Pinduoduo invests US$200 million in electronics retailer Gome as Covid-19 forces sector consolidation
- Shanghai-based Pinduoduo’s 585 million users have made it China’s second-biggest e-commerce platform, second only to Alibaba’s Taobao
- Pinduoduo will subscribe to US$200 million worth of Gome convertible bonds with a tenure of three years
Chinese e-commerce platform Pinduoduo has invested US$200 million in Chinese electronics retailer Gome through convertible bonds as part of a plan to integrate Gome’s entire product range, logistics, and customer service onto Pinduoduo’s platform as the Covid-19 pandemic continues to shake up the global retail industry.
Pinduoduo announced on Sunday that it would subscribe to US$200 million worth of Gome convertible bonds, with a tenure of three years, and an option to extend by two years. The bonds are priced at HK$1.215 per share, equal to around 1.28 billion Gome shares, or around 5.6 per cent of the total on a fully diluted basis.
Pinduoduo said it will also help with Gome’s digitalisation upgrade by transferring its entire product range, including household electronics, computers and smartphones, onto Pinduoduo’s platform at the same or lower prices, and integrating Gome’s supply chain logistics and after-sales customer services with its own.
“This strategic partnership is a win-win-win,” said David Liu, vice-president of strategy for Pinduoduo. “Consumers win because they gain a wider selection of authentic and branded products at competitive prices, PDD wins because we enhance our foothold in household appliances and electronics, and Gome wins because they can broaden their access to our 585 million users.”
The partnership with Gome is Pinduoduo’s first strategic investment since being founded in 2015, and comes after it raised US$1.1 billion in a private share placement and sales promotion between the two companies last month.
“We will capture the opportunities from the consolidation of the retail industry brought by the global public health crisis and speed up the expansion of market share,” Gome’s CEO Wang Junzhou said in a statement on Sunday. “In the future, Gome will continue to strengthen its all-round cooperation with Pinduoduo in the areas of product purchase and sales, logistics services and other services.”
