Back in 2020, Ashwin Ramasamy, a founder of PipeCandy, asked on Marketingwithanoy whether the “ecommerce shift” the world saw as COVID-19 shook up the global economy would continue. The answer was yes. But that doesn’t mean the same pace of online commerce growth that the world saw during the pandemic will be maintained.
As 2021 drew to a close, data began to indicate that the e-commerce boom was slowing down. The question at the time was whether we were seeing a return to pre-COVID-era growth norms or whether growth would slow down even more; in the latter case, this would mean that future e-commerce activity has moved forward, rather than the larger digital commerce pie growing thanks to long-term changes in the economy.
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New data from Pinduoduo, a massive Chinese e-commerce company, and lagging results from Alibaba and others from last year’s fourth quarter indicate that the pull-forward model of recent e-commerce growth is most likely.
For startups, it’s somewhat mixed news. Sure, any startup selling in the ecommerce market has more TAM than ever to, well, tackle.
But slowing growth means it will be harder to grow at previous levels as it will become harder to outperform the market segment enough to impress venture capitalists. (But by no means impossible, as today’s nine-digit CommerceIQ round makes clear.)
Let’s analyze some of the most recent data to get an idea of where we are now.
The slowing growth of Pinduoduo
In the fourth quarter of 2021, the Chinese e-commerce giant grew just 3% from a year ago results, which were released during the pandemic-accelerated Q4 2020 period. Simpler: Pinduoduo barely managed not to shrink compared to the results at the end of 2020.
In numerical terms, Pinduoduo reported revenue of $4.3 billion. That figure in the local currency was RMB 27.2 billion, below market expectations of RMB 30.1 billion. Investors had expected much more growth than what Pinduoduo could deliver, but gains of more than $1 billion helped calm the market.
Pinduoduo is not such an outlier.