China has a new No. 1 in online shopping, the company that has beaten Alibaba – Times of India

China has a new online shopping giant. According to a report in CNBC, quoting Goldman Sachs, PDD, the company behind the popular Pinduoduo shopping app, has surged past Alibaba to become China’s most valuable e-commerce company. This shift comes thanks to PDD’s focus on value for money and the rapid growth of its international marketplace, Temu. Incidentally, Temu was the most-downloaded shopping app in the US in 2023.

Also, this isn’t the first time that PDPP has surpassed Alibaba. However, it comes after a brief period where Alibaba regained the top spot. PDD’s strong financial performance, with net income tripling year-over-year, combined with Alibaba’s struggles, solidified the shift.

Fueled by strong first-quarter results, PDD’s market capitalization reached $208 billion, surpassing Alibaba’s $196 billion. PDD’s stock price has also doubled in the past year. Analysts point to several factors behind PDD’s success:

Temu’s Profitability: A new business model with lower logistics costs is expected to boost Temu’s profitability faster than anticipated.

Strong Brand Image: Consumers see PDD as a reliable source for deals, placing it ahead of competitors like JD.com and Alibaba in a recent survey.

Temu’s International Expansion: The platform’s popularity, fueled by its “shop like a billionaire” marketing campaign, is driving growth in the US, Europe, and Australia.

Analysts at Goldman Sachs upgraded PDD’s rating to “buy,” citing its advertising potential and Temu’s untapped value. They believe the market has already factored in concerns about competition and political tensions. Meanwhile, Alibaba’s net income saw a drastic decline compared to the previous year. This highlights the changing landscape of China’s e-commerce market, where PDD’s value-driven approach is resonating with consumers.