Alibaba Looks to Bring Budget Shopping Platform to Tencent’s WeChat

Alibaba is hoping its rival Tencent will allow it to cash in on the huge user base of social media app WeChat, as it tries to retake its e-commerce crown from Pinduoduo through its own budget shopping platform.

The company has filed a request with Tencent to launch a WeChat mini-program — essentially an app within the app — for the Taobao Special Edition platform, Alibaba Vice President Wang Hai said at an event to celebrate the platform’s one-year anniversary held Thursday.

Alibaba Group Holding Ltd. is looking forward to teaming up with Tencent Holdings Ltd., but the internet giant is still reviewing the request. Tencent hasn’t commented publicly on the matter.

Taobao Special Edition — or Taobao Tejia — was launched in March and offers a wide range of products, mostly priced under 50 yuan ($7.64) apiece.

Five-year-old Pinduoduo Inc. became the country’s biggest online retailing platform in terms of user base last year as it saw annual active buyers rise 35% to 788.4 million as of the end of2020, surpassing Alibaba’s 779 million. As of December, Taobao Tejia claimed over 100 million annual active users.

When asked if Alibaba was using the platform to rival Pinduoduo, Huang Aizhu, Taobao Special Edition’s operation manager, said “we are business friends rather than competitors.”

Unlike links to products on Pinduoduo or the Jingxi budget marketplace operated by JD.com Inc., links to products on Taobao Special Edition can’t be shared on WeChat. That puts it at a disadvantage both in growing its user base and in facilitating transactions, an electronics vendor that uses all three platforms told consulting firm Third Bridge.

Founded in 2015, Pinduoduo has grown at lightning speed. Targeting lower-income users with a discount group-buying model, Pinduoduo quickly grabbed market share by attracting price-sensitive consumers who were previously left out of China’s e-commerce boom.

Besides its budget-product offerings, Pinduoduo has also plowed into the online groceries trend in China’s e-commerce sphere. As the pandemic led many to avoid in-person shopping, the company said that 270 billion yuan of fresh food was sold via its platform last year, up 98.53% from 2019 year and making up 16.2% of its total transactions.

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Taobao Special Edition is also jumping on this bandwagon, saying at the Thursday event that it plans to expand its grocery supply chains and logistics capabilities, and aims to build ties with 10,000 farming entities that can directly supply it with fresh food.

Besides the challenge from Pinduoduo, Alibaba is also facing regulatory headwinds as Beijing steps up oversight of the country’s tech giants. Now, the company will faces huge fines of 10% of its annual revenue if it’s found it have violated regulations against forced exclusivity arrangements, predatory pricing or algorithms favoring new users.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)