The incredible rise of Pinduoduo, China’s newest force in e-commerce

Editor’s note: This post originally appeared on TechNode, an editorial partner of TechCrunch based in China. From Alibaba to JD, China is not short of e-commerce powerhouses. Although the country’s e-commerce market is highly consolidated, it’s not impossible for startup teams to crack this market as long as they are solving the right problems for the right group of customers. Chinese social e-commerce platform Pinduoduo just proved this. The Shanghai-based company just went public raising $1.6 billion through a U.S. IPO this week, which stands out as one of the largest deals of the year. Excitement is quickly intensifying surround the company, which claims 195 million monthly users and has managed to become successful within China’s highly competitive e-commerce market inside just three years.

What is Pinduoduo and what has it done right?

Like Alibaba’s Taobao and rival JD.com, Pinduoduo is an e-commerce platform that offers
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Secondhand marketplace letgo expands into video listings

Letgo, the secondhand goods marketplace valued at over a billion dollars, this week announced the launch of new features aimed at helping sellers: video listings and automatic pricing suggestions that leverage image recognition and A.I. technologies. Sellers will now be able to point their smartphone camera at something they want to sell using this new feature, which letgo is calling “Reveal,” in order to find out what their item is worth. This is based on insights from letgo’s database of hundreds of millions of listings. the company says. At launch, potential sellers will be able to use Reveal to get a general idea about what something sells for, and how high current demand is for similar items. They can then decide to sell it with just a tap, and letgo will suggest further details like title, price, and category. The feature is similar in that respect to technology
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ClassPass works up $85 million Series D funding

ClassPass today announced the close of an $85 million Series D financing round led by Temasek, the same firm that led the startup’s Series C financing. L Catterton, a private equity firm that has also invested in the likes of Peloton, Equinox, and Pure Barre, also participated in the round. As part of the deal, L Catterton’s Michael Farello will join the ClassPass board. It’s also worth noting that CEO Fritz Lanman confirmed that the share price dropped as part of the $70 million Series C round, but that the valuation didn’t. Both share price and valuation went up during this latest round. That said, Lanman stayed mum on any actual numbers around valuation. This latest round brings ClassPass’s total funding to $255 million. ClassPass first launched in 2012 out of TechStars. Back then, it was called Classtivity, and it operated under a very different business model. Users
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Kredivo raises $30M to build a digital credit card for Southeast Asia

FinAccel, a Southeast Asia-based startup that offers a digital credit card service in Indonesia, has closed a $30 million Series B round as it begins to consider overseas expansion. The company launched its ‘Kredivo’ service two years ago to help consumers pay online in Southeast Asia, where credit card penetration is typically low, and it is essentially the combination of a digital credit card and PayPal. The service is available in Indonesia, Southeast Asia’s largest economy, where it uses a customer’s registered phone number — there is no physical credit card — and a dedicated checkout on online retail websites. For consumers, the service offers a 30-day payback option and then more longer-term options of three, six and 12-month payback windows. The 30-day option is interest-free, but other plans come with a 2.95 percent per month charge on the reducing principle, which effectively makes it 25 percent flat. FinAccel says it
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Both Amazon and Walmart announce expanded grocery delivery operations

Amazon and Walmart’s rivalry continues today with two dueling announcements related to their respective grocery delivery expansions. This morning, Amazon said it’s bringing grocery delivery via Whole Foods to several new markets in New York and Florida, including New York City and Miami, among others. Meanwhile, Walmart today is expanding grocery delivery in partnership with Postmates, with a launch in the L.A. region. The Postmates expansion brings grocery delivery to Los Angeles and outlying areas including Glendora, Baldwin Park, Garden Grove, Rosemead, Pico Rivera, Foothill Ranch and Santa Clarita, plus San Diego. Postmates now powers Walmart grocery delivery in seven total regions, it notes: Charlotte, Raleigh, Oklahoma City, Las Vegas, Tucson, L.A. and San Diego. This rollout with Postmates follows news from May of Walmart ending its relationships with prior grocery delivery partners, Uber and Lyft. At the time, Walmart said customers in the four markets Uber served, and
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EU fines Asus, Denon & Marantz, Philips and Pioneer $130M for online price fixing

