Pinduoduo, the fast-growing rival to Alibaba and JD in China. 2 of 2.

IPO and funding
Pinduoduo went public in July 2018 on the Nasdaq, pricing its American depositary shares (ADS) at $19 apiece.

On Monday, shares closed at $50.11 each. That put PDD’s market valuation at around $58.2 billion.

The company also recently announced a new investment and funding.

In March, PDD carried out a private placement of $1.1 billion worth of newly issued Class A ordinary shares. At the time, the company said the funding will help its “strategic flexibility for expansion to bring more interactive experiences and value-for-money products to our users.”

And on Sunday, PDD announced it would invest in convertible bonds issued by Hong Kong-listed GOME Retail. The investment will see GOME’s product range, logistics and after-sales customer support integrated with PDD.

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China’s Pinduoduo partners GOME Retail to improve e-commerce user experience
Competition and risk
Alibaba and JD have found success in larger so-called tier 1 and tier 2 cities in China which include the likes of Beijing and Shanghai. PDD’s growth has come from smaller Chinese cities.

But now Alibaba and JD have put a larger focus on gaining ground in these lower tier cities and have released products to compete with PDD.

In March, Alibaba launched a special version of its Taobao app that focuses on the so-called customer-to-manufacturer (C2M) model, which has been behind the rise of PDD. That’s where consumers can interact and buy direct from the manufacturer rather than going through a third-party seller.

And last year, JD rolled out a group buying app called Jingxi, which is also accessible through WeChat.

“From the prospective of end customers, the value proposition of PDD is not as prominent as before, because BABA and JD both rolled out their special edition (products),” Choi Chun, research director at Shanghai-based firm iResearch, told CNBC.

Chun also noted that Alibaba and JD are building up relationships with factories for the C2M model of business. And with the Alibaba’s strong cloud computing business, it “may have more to offer to the factories” in terms of digital capabilities, Chun said.

Meanwhile, JD and Alibaba both have strong logistics capabilities. JD is known for being able to deliver items on the same day or day after.

“Logistical capability is also lacking in PDD’s ecosystem,” Chun said.

Author: Arjun Kharpal

PUBLISHED TUE, APR 21 20208:52 PM EDTUPDATED WED, APR 22 20203:32 AM