How did cross-border platform Temu’s parent e-commerce company PDD Holdings become the most valuable US listed Chinese firm surpassing Alibaba in Nov?

1.???? Navigating the change with bold vision and innovation – In order to grow, PDD planned to expand overseas in 2022 and reinvented online shopping experience to be more interactive and engaging, with the launch of a new brand – Temu which means “Team up, Shopping Together”. Sticking to the core philosophy of domestic firm Pinduoduo which means “Together, more savings”, it exploited the challenges in US of “Supply Chain Disruption” and “All time high Inflation since 1970”. Temu tops the most downloaded free app charts in the U.S. and some European countries including the U.K. in 2023 and became the most downloaded free shopping app in Japan and South Korea within months of being launched. Colin Huang, the 43-year-old founder of PDD, has become the second-richest man in China, with a net worth of $52.3 billion. Temu ships around one million packages daily. Amazon ships more than 20 million packages daily.

2.??? Persona Centric Innovation led by AI, Tech & Digital Ecosystem for both Customers and Merchants –

a.?????? Strong control on practices - Merchants must sign agreement and follow local legal standards. Leverage AI to identify and take nimble action on counterfeit goods from Merchants and may lead to merchant delisting, accounts terminated and permanently banned from the platform.

b.????? Customer Trust for return payment – Buyers can get an immediate refund without having to return purchased items if they complain about the goods. Initiated a "10 billion subsidy" plan that gave merchants cash in return for offering customers cheaper prices for prioritized high-end products such as the iPhone.

c.?????? Scale & thrive with WeChat partnership - for end-2-end frictionless experience with personalized offers and earn deeper discounts through gaming. Temu collects data around shopping transactions, browsing history, device information and geolocation. It has a much smaller workforce than Alibaba and JD, allowing for more nimble decision-making and implementation.

d.?????? Handles end-2-end logistics including servicing with optimal cost – Sellers only must ship the goods to a designated warehouse in China's southern Guangdong province, and Temu looks after everything from that point forward, including shipping abroad and after-sales services. Temu packages typically arrive between five to eight business days after they are ordered in US. All the packages are done in China with reduced package size to a minimum. These are delivered to US by air and then trucked to parcel carriers’ facilities.

3.????? Purpose and Focus – PDD is focused on only eCommerce segment with consumer first, absolute efficiency and low prices. Core strategy is to satisfy customer’s feeling of getting a good deal.

4.????? PDD Journey since 2015- Colin Huang, a former Google employee and the founder of multiple startups, including a gaming company, started it in 2015 will selling cheap fresh vegetables and very soon diversified into other inexpensive products. It partnered with Tencent and leveraged WeChat (with 90% Chinese population footprints) for social e-commerce strategy with an intensive advertising campaign to allow users to get deeper discounts or even free items by referring deals to more friends. The penetration was fast and deep including older demographics in rural areas with WeChat group and ease of payments using WeChat Pay without connecting to bank accounts unlike using Alipay at Alibaba’s Taobao.

5.????? Competitive Landscape – Alibaba and JD focused on urban population. Alibaba follows a different model wherein a big portion of its revenue comes from the commissions earned from Tmall vendors. Shein is into fashion and is actively focused on US expansion. Alibaba announced a new CEO to drive growth.

6.????? Culture - There has been concerns on toxic working culture, with long hours and strict on-time rules.

7.?????? Regulatory Scrutiny – Temu benefits from the de minimis rule, which eliminates duties and taxes on goods valued at $800 or less for a customer importing merchandise from outside US. US regulators are taking a close look at it. Pinduoduo has also been accused by cybersecurity experts of using malware to spy on its users. It has been suspended from the Google Play?app store after the app was found to contain malware.