The push by Pinduoduo to lower prices has helped it become one of China’s fastest-growing e-commerce apps and epitomizes a broader force plaguing the economy. Founded in 2015, Pinduoduo has grown more quickly than its established rivals. When Lin Yunyun started selling diapers two years ago on Pinduoduo, she was not prepared for the relentless nagging about prices.
Pinduoduo, popular among Chinese consumers for its discounts, sent “reminders” whenever other sellers dropped their prices below hers. When Ms. Lin cut her prices, the site temporarily promoted her products—only to warn her a few days later that more reductions were needed for the site to continue driving customers to her goods.
The platform keeps reminding me to lower prices,” said Ms. Lin, 28, who lives in Zhangzhou, a city in southeastern China.
Pinduoduo’s price pressure on sellers
“If I cut my price anymore, I won’t make any money.”
No company embodies China’s deflationary moment like Pinduoduo. Shoppers flock to the app for its staggering discounts due to its unyielding push to lower prices. As the country’s second-largest online retailer, it is the shopping destination of choice for those who embrace so-called downgraded spending—a social-media-fueled maxim of Chinese consumers.
Rattled by an economy with no end in sight to its troubles, Chinese consumers are spending less and saving more. Prices are falling, and profits are shrinking. Companies are hesitant to hire more workers or invest in the future, fueling even more economic uncertainty.
Despite hints of additional fiscal spending to put more money into the hands of Chinese consumers, the government has not revealed any specific plans. As China navigates its economic challenges, the role of e-commerce giants like Pinduoduo in contributing to deflation remains a critical issue. The pursuit of lower prices, while beneficial to consumers in the short term, exacerbates broader economic troubles that could have long-lasting effects.