The European Union’s antitrust authorities have issued a series of penalties, fining consumer electronics companies Asus, Denon & Marantz, Philips and Pioneer more than €110 million (~$130M) in four separate decisions for imposing fixed or minimum resale prices on their online retailers in breach of EU competition rules. It says the four companies engaged in so called “fixed or minimum resale price maintenance (RPM)” by restricting the ability of their online retailers to set their own retail prices for widely used consumer electronics products — such as kitchen appliances, notebooks and hi-fi products. Asus has been hit with the largest fine (63.5M), followed by Philips (29.8M). The other two fines were 10.1M for Pioneer, and 7.7M for Denon & Marantz. The Commission found the manufacturers put pressure on ecommerce outlets who offered their products at low prices, writing: “If those retailers
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Doughbies’ cookie crumbles in a cautionary tale of venture scale

Doughbies should have been a bakery, not a venture-backed startup. Founded in the frothy days of 2013 and funded with $670,000 by investors including 500 Startups, Doughbies built a same-day cookie delivery service. But it was never destined to be capable of delivering the returns required by the VC model that depends on massive successes to cover the majority of bets that fail. The startup became the butt of jokes about how anything could get funding. This weekend, Doughbies announced it was shutting down immediately. Surprisingly, it didn’t run out of money. Doughbies was profitable, with 36 percent gross margins and 12 percent net profit, co-founder and CEO Daniel Conway told TechCrunch. “The reason we were able to succeed, at this level and thus far, is because we focused on unit economics and customer feedback (NPS scoring). That’s it.” Many other startups in the on-demand space missed that memo
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HoneyLove looks to reinvent shapewear

Betsie Larkin spent the first ten years of her professional career as an EDM artist. She released two solo albums, toured five continents and worked with the likes of Armin van Buuren and Ferry Corsten. But after being constantly frustrated by shapewear she wore under her stage outfits, she felt compelled to try her hand at a new industry. That’s how HoneyLove was born. HoneyLove, backed by Y Combinator, aims to disrupt the traditional shapewear market by making an affordable, high-quality product that actually works. In her research before starting HoneyLove, Larkin identified two big problems with shapewear. The first is that it tends to bunch up, causing constant readjustment, and the second is that it tends flatten out everything, even the curves people want to show off. That’s why Larkin developed HoneyLove Sculptwear. HoneyLove uses supportive structures in side the seams of the garment, similar to the flexible boning
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SessionM customer loyalty data aggregator snags $23.8 M investment

SessionM announced a $23.8 million Series E investment led by Salesforce Ventures. A bushel of existing investors including Causeway Media Partners, CRV, General Atlantic, Highland Capital and Kleiner Perkins Caufield & Byers also contributed to the round. The company has now raised over $97 million. At its core, SessionM aggregates loyalty data for brands to help them understand their customer better, says company co-founder and CEO Lars Albright. “We are a customer data and engagement platform that helps companies build more loyal and profitable relationships with their consumers,” he explained. Essentially that means, they are pulling data from a variety of sources and helping brands offer customers more targeted incentives, offers and product recommendations “We give [our users] a holistic view of that customer and what motivates them,” he said.

Screenshot: SessionM (cropped)

To achieve this, SessionM takes advantage of machine learning to analyze the data stream and integrates
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PayU acquires Zooz to take on international payment services

A week after PayPal led a $50 million round in the cross-border payment specialist PPRO, one of its big competitors in the developing world has announced an acquisition of its own in the same space. PayU — the payments division of Naspers that is sometimes described as the PayPal of the developing world — has acquired Zooz, a startup based out of Israel that provides an API to merchants that lets them accept a variety of payments depending on the market. The two had already been working together — specifically to provide PayU payment options to merchants in markets where PayU is active — and the plan will be to integrate the services further to enable PayU to step deeper into the cross-border payment services space, potentially even by enabling the integration of the payment methods of competitors as part of the mix of payment options. “In the
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Snapchat will shut down Snapcash, forfeiting to Venmo

