In August, South Africa announced it would introduce a value-added tax on imported low-value goods, which had previously enjoyed a concession.

Managing director of CTR Market Research Jason Yu says it’s “very likely” that Temu would take a hit if the US goes through with it. “Competing on lower price will not be a sustainable strategy for companies like Temu or Shein in the long run,” he says. “With the change of law, their advantage in price will be less obvious.”

It all adds up to “a gloomy outlook for cross-border online shopping in 2025,” says Tendolkar, the research analyst.

At least on the surface, Pinduoduo isn’t worried. A Pinduoduo spokesperson tells WIRED, “If their [policy change is] fair, we believe they won’t tilt the competitive landscape.”

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