Shifty E-Commerce Platform Pinduoduo Feeds on Tesla's Fame in Major Model 3 Sales Gimmick in China

Shifty E-Commerce Platform Pinduoduo Feeds on Tesla's Fame in Major Model 3 Sales Gimmick in China
Tesla firmly stands by its direct sales model, which was created precisely with the consumer's best interests in mind, to ensure a fair, transparent, and convenient buying experience. The price is the price, and you are buying exactly what you are intending to--with no sales or middle-person standing between you and a deal. After a test drive--unless a friend already let you try theirs--you can complete your order in the time it takes you to return to your car.

Tesla (NASDAQ: TSLA) also prides itself on its world-class products, and correspondingly, it has earned itself major brand value and consumer loyalty. Tesla's sales model, its sought-after products, and high brand value are not only worth protecting, they must be safeguarded as the company pushes forward in its mission for global sustainable energy.

On July 20, 2020, the China-based e-commerce platform, Pinduoduo (NASDAQ: PDD) launched the marketing gimmick, "Tesla group buy for 10,000 people," announcing that it would be possible to purchase a 2019 Tesla Model 3 Standard Range Plus for 40,000 yuan under list price. In immediate response, Tesla made it crystal clear that it in no way authorized this group buy, and that this third-party purchasing arrangement operates in sharp contrast to its direct sales model:

"Tesla sells cars directly to end customers. For any order that our company believes is for resale or has other non-goodwill purposes, our company has the right to unilaterally terminate this agreement." link 

But, ignoring Tesla's warning, Pinduoduo (PDD)--if not emboldened by the response--allowed its publicity stunt to carry on. As it turns out, only five Model 3s were to be "made available" at discount to the thousands, if not many more entrants. And on August 15, according to E-Commerce News, one of the supposed "winners" tried to take delivery of his new Model 3, but he was ultimately denied. Reportedly, the Wuhan-based consumer happened to mention the buyer was Yibuy, a third-party discount automotive affiliate of Pinduoduo (PDD).

Tesla China followed up, issuing this official statement:

“If consumers are willing to re-order through Tesla’s formal channels, we will provide corresponding compensation for the loss of time and energy incurred by consumers...Tesla supports consumers who are misled by group buying activities and are unable to deliver their cars to protect their rights, and will do everything possible to provide consumers with the legal assistance they need."

Pinduoduo's intentions here seem fairly obvious. Though irrespective of whether its intentions can be proven, Pinduoduo (PDD) was ultimately able to leverage Tesla's brand popularity for its own benefit--drawing traffic, and likely significant revenue, to its platform. Toutiao.com reported that some analysts believe this event was a way for Pinduoduo (PDD) to collect consumer information.

And according to Futunn.com, the event was launched to attract attention to itself, utilizing one of the hottest brands in tech and automotive: Tesla. While beyond the scope of this article, one might also wonder what impact this event may have had on PDD's Gross Merchandise Value (GMV) and Daily Active Users (DAU).

Beyond exploiting the Tesla name, it seems PPD has also taken advantage of its own users. The original event page appears to have been misleading, adding to the "shock and awe" effect. As mentioned earlier, the PDD event page indicated a price reduction of 40,000 yuan--not explaining that about half of that discount was actually from New Energy Vehicle subsidies, already broadly available to the public.

What is also clear: if PDD wished to protect consumers and act in good faith, it could have easily consulted with Tesla before launching this event, and prior to collecting over 1,000,000 yuan from its users. This is not what happened, and instead, now consumers' buying experience of Tesla was tarnished, at no fault of Tesla.

Furthermore, if thousands of PDD users were preparing to potentially buy a Tesla, it is reasonable to suspect that this unsanctioned marketing gimmick could have altered Tesla order flow at the time. Fortunately, the EV maker's global sales, as well as in China, continue to see unprecedented demand.

PDD has been known to draw attention to well-loved brands; Apple certainly is no stranger to PDD's questionable tactics. This attempt to upscale itself may not be surprising, considering the e-commerce platform's history of being associated with low-end and counterfeit brands. But if PDD strives to be a well-liked, socially responsible company, which also holds its consumers in high esteem, then it will take better responsibility not to drag the brands its users love through the mud.

Tesla and CEO Elon Musk have worked tirelessly to establish its world-class brand image, part of which included building Giga Shanghai to better serve the people of China. Because of its factory in China, Tesla is able to make its cars more affordable and accessible to locals.

The EV maker's direct-sales model is tried and true, and is designed to get the exact products people desire into their hands simply and with transparent pricing. This is because Tesla loves its products, cares for its customers, and it's the right thing to do.

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Smokey Shorts

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