“Peter Nathan recently told investors he does not want a2 Milk...

“Peter Nathan recently told investors he does not want a2 Milk sold on Pindoudou, but that is where shoppers are.” Pindoudou (PDD) is the largest interactive e-commerce platform in China, founded by China's third richest man, Colin Huang, with the company valued at over $US100 billion.PDD's motto is "together, more savings, more fun", and it has eliminated the middlemen, selling discounted items directly to consumers that group together. Yunji is a smaller business also taking advantage of social relationships on apps like WeChat to acquire, engage and sell to users.

A2 Milk's head of Asia Pacific, Peter Nathan, told AFR Weekend that PDD is a new sub-channel, similar to e-commerce, but he is not convinced supporting this channel is appropriate given the price destruction to its premium infant formula product. "At this stage, they are purely driven by price, so therefore they are not concerned with maintaining the brand's positioning," he said. Mr Nathan added that the company’s position has been clear that the daigou channel has been impacted by COVID-19, but believes momentum is returning. "No one can be certain that the daigou have moved on; that is not what we have seen, and not what we believe," he said. "There is still a fundamental difference between daigou and social e-commerce: they don't have the same relationship with the brand."

In Australia there are three major corporate daigou players: Wenjun Zhang (known to all as a2 Andy) is a2 Milk's largest customer, moving thousands pallets of a2 Platinum every month. He sells via his app and previously had merchants buying from Coles and Woolworths, but is now facing an issue with is his army of smaller buyers no longer operating here in Australia due to COVID-19 travel restrictions. Bellamy's main corporate daigou partner is HVK Trading, owned by pharmacist Hung Nguyen, while Danone's Aptamil counts its main partner as David Nguyen, who is also a pharmacist in Hurstville in Sydney.

Peter Nathan needs to continue to innovate as these e-commerce channels change or risk a kodak-like moment occurring.