Snapcash ended up as a way to pay adult performers for private content over Snapchat, not just a way to split bills with friends. But Snapchat will abandon the peer-to-peer payment space on August 30th. Code buried in Snapchat’s Android app includes a “Snapcash deprecation message” that displays “Snapcash will no longer be available after %s [date]”. Shutting down the feature will bring an end to Snapchat’s four-year partnership with Square to power the feature for sending people money. Snapcash may have become more of a liability than a utility. With apps like Venmo, PayPal, Zelle, and Square Cash itself, there were plenty of other ways to pay back friends for drinks or Ubers, so Snapcash may have seen low legitimate usage. Meanwhile, a quick Twitter search for “Snapcash” surfaced plenty of offers of erotic content in exchange for payments through the feature. It may have been safer for Snapchat
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Now is the time for Walmart to strike at Amazon Prime

Amazon Prime has been an enormous influence on e-commerce, but this online juggernaut is beginning to show cracks. Now is the time for arch-rival Walmart to swoop in with a Prime-like offering that strikes at the weaknesses Amazon has introduced into its formidable loyalty program: price, a lack of focus, and competing subscription services. Here’s the problem. Amazon has invested in its Prime program continuously, adding feature after feature in an obvious bid to make the service appear as valuable as possible. But while these additions are superfluous to many a user’s needs, everyone pays for them whether they’re used or not. That’s part of the strategy, of course — if you know your customer won’t stop paying for a subscription, you can use that to squeeze the life out of other subscriptions they might pay for, and redirect that money to yourself. Prime Video and Music, for example, are
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EBay paid $573M to buy Japanese e-commerce platform Qoo10, filing reveals

EBay is a very distant second behind Amazon when it comes to e-commerce sales in the U.S., but abroad — and in particular in Asia — it is willing to invest to grow its footprint in a targeted way. In February, eBay paid a total of $573 million to acquire Qoo10, a Japanese sales platform, according to the company’s quarterly earnings filing. In more detail, the deal consisted of $306 million in cash and the relinquishment of about $266 million in shares in Giosis, a pan-Asian e-commerce marketplace business originally founded as a joint venture with Korea’s Gmarket. Qoo10, which claims two million shoppers, was originally part of Giosis. The acquisition is similar to a deal eBay did in Korea in 2001 when it purchased Internet Auction Co and linked the Korean service up to its global network of buyers and sellers. That integration has been successful, and
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Farfetch acquires CuriosityChina to expand its social media efforts on the mainland

Farfetch — the e-commerce startup that works with some 900 high-end fashion boutiques and labels to present and sell clothes, shoes, accessories and jewelry online, and we and others have heard is gearing up for a $6 billion IPO — is making an acquisition to double down on China, one of the fastest-growing markets for luxury goods. It’s acquiring CuriosityChina, a marketing firm that specializes in leveraging social media — specifically, WeChat — to target users and sell goods. It already works with some 80 brands that are also customers of Farfetch to help them use WeChat channels and accounts to reach would-be customers. It also offers CRM and a few other services. The plan will be to incorporate CuriosityChina into Farfetch’s “Black & White” white-label API, which essentially allows boutiques to integrate their stock into Farfetch’s purchasing and logistics platform, or use that engine to sell its goods
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Trump just noticed Europe’s $5BN antitrust fine for Google

In other news bears shit in the woods. In today’s second day Trump news: President ‘The Donald’ has seized, belatedly, on the European Commission’s announcement yesterday that it had found Google guilty of three types of illegal antitrust behavior with its Android OS since 2011 and was fining the company $5 billion; a record breaking penalty the Commission’s antitrust chief Margrethe Vestager said reflects the length and gravity of the company’s competition infringements. Trump is not! at all! convinced! though! “I told you so!” he has tweeted triumphantly just now. “The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google . They truly have taken advantage of the U.S., but not for long!”

