The incredible rise of Pinduoduo, China’s newest force in e-commerce

It’s the combination of the viral acquisition loop and the addictive shopping experience that has caused Pinduoduo to become bigger than eBay in just four short 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.

  1. Pinduoduo is a Chinese e-commerce channel where users can participate in group buying, which typically involves pooling with others to purchase items at lower prices.
  2. If you look at the data in the graph below, it’s easy to see that the users have evened out between the two genders.
  3. “They don’t really understand how the other makes money,” Huang said to Bloomberg.
  4. China Gravy is happy to assist you with this task as well as set up your own online shop with WooCommerce.
  5. Pinduoduo is now valued at a market cap of $81 billion which means its forward price to earnings multiple stands at around 32x.

At the turn of 2020, Pinduoduo finally embraced the live streaming trend as well after seeing Alibaba and others derive bigger and bigger portions of their revenue from it. Farmers, in particular, benefitted from the solution as they could show prospective customers how their produce was made. In June, 14 store owners protested in front of the company’s headquarters in Shanghai over what they deemed were inappropriate rankings assigned to them.

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. Sekkei Digital Group is an agency of digital hustlers, marketers, developers, and brand builders working between France and China. From a single service to a full suite of marketing-centric operations, we raise the profile of brands on online media in China. And because these people will represent your brand or product for a period of time, it’s wise to work with ones who have a genuine interest in your offerings. Doing this also ensures that you’re tapping into the right target audience for your business.

Xunmeng would form the basis for many of the gamification elements that are now present in Pinduoduo’s app experience. “On average, some of them are going to be exactly the same, some of them are going to be coming from exactly the same sellers” that consumers might find at other retailers, The Atlantic’s Mull said last year. “Others are going to be a little bit junkier. Others might use substandard materials that might not always pass muster in the U.S. for safety standards.”

What is Pinduoduo? Revolutionizing retail, generating profits

If you want to access it, you can directly download the app files from the platform’s website. Although Pinduoduo recently launched a website for its e-commerce system, the fastest way to access it is through downloading its app. Because of recent issues about security, you can’t download it from Apple’s App Store or Google Play Store. Through this, brands can remove the hassle and additional costs of using a middleman. It also enhances the consumer journey by adding gaming elements and giving out coupons and rewards. Pinduoduo’s Temu is a cross-border e-commerce website with most products likely to come from overseas, especially China.

Individuals need a deposit of 2,000 yuan to open a store, while businesses need a deposit of 1,000 yuan. If you want to close your store anytime, you can get the deposit refunded. The only fee for selling on Pinduoduo is a refundable security carry trade broker deposit, which is different for different types of stores. Download the Pinduoduo app and sign up with a mobile number or social login. And on Sunday, PDD announced it would invest in convertible bonds issued by Hong Kong-listed GOME Retail.

A large part of PDD’s user base is from smaller Chinese cities where there are perhaps more price-conscious consumers. and Alibaba appear to dominate in the so-called tier 1 cities in China. A large part of PDD’s growth has been driven by the fact that it can be accessed on Tencent-owned messaging service WeChat, which has over a billion monthly users. WeChat is a key part of daily life in China and allows people to make payments within the app. This encourages buyers to share links to the item they are buying with friends and family or over social media. The social nature of this platform has led to its exponential growth in third-tier cities in China.

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. PDD pioneered the concept of mixing online shopping with social media interaction between sellers and their consumer base. The bold business decision of the company has led China to quicken the transition of the country’s commerce sector from offline to online. The unique value of Pinduoduo mostly lies in its strong user engagement which differentiate itself and Groupon. 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.

Temu (marketplace)

The advantage of PDD over other social commerce channels in the country is its consumer-oriented approach. It offers products at up to 20% cheaper compared to their market price by letting users directly purchase from manufacturers. WeChat is the biggest social media platform in China with over 1 billion monthly users.

The miraculous rise of Pinduoduo

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. 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. Founded in 2015, Pinduoduo (PDD) is a social e-commerce app that allows consumers to find product deals with the added value of recruiting friends and family to join in and buy at a discounted price.

Pinduoduo focuses on the social shopping element

These influencers engage with their followers by creating engaging and valuable content like product reviews and live-streaming sessions. Collaborating with KOLs can give your brand or product a boost in reputation and credibility. Temu could also have an advantage due to “existing relationships with low-cost manufacturers in China that maybe haven’t expanded to the U.S. yet,” Cooke said. For example, the men’s wristwatch category had just two products listed. Sellers
You can open a store for free on the Pinduoduo Seller app with a phone number and a verified ID card.

Lawmakers also accuse Temu of abusing a loophole in U.S. import tax law. The loophole lets companies skip import fees for smaller-value shipments, and Temu uses that rule when shipping individual packages to people’s homes rather than importing in bulk to a warehouse. Secondly, you can select all products that you searched for in the first step of a specific company, e.g. corn. First, with over 1 billion users on WeChat and over 800 million on QQ, these messenger apps are the driving power behind Pinduoduo’s success. Pinduoduo uses WeChat’s online payment system in the form of “automatic WeChat payments”. Once you complete your purchase, it is automatically billed to your WeChat Pay account without the need for further validation.

The import method also minimizes the chances that Temu’s packages will be screened for compliance with the Uyghur Forced Labor Prevention Act, the House Select Committee on the Chinese Communist Party said. That law blocks products from China’s Xinjiang region, where systematic human rights abuses against the Uyghur minority have been reported. The first time you pay for something on Pinduoduo, it enables “password-less payments” by default. After your first transaction, you won’t have to enter your password anymore and will be able to use “one-click payments”. Since then, the Pinduoduo stock price went down to 17 USD and up to 30 USD, averaging at 19 USD by mid-2019. Continue reading about the Chinese investment landscape and Chinese stocks in this China Gravy article.

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