Technology

Chinese tech giants’ push into U.S., Europe’s markets sets up potential clash with Amazon

TikTok owner ByteDance has launched a women’s fashion website called If Yooou. Pinduoduo launched an e-commerce site in the U.S. called Temu. The two companies are the latest Chinese tech giants to look to crack the international e-commerce market domianted by Amazon.
Mike Kemp | In Pictures | Getty Images

Pinduoduo and TikTok owner ByteDance launched e-commerce websites overseas in the last few months, as they aim to take a crack at selling Chinese products to foreign buyers.

The move sets the two Chinese technology firms up on a collision path with Amazon as they expand internationally.

Pinduoduo, one of China’s biggest e-commerce companies, launched a U.S. shopping site called Temu last month, which sold products in categories from fashion to sports and electronics.

Weeks later, ByteDance, the Beijing-headquartered owner of short video app TikTok, launched a fashion website named If Yooou. It is currently shipping to the U.K., Spain, Italy, Germany and France.

Both firms are looking to replicate the success of Shein, the Chinese fast fashion brand that is reportedly now worth $100 billion and has found a large customer base in the U.S. and elsewhere.

ByteDance and Pinduoduo are also relying on cross-border e-commerce — selling Chinese goods to overseas consumers. The U.S. and European markets also present an opportunity for growth.

The push abroad comes at a time where tech giants in China are looking for new avenues of growth as the domestic economy continues to face challenges as a result of Beijing’s strict Covid control policies and deteriorating global macroeconomic environment.

“I think ByteDance and [Pinduoduo] are seizing an opportunity to apply their unique social commerce innovations” to overseas markets, Jacob Cooke, CEO of WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told CNBC.

Pinduoduo declined to comment for this story, while ByteDance did not respond to a request for comment.

Pinduoduo and ByteDance e-commerce strategy

Cross-border e-commerce strategies of Pinduoduo, also known as PDD, and ByteDance will be different given their different strengths.

In China, PDD has grown rapidly by building direct links with suppliers and offering big discounts. That could help when it comes to sourcing products to sell in the U.S. and selling them at low prices.

ByteDance, meanwhile, runs TikTok — one of the world’s most popular social media apps.

ByteDance’s algorithms for understanding consumers on Tiktok, “plus the potential to leverage the TikTok ecosystem for commerce, are massive advantages,” Cooke said.

The Chinese firm is not new to e-commerce abroad. In the U.K., it has a shopping feature in TikTok where brands and influencers make videos on products and users can buy those products via the app.

But it hasn’t found success yet.

[Pinduoduo and ByteDance] face low brand recognition and need to build user trust.
Jacob Cooke
CEO of WPIC

Dmonstudio, a women’s fashion site that ByteDance previously launched, shut down after just a few months in operation. And Fanno, another e-commerce site from ByteDance, hasn’t had much traction.

So-called livestream shopping is very popular in China and certain countries in Asia, but it hasn’t really taken off in Europe or the U.S. The Financial Times reported in July that TikTok has abandoned plans to expand its livestream e-commerce strategy in Europe and the U.S.

That could be a reason ByteDance has persisted with an e-commerce shopping website to accompany its TikTok shopping strategy.

ByteDance and Pinduodudo are newer Chinese firms looking to take on international markets. Alibaba and JD.com, China’s two largest e-commerce firms, have been expanding overseas in the last few years.

Amazon challenge?

ByteDance and Pinduoduo’s attempts to crack the e-commerce market put them in direct competition with U.S. giant Amazon.

PDD’s Temu, which sells products across different categories, will look to challenge Amazon in price.

ByteDance’s If Yooou website will compete with Amazon in fashion, an area the Seattle-headquartered firm has been looking to boost its efforts in.

But both could face a challenge dislodging the dominance of Amazon.

One reason is that consumer behavior outside of China tends to favor Amazon’s model, according to Cooke. Customers usually go to Amazon to find specific products or brands that they have already decided to buy, he said.

In contrast, Chinese platforms like Alibaba’s Tmall and JD.com “function more like virtual shopping malls where people are browsing and participating in a digital social experience.”

Pinduoduo and ByteDance “can eat away at Amazon’s share of certain sectors as Shein has done, but ultimately they won’t jeopardize Amazon’s stranglehold on the U.S. e-commerce market,” Cooke said.

“They face low brand recognition and need to build user trust.”

Articles You May Like

Best Black Friday 2022 Green Deals: e-bikes, power stations, more
Teenager denied request to watch execution of father by lethal injection
Government launches £1bn scheme to insulate middle-income homes
China ‘played a great game’ on lithium and we’ve been slow to react, industry CEO says
Will Smith’s ‘deepest hope’ Emancipation film crew won’t be ‘penalised’ over his Oscars slap