By one key measure, Alibaba is no longer China’s largest e-commerce company
Published March 18, 2021, 9:25 a.m.
In China, an e-commerce David is gradually overtaking the country’s Goliath.
Yesterday (March 17), Alibaba’s e-commerce rival Pinduoduo announced it had surpassed the tech giant in one area: annual active user numbers.
The US-listed platform founded in 2015 reported robust earnings for last year, nearly doubling its revenue to $9.1 billion compared with 2019, as the pandemic fueled demand for online shopping. Sales were especially strong in the fourth quarter. Its annual active buyers, or those who make at least one purchase, reached 788.4 million in 2020, just ahead of Alibaba’s 779 million. Despite its impressive growth, though, Pinduoduo stayed in the red with a net loss of $1.1 billion in 2020.
By a number of other indicators, Alibaba remains China’s biggest e-commerce firm.
For monthly active users, Alibaba was still ahead of Pinduoduo in December with its more than 900 million users, compared with 720 million for its rival. In terms of other key metrics such as gross merchandise volume, Alibaba also dwarfs Pinduoduo. In the fourth quarter last year, Alibaba reported $33.9 billion in revenues, compared with $4 billion for Pinduoduo.
But Pinduoduo’s surpassing of Alibaba in annual user numbers showcases the company’s fast pace towards becoming a mature, all-encompassing e-commerce platform. Initially known for its cheap deals and a strong user base from China’s smaller cities, the company has gone from offering daily use items to also selling discounted luxury cars such as the Rolls-Royce.
The strong earnings report was accompanied by founder Colin Huang stepping down as chairman, after giving up the CEO role last year, which sent the company’s stock price down yesterday despite its results. CEO Chen Lei will now take on the role of chairman as well. The transition may be a sign that Huang is quicker than his older peers at grasping how fast expanding fortune and influence can become a liability in today’s China, amid Beijing’s ongoing crackdown on its powerful tech giants, particularly Alibaba.
Compared with Alibaba founder Jack Ma, long China’s unofficial ambassador on the world stage, 41-year-old Huang maintains a low profile and rarely accepts media interviews. While Ma celebrated his stepping down as chairman of Alibaba at the age of 55 with a grand gala in 2019, Huang’s resignation is happening quietly, and almost feels like a way to avoid any unwanted attention. Huang wants to “pursue research in the food and life sciences,” the company said.
In a letter to shareholders, Huang said he feels both joyful and anxious about the future of the company.
“Pinduoduo will have its own growth journey regardless of whether I am nervous, excited, or frightened as its guardian…I hope that my stepping down as chairman of the board will aid this young person into independent adulthood,” he wrote.
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