ByteDance, Pinduoduo launch foreign e-commerce sites to challenge Amazon

Pinduoduo and TikTok owner ByteDance have launched e-commerce websites overseas in the past few months as they seek to push Chinese goods to overseas buyers.

The move puts the two Chinese technology firms on a collision course with Amazon as they expand internationally.

Pinduoduo, one of China’s largest e-commerce companies, last month launched a US-based shopping site called Temu, selling items in categories ranging from fashion to sports and electronics.

A few weeks later, ByteDance, the Beijing-headquartered owner of the short-form video app TikTok, launched a fashion site called If Yooou. It currently ships to the UK, Spain, Italy, Germany and France.

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

ByteDance and Pinduoduo are also betting on cross-border e-commerce — selling Chinese goods to foreign consumers. The US and European markets also represent an opportunity for growth.

The push overseas comes as tech giants in China look for new avenues of growth as the domestic economy continues to face challenges from Beijing’s strict Covid control policies and a worsening global macroeconomic environment.

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

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

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

In China, PDD is growing rapidly, establishing direct relationships with suppliers and offering deep discounts. This can help when it comes to finding products for sale in the US and selling them at low prices.

Meanwhile, ByteDance operates TikTok, one of the world’s most popular social media apps.

ByteDance’s algorithms for understanding consumers on Tiktok, “plus the potential to use the TikTok ecosystem for commerce, are huge advantages,” Cook said.

The Chinese firm is not new to e-commerce abroad. In the UK, TikTok has a shopping feature where brands and influencers make videos about products and users can buy those products through the app.

But it has not yet succeeded.

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

So-called live shopping is very popular in China and some Asian countries, but it has not seen much growth in Europe or the US. In July, the Financial Times reported that TikTok had abandoned plans to expand its live e-commerce strategy in Europe and the US

This could be why ByteDance is pushing for an e-commerce shopping website to accompany its TikTok shopping strategy.

ByteDance and Pinduodudo are new Chinese firms looking to enter international markets. Alibaba and JD.comthe two largest e-commerce companies in China have been expanding overseas in the past few years.

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

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

ByteDance’s website If Yooou will compete with Amazon in a fashion in which the Seattle-headquartered firm is looking to ramp up its efforts.

But both may face the challenge of displacing Amazon’s dominance.

According to Cook, one reason is that consumer behavior outside of China tends to favor the Amazon model. Customers typically go to Amazon to find specific products or brands they’ve already decided to buy, he said.

In contrast, Chinese platforms such as Alibaba’s Tmall and JD.com “function more like virtual malls where people browse and engage in digital social experiences.”

Pinduoduo and ByteDance “may eat into Amazon’s share in some sectors, as Shane did, but ultimately they will not threaten Amazon’s stranglehold on the US e-commerce market,” Cook said.

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