Pinduoduo, a domestic e-commerce giant, will reportedly invest tens of billions of yuan to support new quality retailers in the next year, and carry out ecological governance of retailers, to realize healthy development of its platform ecology through long-term and patient investment.
Given that China’s e-commerce market is to a large extent dominated by JD.com and Alibaba, Pinduoduo’s fast growth is linked to its consumer-friendly measures such as lower prices and convenient refund procedures. In May, Pinduoduo launched a new tool for automatic price matching, through which Pinduoduo can analyze product prices in real time and help merchants automatically adjust prices to attract consumers with lower prices.
However, this model also leads to excessive low-price competition, prompting merchants to sacrifice quality for costs. A model that relies on lower price competition is not only difficult to sustain, but also creates a lose-lose scenario for merchants and consumers. It is in the interest of consumers and businesses to provide high quality products at low prices rather than just at low prices.
Given that the law prohibits unfair competition, e-commerce platforms should build a commercial ecology that provides healthy growth for businesses and consumers, meets consumer demand and promotes high-quality development on the supply side.
As the country’s e-commerce needs to shift to competing for higher-quality products, that will test how the major platforms can increase their competitiveness, rather than relying solely on lowering product prices.
Such a competitive ecology will create a win-win situation for the platforms, merchants and consumers, and provide a guarantee for the sustainable and high-quality development of the e-commerce industry.
21ST CENTURY BUSINESS HERALD