Alibaba boosts its offline reach with $2B+ investment in outdoor digital marketing firm

Alibaba is investing big bucks into offline distribution. The Chinese e-commerce giant has forked out $2.23 billion in exchange for a sizeable piece of Focus Media, a Shanghai-based company that operates outdoor digital advertising screens across China, Singapore and Hong Kong, according to a U.S. filing. The deal itself is broken up into a few pieces. Alibaba itself is paying $1.43 billion for a 6.62 percent share of Focus Media, which is listed in Shanghai, It is also spending $504.7 million to buy 10 percent of an entity (managed by Focus Media founder and chairman Jason Nanchun Jiang) which controls 23.34 percent of Focus Media. In addition, an Alibaba-aligned fund called ‘New Retail Strategic Opportunities’ is buying 1.37 percent of Focus Media, while Alibaba itself is planning to exercise an option to buy five percent more of the business over the next twelve months. That additional
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Prime Day boosted other large retailers’ sales by 54%, says report

Amazon’s Prime Day again broke records this year, but the sales holiday also boosted sales across the broader U.S. e-commerce industry. According to Adobe Analytics data released this morning, larger retailers – meaning those with over a billion in annual revenue – saw a 54 percent increase in sales on Prime Day, compared with an average Tuesday. This is attributed to increased conversions on their own sites, Adobe says. Though not highlighted in Adobe’s report, Target announced that its one-day sale held on Tuesday was the biggest online shopping day of 2018, in terms of both traffic and sales. “Millions” of guests shopped its site, and “millions” of orders are now being fulfilled, it said. Of note, 90 percent of those online orders are being fulfilled by Target stores – a different model than Amazon. eBay, however, can’t comment on the results of its Prime Day sale, as it’s
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What Amazon lost (and made) on Amazon Prime Day

Amazon Prime Day is over, and what a ride it was this year. Widespread technical glitches in the first hours of Amazon’s massive annual Prime Day promotion cost the e-commerce giant an estimated $1.2 million a minute, according to One Click Retail founder Spencer Millerberg.

The total loss is difficult to nail down, in part because the exact span of the outage varied. But the data analytics firm says the outage, which included a broken landing page and links that sent potential customers to an error page, appeared to be concentrated on the East and West coasts of the U.S. for about 75 minutes. That puts Amazon’s loss in sales at about $90 million, an estimate One Click Retail based on 1P sales from 2017.

Another estimate from discount site Lovethesales.com put Amazon’s loss at more than $99 million, Bloomberg reported.

And yet, Amazon contends that these
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Amazon’s Prime Day again became the biggest sales day in its history

Prime Day has once again broken records. Despite serious glitches at its start, Amazon announced this morning that Prime Day 2018 grew to become the biggest shopping event in its history, beating out Cyber Monday, Black Friday, and the previous Prime Day 2017. Of course, this year’s Prime Day was longer – a full 36-hours, in fact. And while Amazon did make its comparisons to other sales holidays over the same period of time, it’s not quite the same thing to compare a shorter sale to a longer one. (Last year’s Prime Day was 30 hours, for example.) Still, it’s a remarkable showing on Amazon’s part. So much so that Amazon has taken the unusual step of actually providing some numbers around how much people bought. Though it still declines to talk sales dollars, as per usual, it did say that Prime members worldwide purchased over 100 million
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Custom framing startup Framebridge picks up $30 million Series C

D.C.-based Framebridge today announced the close of a $30 million Series C financing round led by T. Rowe Price Associates, Inc. with participation from existing investors SWaN & Legend Venture Partners, Revolution Ventures, and NEA. Launched in 2014, Framebridge offers affordable and convenient custom framing via its website and mobile app. The idea for the company started when founder and CEO Susan Tynan went to get four National Parks posters framed. After a multi-hour consultation, she ended up spending $1,600. “I left thinking ‘What did I just do?'” said Tynan. “The framing cost more than my couch, and that experience just really stuck with me.” She poured herself into understanding how the framing industry works, and soon after, Framebridge was born. On the consumer side, the process is really simple. Users can either upload a picture to be framed, or request shipping materials from Framebridge to
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