What is Pinduoduo and how to get started
There are many factors, but one of the most interesting is how Pinduoduo has successfully gamified shopping for the most mundane everyday products to drive re-engagement and user retention. In many ways, Pinduoduo represents the most successful example of how a mobile commerce app can be designed from the ground up to engineer social sharing, viral engagement and repeat buying as part of the user experience. Lesser-known brands were chosen over famous brands to erase any premium that comes from branding. Additionally, the costs for advertising and marketing are also lowered through user sharing to social media. Through social sharing, users are sending the product information precisely to friends and groups that may have similar income and consumption preferences. Viral marketing is a more clever way to build the identity of all the lesser-known brands on its platform.
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Where Groupon focused on local vendors of “want to have” goods and services like fancy dinners and massages, Pinduoduo offers deep discounts for bulk purchases of everyday “need to have” household items. In this way, Pinduoduo is more like a social sharing driven version of Costco or Dollar General. The Shanghai-based company just went public raising $1.6 billion through a U.S. IPO this week, which stands out study for coming to the trade as one of the largest deals of the year. Excitement is quickly intensifying surround the company, which claims 195 million monthly users and has managed to become successful within China’s highly competitive e-commerce market inside just three years.
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Tapping into the fastest-developing areas in China, Pinduoduo is a popular outlet for international brands to achieve high volume sales fast. In a brief update ahead of the weekend, the London transport network said it has no evidence yet that customer data was compromised. By using readily available natural gas as the feedstock, C-Zero hopes to produce emission-free hydrogen for less than other green hydrogen startups.
Over 88.4 percent of Pinduoduo’s RMB 1.2 billion ($180 million) Q1 revenue was spent on marketing. 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.
Coupled with other incentives such as cash, coupon, lottery and free products, Pinduoduo manages to acquire users at a very low cost. Combined with the extra satisfaction of scoring a good deal with your friends as a team, Pinduoduo soon became a viral sensation in China. The name Pinduoduo means “Together, More Savings, More Fun.” It’s a great summation of the company’s core group-buying value proposition, which has been described as “Groupon on Steroids.” But there are key differences.
PARENT COMPANY
It enables these buyers, often women in charge of household purchases, to obtain deep discounts by getting their friends to participate in group buys of items ranging from produce to diapers. The most typical Pinduoduo users are price sensitive women that reside in low tier cities. But how to maintain these users and its growth momentum is a big challenge for Pinduoduo now given rising product quality complaints. 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.
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. Pinduoduo’s C2B model allows it to ship directly from the manufacturers eliminates layers of distributors, not only reduces the price tag for buyers but also raises the profit of manufacturers. This approach is particularly effective for the sales of perishable agricultural and fresh products, where the speed for matching supply and demand is critical. “The retention rate is a big challenge of Pinduoduo, implying potential GMV slow down. Pinduoduo will have difficulty in upgrading to a marketplace of premium products because of its user demographics and brand image,” according to 86 Research.
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He deliberately sought to combine a game-like experience with e-commerce. This is evident in many game-like features that Pinduoduo uses to re-engage users, including special deals and promotions. You get free products for getting friends to install the app, and there are leaderboards showing people who have had the most friends sign up. You win coupons by spinning a wheel on an in-app game, then the coupon only lasts 2 hours, prompting an impulse buy. And how did Pinduoduo achieve it in the face of such large established competitors?
- As Pinduoduo gets into life as a public company, the firm is following the e-commerce giants in cleaning up the platform.
- Pinduoduo will have difficulty in upgrading to a marketplace of premium products because of its user demographics and brand image,” according to 86 Research.
- 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.
- Through social sharing, users are sending the product information precisely to friends and groups that may have similar income and consumption preferences.
- As of 2019, Pinduoduo has amassed a 7.3% market share, coming behind JD.com (16.7%) and Alibaba (55.9%) according to eMarketer.
Blocked OUTSIDE OF CHINA?
Digital economy observers outside of China can be forgiven for missing the meteoric rise of Pinduoduo. Today Pinduoduo’s $40+ billion market cap is the equal of JD.com and its 366 million monthly users and 536 annual active buyers are both second in China only to Alibaba. 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. Company founder Huang insisted Pinduoduo’s decision and punishment of the owners is just and fair.
Complaints mainly target at the problems of poor quality, slow delivery, misleading ads, etc. Many aspects of Pinduoduo, from the underserved target markets to the unparalleled distribution afforded by WeChat, are singular and cannot be reproduced. But the lessons of building a socially shared, dynamic experience where the use of app itself drives consistent re-engagement are more important than ever. If Huang could find a way to make buying the most mundane everyday household items exciting and fun, then app developers everywhere can try to find ways to do the same with their apps. The discount is usually up to 90 percent, including everything from RMB 10 ($1.50) bed sheets to RMB 1,000 ($150) PCs. More than 6.4 million units of tissue paper were sold at RMB 12.9 ($1.90) for 10 boxes and 4.8 million umbrellas were purchased at RMB 10.3 ($1.51) apiece.
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. Pinduoduo started by targeting price-conscious (as opposed to brand-conscious) buyers in third and fourth tier Chinese cities – an underserved market.
Pinduoduo is an e-commerce platform that offers a wide range of rock bottom priced products from home appliances to daily groceries. Its key differentiator from other Alibaba’s Taobao and JD.com is it’s ‘team purchase’ model. 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, Leqi, e-commerce platform marketing agent service and a WeChat-based role-playing game company. As Pinduoduo gets into life as a public company, the firm is following the e-commerce giants in cleaning up the platform.
Price and social features are not only the only path to Pinduoduo’s meteoric rise, and spotting the right user profile is the last piece to the puzzle.
Given the history between Pinduoduo and Pinhaohuo, then of the two largest players in the social e-commerce sector, the two companies merged to form one dominator. In April 2018, Pinduoduo completed a new round of financing raising $3 billion at a valuation of nearly $15 billion. Given Pinduoduo’s WeChat-based ecosystem, Tencent joined the round as a returning investor. Pinduoduo’s annual GMV (gross merchandise volume) surpassed RMB100 billion ($14.7 billion) in 2017, that’s around two years since its inception. To hit the same milestone, Taobao took five years, VIP.com took eight years and JD ten years. Pinduoduo now claims more than 343.6 million active buyers with an annual GMV of RMB 262.1 billion, what is the best way to invest your money or $38.5 billion.
The company set up an RMB 150 million ($22 million) fund to deal with after-sales disputes. In 2015, Huang launched Pinhaohuo, a social commerce platform for fruits, with the team from his second startup Leqi. Cost performance 10 best renewable energy stocks to buy according to hedge funds is still the most important factor to consider for consumers.
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