China E-commerce: Platform differentiation now taking shape
Consumer Discretionary
E-commerce platform growth in 1Q25 remained broadly stable Q/Q, but strategic divergence is now clearly underway. While overall momentum held steady, platform-specific execution and monetisation efficiency began to separate winners from laggards. All major platforms are pushing algorithm and AI-tool enhancements, with mixed results in conversion and traffic ROI. Stocks discussed include: 1) Alibaba - improved monetisation; subsidy efficiency gains allowed BABA to protect margins while growing share; expect better profitability this quarter as the platform leans into smarter traffic and brand segmentation. 2) Pinduoduo - is doubling down on volume and SKU expansion. Efficiency gains in ad/subsidy tools suggest a scalable ROI model is emerging - though monetisation remains back-end loaded.
Edition: 210
- 02 May, 2025
Pinduoduo (PDD US) & Dada Nexus (DADA US) US
Consumer Discretionary
Revenue growth has been the driver for both stocks, but they are facing tough top line growth comps in 2H23. For PDD, the slowing growth may not be temporary, as F&B delivery is likely to become a smaller part of the business with people out of quarantine, user saturation may be reaching its limit and merchants / consumers may be switching to JD.com’s offer. Felix Wang is also flipping DADA from long to short, as near-term catalysts are shifting. A critical part of his long pitch stemmed from support from short video disruptor, Douyin. However, Douyin surprisingly encountered major obstacles in local life services, including food delivery, in Q2. Competition for DADA is also heating up.
Edition: 166
- 04 August, 2023
Communications
In Sumeet Singh’s earlier note in 2022, ‘Tencent investee selldown - The US$120bn global overhang’, he had looked at the group's overall investment portfolio. With two of its heavyweight investments having now been spun-out, Sumeet re-looks at Tencent’s shareholdings in various companies to try and gauge which ones it could sell out of and how. In terms of regulatory scrutiny, Pinduoduo is probably very high up on the list, alongside Kuaishou, Futu and PolicyBazaar. Announcements re. the divestments of JD.com and Meituan occurred towards the end of 2021 and 2022, respectively. Thus, some of these names could start to come under pressure by the last quarter.
Edition: 162
- 09 June, 2023
Consumer Discretionary
With its positioning in the low-end and lower tier geographies, PDD has more opportunities to expand in eCommerce than Alibaba and JD.com, and the lowest risk of having somebody encroach on its turf. Douyin and Kuaishou only have niche eCommerce operations and will not focus on the average guy in some rural township. Modest improvements in trust among China’s middle class suggest PDD can steal some growth from its upmarket rivals, but no one believes it will enjoy the kind of success in the mid- and upper-tiers of the market that it does now in low-tier markets, and with ~900m customers that will continue to find value in that for the foreseeable future, that’s just fine.
Edition: 161
- 26 May, 2023
China eCommerce primary research report
Consumer Discretionary
Based on a variety of data and feedback from 27 eCommerce professionals, Westlake observed 1Q apparel sales recovered the strongest among online discretionary categories, cosmetics rebounded modestly but appliances sales softened slightly. Mar & Apr saw a marked acceleration in online discretionary category sales growth (except for skincare), likely due to further consumption recovery and a low base last Mar & Apr. Alibaba, JD.com, Pinduoduo, Vipshop and Kuaishou eComm can likely at least meet 1Q China-related eComm sales or marketing revenue expectation. JD Retail had relatively weaker 1Q given the restructuring and soft appliance & general merchandise sales.
Edition: 160
- 12 May, 2023
Communications
US$20bn overhang for Meituan as China's social media giant slashes its stake in the food delivery firm from 17% to just 1.6% - the share distribution follows the template of the US$16bn worth of JD.com shares that Tencent paid out after its dividend announcement at the end of 2021. In this note, Sumeet Singh discusses the implications of the deal and thinks next on the list for stake divestment is likely to be Pinduoduo, but that will have to be via a placement as it trades in the US.
Edition: 149
- 25 November, 2022
China eCommerce primary research report
Consumer Discretionary
Westlake observed online discretionary spending (except for cosmetics) recovered gradually in Jul & Aug, but softened slightly in Sept & Oct given rising community lockdowns. They expect Alibaba, JD, Pinduoduo, Vipshop and Kuaishou will meet 3Q Street expectations. Given modest improvements in business and consumer confidence, they anticipate further 4Q sales recovery for leading Chinese eComm players driven by 11.11 promotions and likely continued government consumption coupons. If Covid restrictions gradually ease after the 20th party congress, a broad-based recovery will help boost consumer spending.
Edition: 146
- 14 October, 2022
Consumer Discretionary
Once one of the fastest growing segments within Chinese e-commerce, community group buying is starting to face multiple headwinds from funding shortages to excessive price competition. Oshadhi Kumarasiri points to PDD's competitors who have been announcing job cuts and rapidly scaling back operations over the last few months, and argues that the operating environment shouldn’t be much different for PDD. With QoQ revenue growth pretty much at a standstill and sales and marketing cost cutting almost fully exhausted, current consensus expectations are too optimistic and bound for a significant correction.
Edition: 141
- 05 August, 2022
Douyin eCommerce: From strength to strength
Against a background of widespread pessimism about the macro-environment for 2022/23, merchants in RedTech’s 2Q22 eCommerce survey highlighted Douyin, and to a lesser extent Pinduoduo and JD.com as winners, while Alibaba underperformed. Merchants liked Douyin’s eye-catching content, which delivers excellent performance on ad KPIs, resulting in rising sales and an even greater chunk of merchants’ ad spending. They also noted Douyin’s strong potential for sales in lower tier cities. Alibaba on the other hand has hit its peak, user growth is stalling, costs for merchants on the platform are high, and competitors in both the high and low end loom large.
Edition: 140
- 22 July, 2022
A reversal for China CGB
RedTech’s latest eCommerce survey finds consumers switching back to traditional eCommerce platforms - the underlying rise of groceries in eCommerce remains in place, though, and this may be a temporary reversal of the trend toward community group buying. The low prices that drew consumers to CGB and local service platforms are now rising, taking away some of the appeal, and smaller platforms without a deep-pocketed parent company are pulling back from underperforming markets, while larger platforms like Pinduoduo and Meituan have lost market share.
Edition: 131
- 18 March, 2022
eCommerce Consumer Survey: Meituan & Pinduoduo surge in China Community Group Buy
Not only are online groceries one of the largest categories in eCommerce, reaching RMB3.7tn in GMV for 2021, but they are also the most tumultuous. Community Group Buy (CGB) and local service models are upending the industry and incumbent eCommerce platforms, with Meituan and PDD coming out ahead. However, more than 50% are likely to switch in the next year, mostly to local service or CGB, and an early lead does not guarantee long-term success.
Edition: 122
- 29 October, 2021
Risky Business: China’s Tech Crackdown & How to Navigate it
While the official ban on the most lucrative activities in the after-school tutoring sector marks a new low in the regulatory crackdown, RedTech maintain that China is not trying to strangle the golden goose. A handful of big losers will be offset by a majority of companies that are well positioned for growth in a tighter regulatory environment. The less risky (Tencent) are being dragged down with the more risky (Didi), creating lucrative, long-term investing opportunities. Other companies mentioned include Alibaba, Ant Group, ByteDance, Douyu, Huya, JD, Meituan, Pinduoduo, Sogou and TAL.
Edition: 116
- 06 August, 2021