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. Pinduoduo (PDD) is an e-commerce platform that offers a wide range of products. The company sells everything from groceries and home appliances to iPhones.
- Alibaba already has a large stake in almost every logistics company in China.
- In one of their first big planned campaigns, which was aided by an $8 million fundraise in May 2015, they would go on to advertise heavily discounted lychees on WeChat.
- Sekkei Digital Group is an agency of digital hustlers, marketers, developers, and brand builders working between France and China.
- Download the Pinduoduo app and sign up with a mobile number or social login.
Moreover, this direct-to-consumer model indicates to cut out the middlemen and further deliver price savings to the customer, which in turn generates more demand and economies of scale. 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. Pinduoduo’s Temu is a cross-border e-commerce website with most products likely to come from overseas, especially China. On top of that, keeping yourself updated on brand competitors is an effective strategy to determine where the business stands in the industry. It’ll also save you time and money as these details will tell you which strategy is worth trying and which is a waste of time. After downloading and installing, users must provide details manually or choose other login methods.
“They don’t really understand how the other makes money,” Huang said to Bloomberg. Pinduoduo has captured this chance which helped boost itself through the rural online sales. Pinduoduo’s growth came from an existed crowded Chinese ecommerce environment, dominated by Alibaba and JD.com. The Brand Card is aiming to promote the branded products on the platform. Member Card are different kinds of the rewarding, aiming to help users save money via vouchers or special discount by sharing amongst their friends. It utilizes the social networking to connect like-minded shoppers and various gamifications to draw so many users gradually addicted to the platform.
Key Challenges for the Chinese e-commerce giants: Alibaba and Pinduoduo
Pinduoduo’s founder, Colin Huang (Huang Zheng) believes that most present-day Chinese consumers have used the Pinduoduo platform. Since the counterfeit credibility crisis, Pinduoduo has begun to focus on evaluating the products and services offered by shopkeepers, leading to conflicts between the two sides. Here is a typical example of shopkeeper protests that took place on Jun 13, when Pinduoduo was in disputes with shopkeepers who were doing business on the platform after a quality crackdown. As Pinduoduo gets into life as a public company, the firm is following the e-commerce giants in cleaning up the platform.
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. Taobao launched Taobao Tejia, a dedicated app for China’s low-end users.
Shoppers get lower prices on Pinduoduo
Founded in September 2015, Pinduoduo is the fourth startup of Colin Huang, an ex-Googler who once worked on early search algorithms for e-commerce. His previous startups include consumer electronics e-commerce site Ouku.com, https://bigbostrade.com/ Leqi, e-commerce platform marketing agent service and a WeChat-based role-playing game company. The unique value of Pinduoduo mostly lies in its strong user engagement which differentiate itself and Groupon.
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. According to Business Insider, even though Pinduoduo sells products at low prices, the platform really makes money through its sellers. They pay for the advertising that’s featured and allows the app to keep prices so low. In 2019, PDD said it had 585.2 million active buyers — those that made at least one purchase on the platform during the year. Alibaba said it had 711 million annual active consumers on its Chinese e-commerce marketplaces in the 12-month period ended September 30, 2019, the latest available figure.
Pinduoduo Gives Investors Access to China’s E-Commerce Market
Pinduoduo removes the middle-man from the supply chain and provides an opportunity for farmers to interact directly with consumers, thus helping them get a better price for their produce. Community group buying has seen a rapid shift in fresh produce and grocery shopping habits in many parts of China. 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. Another video on the company’s website says that instead of using a search bar function, Pinduoduo gives its users a personalized feed of products. The company combines products the user may need, like toiletries, with other things they may want to buy. A Pinduoduo blog post says that sharing products with friends helps users customize recommendations.
Although Pinduoduo claims to have several channels to lower product prices, increasing product quality and counterfeit complaints still raise concerns for a possible low-cost and low-quality association. Complaints mainly target at the problems of poor quality, slow delivery, misleading ads, etc. 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. ETOC also provide free educational content to help brands understand more about China e-commerce and digital marketing.
Comparatively, the forward price to sales multiple for peer e-commerce companies such as Etsy and Hello Fresh stand at 30x and 29x respectively. Analysts tracking Pinduoduo have an average target price of $70.55, which is around 10% above its current trading price. 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.
In December, it launched its own digital wallet called Duoduo Pay to the more than 731 million members on its platform. The most popular sales on Pinduoduo are always those which meet people’s que es swing trading daily needs with lower price. But the products that are unexpectedly a hit in the marketplace can cause the underserved traders to fail delivery, misdelivery and customer refund.
The bold business decision of the company has led China to quicken the transition of the country’s commerce sector from offline to online. However, there is massive potential for companies to gain traction in lower-tier cities in China in the upcoming decade which will be a key driver of revenue growth. Further, the increase in the purchasing power of China’s middle class and rising GDP numbers make e-commerce companies like Pinduoduo a good bet for long-term investors. Pinduoduo has leveraged its platform and developed the Internet+ Agriculture initiative to facilitate direct sales between small-scale farmers and consumers.
The Price Chop mechanism encourage users to get the items that they want for free by sharing with their networking within 24h. 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. Pinduoduo launched its U.S. online shopping site as the Chinese e-commerce giant makes its first major push overseas. PDD has over 5.1 million merchants on its system marketing their products. The overall value of goods sold there has already reached around $154 million.