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Pinduoduo pioneers neighborhood group-buying service in Shanghai

Written by Song Jingli Published on 

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Group-buying businesses have shunned top-tier cities so far.

Social e-commerce platform Pinduoduo (NASDAQ: PDD) has expanded its Duoduo Maicai service to Shanghai, becoming the first retailer to bring grocery group-buying services to a large city with about 24 million residents, just ahead of the Spring Festival, IT Times reported on Wednesday.

Residents will be able to buy vegetables, meat, eggs, and rice, among other groceries, online and pick them up at a physical location on the following day. Buyers around No 757, Yishanlu Road, Xuhui district in Shanghai, for example, will have seven pick-up spots within one kilometer, most of which are traditional grocery stores. For customers staying around Juyang Xiaoqu, however, KrASIA couldn’t find any convenient collection points nearby.

The neighborhood group-buying model offers users relatively low prices, while it helps sellers to secure orders a day earlier, reduce inventory, and cut logistics costs. It was first invented by Xingsheng Youxuan around 2017 in Changsha, in the central Hunan province. Ride-hailing firm Didi Chuxing, food-delivery app Meituan, and Pinduoduo all chimed in last year as COVID-19 boosted online grocery shopping.

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Like Xingsheng, all these internet giants started their services in medium-sized cities, where residents are relatively free after work to collect their deliveries. Dwellers of China’s four tier-one cities Beijing, Shanghai, Guangzhou, and Shenzhen, usually get their groceries delivered at home within about one hour.

As of Tuesday, Duoduo Maicai, which first launched in August in the Hubei province, is available in Shanghai. Earlier than this, Duoduo Maicai and Meituan Youxuan have already been available in Guangzhou and Shenzhen.

“Shanghai is where Pinduoduo is headquartered and it is a city where people in general are price sensitive,” Zhuang Shuai, a retail veteran and founder of Bailian Consulting told KrASIA.

The group-buying platforms are still all at the stage of nurturing purchase habits and could be in a fiery competition within the next five years, he presumes. “Brick-and-mortar stores, on-demand delivery, and neighborhood group-buying will co-exist in the grocery retail sector for a long time,” said Zhuang.

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