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Alibaba aggressively promotes discount program to fend off Pinduoduo

Written by Song Jingli Published on 

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A price war is around the corner.

In an attempt to fend off rival Pinduoduo, Alibaba is leveraging on huge discounts to draw customers to its Taobao app. Notably, it is promoting its RMB 1o billion (USD 1.4 billion) subsidy program even more prominently in the upcoming version of its Taobao app.

It will also market the program that allows its users to get discounted products, on Chinese state broadcaster China Central Television (CCTV)’s 2020 Spring Festival Gala, 36Kr reported, citing people familiar with the matter. This move indicates that Alibaba wants to fend off Pinduoduo at all costs.

Juhuasuan rolled out the RMB 10 billion subsidy program shortly before the December 12 promotion day to allow some users to buy selected goods such as iPhones, Dyson hairdryers, and Nintendo Switch consoles at prices even lower than those on Pinduoduo, KrASIA reported last month.

Currently, the subsidy program does not have enough visibility as a user needs to go inside the Juhuasuan channel to find it. The sources said that the RMB 10 billion program will be featured more prominently than Juhuasuan itself on the first layer of the new Taobao version—expected to go live before the 2020 Chinese Spring Festival which starts on Jan 25.

The Spring Festival is a key promotional period for e-commerce players as Chinese consumers tend to buy many products including food and gifts, ahead of the country’s longest holiday, which lasts for about seven days.

Alibaba confirmed with 36Kr last Thursday that Taobao will increase its support for Juhuasuan’s RMB 10 billion program. However, detailed measures are still being studied, the company said.

Sources told 36Kr recently that Juhusuan’s RMB 10 billion program will be a cooperative partner for the CCTV gala, the most watched TV show in the world, without revealing details.

The RMB 10 billion subsidy program was first rolled out by Pinduoduo last June as a measure to attract price-sensitive users and was deemed effective by the company’s management. Pinduoduo’s annual active users reached 536.3 million by the end of September, second only to Alibaba, which had 693 million.

To defend its leading position, Alibaba recently took a slew of measures. These included launching a new feature called Taoxiaopu, which allows all of its users to earn a commission by recommending goods to their contacts.

36Kr is KrASIA’s parent company

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