The CBs will have a coupon rate of 5% per annum and a tenure of three years, with an option to extend by two years at the election of PDD, according to a statement by GOME. The CBs are convertible at HK$1.215 per share, which works out to approximately 1.28 billion GOME shares or approximately 5.6% on a fully diluted basis.

“This strategic partnership is a win-win-win,” said Mr. David Liu, Vice President of Strategy at PDD. “Consumers win because they get a wider range of top domestic and international brands at competitive prices, GOME wins because they can broaden their access to our 585.2 million users, and PDD wins because we enhance our foothold in household appliances and electronics.”

The tie-up marks the first strategic investment by Pinduoduo and comes after its US$1.1 billion share placement to long-term investors in March, when it said it will use the proceeds to enhance user experience.

The partnership also strengthens the e-commerce platform’s position in household appliances and electronics while accelerating its push into consumer-led manufacturing.

As part of the partnership, PDD will help bring the entire GOME product range, including top domestic and international brands such as Siemens, Sony, Haier, Gree and Midea, onto Pinduoduo platform at competitive prices.

PDD will also help GOME’s digitization strategy, extending PDD’s technological capability to help the retailer upgrade its supply chain and tailor its product range to consumer needs and preferences.

GOME will integrate its logistics, delivery and assembly services with the PDD platform to enhance user satisfaction.

With GOME’s extensive network of stores across China, PDD users will be able to enjoy an extension of their user experience to try and experience the products before placing their orders.

The deal also furthers PDD’s push into the consumer-to-manufacturer (C2M) realm by working with GOME to source for products that are tailored to customers’ needs.

Founded in 2015, the Shanghai-based company has seen rapid growth as it builds on its strength in all product categories, including household appliances and electronics.

Pinduoduo exceeded RMB 1 trillion (US$144.6 billion) in GMV for the 12-month period ended December 31, 2019. The company saw a 40% increase in active buyers in the same period to 585.2 million, while annual spending per active buyer jumped 53%.

Alibaba launched a new app Taobao Special Offer in March 2020 to compete with Pinduoduo on C2M.

Pinduoduo and Taobao’s manufacturing strategies

In China, the online retail B2C e-commerce grew by 28.4% to a US$226.38bn market in Q4 2018. Tmall took the lead, followed by JD, Suning, Vipshop, and Gome.

China’s online retail B2C e-commerce market reached 1,526.76 billion yuan (US$226.38bn) in Q4 2018, an increase of 28.4% year-on-year.

Revenue from Alibaba’s core commerce grew by 40% year-over-year to 102,843 million yuan (US$14,958 million) as of Q4 2018. Its annual active consumers on the China retail marketplaces reached 636 million.

Related: China e-commerce market overview

Tmall took a market share of 61.5%, with a GMV increase of 29.5% year-on-year. JD ranked in the second place with a share of 24.2%, whose GMV grew by 21.1% year-on-year. Suning, Vipshop, and Gome listed third, fourth, and fifth with a share of 6.7%, 3.7%, and 0.7%, respectively.

71 brands exceeded 100 million yuan (US$14.37 million) in GMV in the pre-sale period of Double 11. Among that, 15 brands came from Tmall apparel, i.e. Nike, Adidas, Puma, Lining, Converse, Anta, Fila, Skechers, New Balance, Underarmour, Uniqlo, Eifini, Only, Vero Moda, and Bosideng. The same figure was only 40 in last year’s Double 11. You can find out the top statistics of Double 11 2018 here.

In 2018, the online retail sales of goods and services totaled 9,006.5 billion yuan (US$1,328.59 billion), up by 23.9% year-on-year. China’s retail market is estimated to hit US$6.77 trillion by 2019 with e-commerce representing 14.46% of this market.

Individual agents (Daigou), who frequently promote products on WeChat Moment or sell products in live streaming and short videos, are facing a new e-commerce policy on the first day of 2019. Under this new regulation, they need to make market entity registration and perform the obligation of tax payment.

In order to meet the ever-changing consumer preferences, companies should adjust their products and marketing based on people’s shopping motives, methods, time and results. Read more on Chinese digital consumer trends here.

China’s US$16bn cross-border e-commerce market overview in Q4 2018

GOME sales revenue in the first three quarters of 2014 was RMB44.645 billion, up 7.2% year-on-year and the sales growth of its comparable stores was up 6.0%.

GOME E-Commerce Gross Merchandise Volume (including GMV of GOME marketplace) was up 72.7% year-on-year in the first three quarters; unique visitor was up 63.9% year-on-year.

Consolidated gross profit margin was 18.6%, up 0.6 percentage point year-on-year; GOME net profit was RMB 1.018 billion, up 74.9% while its net profit margin was 2.3%, up 0.9 percentage point year-on-year.

GOME off-line store. Tier-1 and Tier-2 Cities: Same-store sales grew by 4.7%. There were 68 stores
upgraded to new smart comprehensive stores during the reporting period. Tier-3 and Tier-4 Cities: Same-store sales grew by 12%. During the reporting period, the Group opened a total of 58 stores.

GOME E-Commerce GMV including GMV of marketplace was up 72.7% year-on-year (of this, GMV for the third quarter rose 100.8% year-on-year). Unique Visitor went up 63.9% year-on-year (of this, UV traffic for the third quarter rose 104.1% year-on-year). GOME Mobile Terminal GMV increased to 12.4% of the E-Commerce GMV.

Mr. Wang Junzhou, CEO of GOME, said,

GOME’s ‘Open Omni-Channel Retailer’ strategy has enabled us to record impressive results that have outpaced the industry average and our peers for seven consecutive quarters. Going forward, our four unified service platforms –
procurement, logistics, information technology and financial services – will offer full support to the Group’s omni-channel development. This includes offline, online, mobile applications and other social channels to further drive business expansion, while providing quality onestop services for consumers and business partners. We are committed to achieving our goal to ‘Build another GOME’ by 2017, and to creating greater value for our shareholders and society as a whole.

Read more: JD.com Active Customer Accounts and GMV Both Doubled in Q3 2014

Suning.com, being operated by Suning Appliance Company Limited and one of the largest privately owned electrical appliance retailers in China, came on top with its annual turnover in 2012 reaching 18.8 billion yuan (USD 3 billion). And Yintai.com led the way of the department store with 560 million yuan (USD 91 million) annual turnover.