Pinduoduo invests $200m in appliance retailer Gome to strengthen its position in e-commerce

Apr 23, 2020 PinDuoDuo

Chinese e-commerce platform Pinduoduo took the initiative to take another step in the electrical category. On April 19, Pinduoduo announced it will subscribe to $200 million in convertible bonds issued by Gome Retail Holding, a Beijing-based household appliance and electronics retailer. The bonds will have a coupon rate of 5% per annum and a tenure of three years, with an option to extend by two years. If all the conversion rights are exercised in the end, Pinduoduo will be allocated up to 1.28 billion Gome shares or a 5.62% stake on a fully diluted basis.

After this investment, the two parties also reached many cooperation issues. As part of the deal, Gome's entire product range will be listed on Pinduoduo, and its brand home appliances will join in Pinduoduo's "10 billion subsidy" plan. Before that, it has stores on Tmall and Meanwhile, Anxun Logistics, a subsidiary of Gome, will join in Pinduoduo platform to provide directional services for platform merchants in large parts logistics, warehouse integration, installation and delivery. And Pinduoduo will inject advantage digital retail resources into Gome, such as consumer trend big data, platform traffic, ect.

This capital cooperation is obviously an alliance between the second largest e-commerce company in China and the second largest offline electrical mall. Since Huang Guangyu, the founder of Gome, was released from prison and regained control of Gome, some netizens joked this cooperation between Pinduoduo (Huang Zheng) and Gome (Huang Guangyu) as "Shuanghuanglian". So, how was this Shuanghuanglian produced?

Pinduoduo's strategy: category + logistics + supply chain