---
title: "After Supporting Pinduoduo, Galanz Faces Tragedy on Tmall..."
description: "Galanz publicly supported Pinduoduo on May 28, 2019, and subsequently experienced search anomalies on Tmall, severely impacting sales. Galanz accused Tmall of inaction and expressed dissatisfaction, while industry insiders speculate this is retaliation for Galanz's stance in the \"choose one of two\" battle."
author: "原调戏电商"
publisher: "New Distribution"
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published: "2019-06-18"
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---

# After Supporting Pinduoduo, Galanz Faces Tragedy on Tmall...

> Galanz publicly supported Pinduoduo on May 28, 2019, and subsequently experienced search anomalies on Tmall, severely impacting sales. Galanz accused Tmall of inaction and expressed dissatisfaction, while industry insiders speculate this is retaliation for Galanz's stance in the "choose one of two" battle.

Click to read the original text for details.
This afternoon, a member of Naughty E-commerce revealed that Galanz was suspected of being retaliated against by Tmall. Soon after, Galanz's official Weibo account made a statement:
The text of Galanz's statement is as follows:
Since Galanz visited Pinduoduo on May 28, 2019, anomalies have appeared in the search results for Galanz on the Tmall platform, severely impacting normal sales. After discovering the anomalies, we communicated with Tmall through various channels, but the issue remains unresolved. To date, we believe this is at least inaction at the business level of Tmall, and we hope it will attract sufficient attention from Tmall's senior management.
We believe that Tmall, as a well-known enterprise, has sufficient technical capability to maintain the normal operation of the platform. It should fulfill its philosophy of "making it easy to do business anywhere" and continue to provide consumers with fair, open, and free consumption choices. Given the sales characteristics of e-commerce, this incident has not only caused significant losses to stakeholders including Galanz during the 618 promotion period, but may also have an incalculable substantial impact on future business cooperation between both parties.
We express our deep dissatisfaction with this.
Since the establishment of Tmall, cooperation between the two parties has been deepening. To prepare for the 618 promotion, our company and partners stocked over 200,000 units on the Tmall platform and actively cooperated with promotional activities, but these efforts have now come to naught.
Here, we sincerely apologize to all consumers who have been inconvenienced by this, and suggest that consumers who wish to purchase Galanz products temporarily go to platforms that are selling normally. We will continue to make every effort to communicate with Tmall until the anomaly is resolved.
We also solemnly appeal: A big store should not bully its customers. All sectors of society should maintain a fair business environment. Consumers are our common bread and butter.
It is reported that Galanz's visit to Pinduoduo on May 28 was also covered by official news. The news showed that Galanz's chairman visited Pinduoduo and announced strong support for Pinduoduo, stating that the controversy surrounding Pinduoduo is social prejudice.
At the same time, Galanz also proposed to provide the best products and give maximum support to Pinduoduo:
If it were just a routine visit, Galanz's move might not be inappropriate. However, this action took place against the backdrop of the "choose one of two" battle before the 618 promotion, which is significant.
Last month, media reported that small appliance companies such as Joyoung and Midea collectively withdrew from Pinduoduo, and some small appliance brands even resorted to legal action, sparking speculation about e-commerce platforms' "choose one of two" practices.
When Pinduoduo was relatively isolated, Galanz issued the above statement supporting Pinduoduo. In response, Dada, co-founder of Pinduoduo, also posted on his Moments:
Industry insiders speculate that it was Galanz's clear "taking sides" with Pinduoduo that triggered Tmall's "retaliation," leading to anomalies in the search results for its products on the Tmall platform.
According to sources close to Galanz, to prepare for 618, Galanz deeply stocked inventory this year. Once sales on one platform decline significantly, it will definitely pose a major inventory risk for Galanz.
This year is the first year of the implementation of the E-commerce Law. Unexpectedly, the disguised "choose one of two" still appeared. However, this time it is not for JD.com merchants, but for Pinduoduo merchants.
The question is: why has the "choose one of two" phenomenon appeared in the home appliance sector this year? In the past, various forms of "choose one of two" were more prevalent in apparel or other non-standard products, but this year it has appeared in the small appliance sector.
Perhaps this is related to Pinduoduo's development strategy this year.
This 618, Pinduoduo claims to have allocated 10 billion yuan for subsidies, focusing on high-priced items, especially iPhone series products, which are generally priced lower than on other platforms.
Apple has always been a traffic driver for e-commerce platforms' promotions. They don't rely on selling iPhones to make money, but the popularity and GMV brought by iPhones are what they pursue. Think about it: one Apple phone can equal several Xiaomi phones. Now is the time for Apple phones to drop prices significantly. Using iPhones to boost GMV is really the best option.
Besides Apple, other high-priced items are also key subsidy targets for Pinduoduo. After all, for Pinduoduo, which started with agricultural products, the average order value was previously too low, around 10 to 20 yuan. Even with rapid user growth, it was difficult to increase GMV significantly.
At the same time, according to Pinduoduo's Q1 2019 financial report, Pinduoduo's user base has reached about 440 million. At this scale, growth slowdown is inevitable. Although the user base in lower-tier markets is about 600 million, Pinduoduo is getting closer to the ceiling of user scale.
What to do? How to maintain the image of high growth?
Previously, Pinduoduo spent almost all its revenue on advertising, with various TV stations having programs sponsored by Pinduoduo. Now, they have shifted focus. The user growth brought by advertising is declining, and Pinduoduo's user acquisition cost is soaring. According to media statistics, it has risen from over 40 yuan last year to over 160 yuan now. The cost of acquiring new users is too high.
Therefore, they have converted advertising expenses into subsidies to boost GMV. Currently, it seems that Pinduoduo achieving 100% GMV growth this year should not be a problem. In 2018, GMV was 476 billion yuan. Exceeding one trillion yuan this year should be an achievable goal, unless Pinduoduo undergoes major adjustments like last year.
In this context, Pinduoduo's balanced growth in users and GMV poses a major challenge to Tmall and Taobao. Additionally, according to Aurora Big Data report, as of Q1 2019, 44.2% of new users on the new e-commerce platform Pinduoduo came from second-tier and above cities, showing a continuous upward trend. Pinduoduo's penetration rate among Taobao users is also increasing, rising from 28.3% in the same period last year to 40.1%.
The report states that this data means that currently, "4 out of every 10 mobile Taobao users have Pinduoduo installed."
Therefore, in the next two years, the battle between Pinduoduo and Tmall/Taobao will remain fierce. If we also consider the competitive landscape of internet giants, Galanz's tragedy on Tmall is just a small spark from the collision of giants.
Source: Naughty E-commerce (ID: tiaopiEC)


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