Pinduoduo CEO Condemns E-Commerce’s ‘Forced Exclusivity’ Rule
The founder of China’s No. 3 e-commerce platform, Pinduoduo Inc., lashed out at the sector’s practice of “forced exclusivity,” saying merchants shouldn’t be forced to choose only a single platform to sell their products on.
This unspoken rule isn’t likely to go away soon, but it doesn’t create value for consumers, merchants and manufacturers, wrote CEO Colin Zheng Huang in his first letter to shareholders after the company’s initial public offering in New York last year.
Like many other internet businesses, China’s booming e-commerce sector is dominated by a handful of firms, which can stymie their rivals with exclusive products and services.
“Attempts to establish or prolong any monopolistic control are both wasteful and destructive … such a practice will eventually be dismantled,” Huang wrote.
Although Huang didn’t mention any rivals, his letter has widely been seen as a swipe at Alibaba Group Holding Ltd., the e-commerce behemoth that Pinduoduo earlier this month accused of forcing some merchants to pull products from its site.
In just four years, the Shanghai-based newcomer has developed itself into China’s third-largest e-retailer, trailing only Alibaba and JD.com Inc. That has been largely due the “group buying” model the company has pursued, in which buyers of groceries, electronic devices and other goods are encouraged to buy in bulk alongside friends and relatives in order to access discounts.
When reached by Caixin, an Alibaba spokesman declined to comment on Huang’s letter. However, Caixin learned from sources familiar with the situation that Alibaba has recently demanded that merchants clarify whether they are cooperating with Pinduoduo or have done in past.
In the letter, Huang likened his company to a prepubescent Yao Ming — a Chinese NBA player who stands almost 2.3 meters (7 feet six inches) tall — saying his company is like a “little grown-up” — a young company that has grown very fast.
Amid intense competition, Pinduoduo has ploughed a massive amount of cash into sales and marketing. Last year, it posted a net loss of 10.3 billion yuan ($1.5 billion), compared to a loss of 498.7 million yuan the year before.
Pinduoduo has previously argued that such hefty investment is necessary and Huang once again defended the company’s strategy.
“At this current stage, Pinduoduo has the ability to generate revenue, but it is weakly correlated with the large amount of spending we choose to incur” he said. “We will continue to focus on building our intrinsic value and proactively seek investment opportunities that can drive the long-term value of our company.”
Contact reporter Mo Yelin (firstname.lastname@example.org)
Jan 24 06:56
Jan 24 06:01
Jan 24 02:16
Jan 23 18:30
Jan 23 16:00
Jan 23 10:48
Jan 23 05:58
Jan 23 03:49
Jan 23 03:41
Jan 23 03:09
Jan 22 15:44
Jan 22 06:31
Jan 22 03:47
Jan 22 03:06
Jan 21 17:02
- 1Wuhan Virus Latest: More Domestic, Foreign Governments Raise Alarms as Confirmed Cases Surge
- 2Reporter’s Notebook: We Stayed in Wuhan as the Last Trains Pulled Out
- 3Wuhan Virus Update: Health Expert Warns of ‘Super-Spreader’ of Viral Pneumonia
- 4How Did Two Women Drive a Luxury SUV Into the Forbidden City?
- 5After Layoffs, Oracle Executive Vows to Stay in China
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas