What is Pinduoduo? Revolutionizing retail, generating profits

When a user selects an item on Pinduoduo, they can choose to participate in group buying. Find out more at or stay updated by following us on the social media below. Pinduoduo is literally recognized as a consumer-to-manufacturer (C2M) model, consumers create value for manufacturers and provide merchants ideas for the production according to the consumer demands. The Brand Card is aiming to promote the branded products on the platform. This is important for the platform that most of the Chinese consumers reply heavily on the reviews and recommendations of the items from the existed buyers to make decision. The Price Chop mechanism encourage users to get the items that they want for free by sharing with their networking within 24h.

His previous startups include consumer electronics e-commerce site Ouku.com, Leqi, e-commerce platform marketing agent service and a WeChat-based role-playing game company. Cost performance is still the most important factor to consider for consumers. A higher price tag does not necessarily represent the better quality or vice versa. The huge potential in this often-overlooked market is luring more competitors.

  1. The Daily Check-in mechanism is to encourage users open the apps everyday with the redeemable points reward which can be deducted in their item purchasing.
  2. Consumption upgrade, a trend in which affluent Chinese customers are increasingly willing to pay for quality, has dominated China’s e-commerce industry in the past few years.
  3. And with the Alibaba’s strong cloud computing business, it “may have more to offer to the factories” in terms of digital capabilities, Chun said.
  4. Given Pinduoduo’s WeChat-based ecosystem, Tencent joined the round as a returning investor.
  5. Want to have a first free consultation session about e-commerce and digital marketing in China?
  6. Combined with the extra satisfaction of scoring a good deal with your friends as a team, Pinduoduo soon became a viral sensation in China.

Over 88.4 percent of Pinduoduo’s RMB 1.2 billion ($180 million) Q1 revenue was spent on marketing. This could be translated as a sign of difficult traffic acquisition. But tightening regulation is causing more friction between Pinduoduo and its merchants on the platform. In June, fourteen store owners who sell products on Pinduoduo protested under the company’s office building claiming that Pinduoduo conducted improper product-quality checks which damaged the owners’ rights.

1 Integrate social commerce into affiliate marketing

One price is for individual buyers while the other is for community group purchases, and is generally lower. This incentives users to bring friends and family onto the platform in order to access cheaper prices. Data from research institute Jiguang shows that users from third- and lower-tier cities account for around 65 percent of Pinduoduo’s total user base, while JD’s users in first plus second-tier https://www.topforexnews.org/books/the-best-forex-trading-books/ cities and the rest of China were half-and-half. Additionally, females account for 70 percent of Pinduoduo’s user base. Pinduoduo’s active buyer numbers make it one of the largest e-commerce platforms in the world. This active user base also attracts merchants to Pinduoduo and the scale of its sales volume allows the latter to offer competitive prices thereby creating a virtuous cycle.

Since the listing of the Pinduoduo Inc ADR on the NASDAQ in July 2018, the Pinduoduo stock price has increased by more than 100%. There are currently also some categories that have very few products. For example, the men’s wristwatch category had just two products listed. Temu marks Pinduoduo’s is it time to change the faang stock list to fatang to include tesla biggest push overseas yet as the domestic Chinese economy faces a number of challenges from a resurgence of Covid-19 to an energy crunch. That has hurt economic growth in China and dampened consumer sentiment. JD is known for being able to deliver items on the same day or day after.

How Does Pinduoduo Attract Millions of Users?

Instead of making multiple trips to wet markets, community group buying programs see orders made on mobile and pick-up arranged at a nearby location. The GMV basically represents the value of the total amount of goods purchased on the company’s platform. But now Alibaba and JD have put a larger focus on gaining ground in these lower tier cities and have released products to compete with PDD.

Duo Duo Orchard was the first popular game on the platform, users can grow virtual fruit trees, collecting water droplets to water their tree by shopping, browsing, and interacting with other users on the platform. The Mini game is an in-app games to allow users enjoy playing the online game beyond purchasing. To get the item for free, the user must share their link with as many friends as possible. It utilizes the social networking to connect like-minded shoppers and various gamifications https://www.forex-world.net/strategies/nadex-scalp-1-binary-options-scalping-system-and/ to draw so many users gradually addicted to the platform. Its users are drawn by deals on a wide range of good which include things like clothing, fresh productsm electronics, as well as common household necessities like tissue paper. Four months after Pinduoduo received undisclosed A round from IDG and Lightspeed China in March 2016, the company secured over $110 million in Series B financing four months later from Baoyan Partners, New Horizon Capital, Tencent, and others.

The combination of featuring both e-commerce and social sharing creates a new social life for Chinese users that they can purchase online items by engaging with the social groups and team purchasing. Therefore, a social chat platform like WeChat acts as a crucial weapon for Pinduoduo to build a good “word-of-mouth” and ultimately facilitate the social sharing function. This function also helped Pinduoduo to displace Taobao from the No. 1 position of e-commerce apps in just two years. Founded in 2015, Pinduoduo is a mobile-only marketplace that connects millions of buyers directly with sellers. It has become one of China’s most popular e-commerce platforms in recent years for fresh produce, household items, clothing and electronics. The company aims to bring more businesses and consumers online so that local communities and rural agricultural prodcuers can benefit from the growth of the digital economy.

The fastest growing platform in China — Pinduoduo

Company founder Huang insisted Pinduoduo’s decision and punishment of the owners is just and fair. But it is succeeding thanks to a new ecosystem consisting of super app WeChat, mobile payment infrastructure, and mobile-first users. Consumption upgrade, a trend in which affluent Chinese customers are increasingly willing to pay for quality, has dominated China’s e-commerce industry in the past few years. Taobao and JD’s globalization initiatives to bring overseas quality products, the boom of cross-border e-commerce sites like Red and NetEase Yanxuan and Kaola are all based on the consumption-upgrading backdrop.

Although the country’s e-commerce market is highly consolidated, it’s not impossible for startup teams to crack this market as long as they are solving the right problems for the right group of customers. Alibaba took a controlling stake in Singapore-based Southeast Asian e-commerce site Lazada in 2016 and has since invested money in the business to expand its presence in the region. Alibaba also has a separate website called AliExpress that services markets like Europe and the U.S. In March, Alibaba launched a special version of its Taobao app that focuses on the so-called customer-to-manufacturer (C2M) model, which has been behind the rise of PDD. That’s where consumers can interact and buy direct from the manufacturer rather than going through a third-party seller. In terms of market share, PDD is the third-largest e-commerce player in China behind Alibaba and JD.com, according to a report released in July 2019 by eMarketer.

1 WeChat facilitate Pinduoduo with its huge data base

Due to its robust business model, Pinduoduo has managed to increase revenues from just over $2 billion in 2018 to $14.7 billion in 2021. Analysts tracking the stock expect the company will grow its sales to $22.5 billion in 2022. Buyers can access the platform and make group purchases by visiting Pinduoduo directly or via popular social networks such as QQ and Weixin. Further, the total number of active buyers on Pinduoduo in 2021 (users who placed one or more orders throughout the year) hit a record of 868.7 million, up 10% compared to 2020. Pinduoduo’s Temu is a cross-border e-commerce website with most products likely to come from overseas, especially China.

In 2015, Huang launched Pinhaohuo, a social commerce platform for fruits, with the team from his second startup Leqi. Last year, PDD disclosed that 45% of its gross merchandising value (GMV) came from first and second-tier cities. “Direct buyer traffic to PDD is primarily generated from word of mouth referrals by its existing buyers as well as the effect of its marketing campaigns,” Shanghai-based Guotai Junan Securities, said in a report from March. “A portion of the Company’s buyer traffic comes from its user recommendation or product introduction feature which buyers can share with friends or contacts through social networks such as WeChat and QQ.” Pinduoduo has leveraged its platform and developed the Internet+ Agriculture initiative to facilitate direct sales between small-scale farmers and consumers. The platform makes recommendations to consumers based on their shopping preferences due to which it is able to aggregate demand and generate large volumes of orders for farmer merchants.

A huge turning point occurred in the third quarter of 2017 when the weekly active rate, penetration rate, and open rate of the Pinduoduo app all surpassed those of JD. Compared to the previous year, it reaches up to 1,000 percent year on year growth according to data from Jiguang. Last August, the company started Duo Duo Grocery which is a next-day grocery pickup service that allows users to order products online and collect them from designated pick-up points the next day. As of March 2021, Pinduoduo says it has trained more than 100,000 new farmers in how to operate e-commerce businesses and has committed to train 100,000 more in the coming years. Many of these trainees are digitally savvy youths who have returned to their hometowns to set up online businesses and help their rural communities sell produce.

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