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

Tsai didn’t notation Pinduoduo by name, but from its beginnings, the buying level has ne'er made the merchant its absorption similar Alibaba did: It has ever prioritized getting the idiosyncratic the lowest terms online.

“In retail ecommerce, terms wars are continuous and volition ne'er stop,” says Zhuang Shuai, retail expert and laminitis of Bailian Consulting. “They’re effectual successful the abbreviated word but not a semipermanent effectual mode to compete.”

Pinduoduo has adjacent instated policies that favour 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 lucifer the seller’s description. The Chinese counterpart to Tiktok, Douyin introduced a akin argumentation successful September 2023, arsenic did Taobao and JD astatine twelvemonth end.

The level is besides edging into territory traditionally occupied by its competitors by welcoming dealers for established brands similar Apple and Louis Vuitton.

Competitors similar JD, which banked connected being the destination for prime products and accelerated logistics, are astatine hazard of their users being stolen. “JD is disquieted it can’t clasp its existing users, and besides won’t beryllium capable to pull price-sensitive users,” says 1 erstwhile mid-level JD manager, who asked for anonymity due to the fact that of imaginable nonrecreational repercussions, astir Pinduoduo’s rise. On its app homepage, JD has begun aping Pinduoduo by emphasizing discounts.

Pinduoduo has besides made planetary enlargement a precedence by launching Temu for planetary markets, a measurement that galore retail Chinese companies haven’t taken. It utilized to beryllium good for a Chinese marque to enactment wrong the Chinese market—after all, the user basal is huge. Rather than marque planetary enlargement a broadside thought, Pinduoduo spent a reported $21 cardinal connected ads astatine the SuperBowl earlier this year; The Wall Street Journal besides reported that Temu was Meta’s azygous biggest advertiser successful 2023, racking up $2 cardinal successful spend. That propulsion has paid off; successful the archetypal fractional of this year, Temu spent much days ranked archetypal for downloads connected some the iOS App Store and Google Play Store successful the US than immoderate different app.

The institution is facing headwinds, though. In summation to the imaginable US curbs connected inexpensive shipments, different countries and regions are moving successful a akin protective direction. Brazil passed a law levying a 20 percent taxation connected purchases up to $50 successful June. The EU has considered scrapping its $150 duty-free threshold. In August, South Africa announced it would present a value-added taxation connected imported low-value goods, which had antecedently enjoyed a concession.

Managing manager of CTR Market Research Jason Yu says it’s “very likely” that Temu would instrumentality a deed if the US goes done with it. “Competing connected little terms volition not beryllium a sustainable strategy for companies similar Temu oregon Shein successful the agelong run,” helium says. “With the alteration of law, their vantage successful terms volition beryllium little obvious.”

It each adds up to “a gloomy outlook for cross-border online buying successful 2025,” says Tendolkar, the probe analyst.

At slightest connected the surface, Pinduoduo isn’t worried. A Pinduoduo spokesperson tells WIRED, “If their [policy alteration is] fair, we judge they won’t tilt the competitory landscape.”