On top of that, Pinduoduo also puts greater emphasis on the discovery of new products. For instance, the search bar is hidden at the bottom of its front page, which encourages the customer to browse the feed (and thus aids product discovery). 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.
PDD has over 5.1 million merchants on its system marketing their products. The overall value of goods the money queen’s guide sold there has already reached around $154 million. While it’s true that PDD doesn’t take commissions from sellers, remember that you’re still obliged to pay a service fee for utilizing its e-commerce features.
Dubbed Duoduo International, the platform would host authentic products from brands like Apple or Nike. To profit from the more affluent end of the market, Pinduoduo began onboarding international brands such as Nike and Apple. No longer confined to agricultural products, the platform now sells a range of items including liquor, cosmetics, clothing, electronics, and baby supplies. Central to the future success of Pinduoduo was Huang’s belief that shopping was like a game. To that end, users on the platform could enjoy large discounts if they were able to convince family and friends to purchase in bulk. Translating this idea into a working platform required more work and an initial $8 million round of funding.
An auction can sometimes have dozens or even hundreds of individual buyers. Another source of income for Pinduoduo comes from transaction services, alligator indicator which are the commission fees it charges merchants when a purchase is completed. Many of the merchants on its platform are the actual manufacturers of the product, which means that they can command higher margins on the product. These ads then appear across Pinduoduo’s platform in the form of banners, links, as well as company logos.
1 WeChat facilitate Pinduoduo with its huge data base
Pinduoduo then went on an aggressive recruitment drive, seeking out new graduates hungry for success and single individuals unburdened by family commitments in particular. Like its non-Chinese counterpart TikTok, businesses can use DouYin to create short-form video content and post ads. Given its enormous growth over the past few years, it’s likely that DouYin will overtake other Chinese social media platforms in terms of popularity. The unique value of Pinduoduo mostly lies in its strong user engagement which differentiate itself and Groupon. The more you shop on the platform the more water droplets you receive, or team purchases and sharing items alternatively enable users to obtain special tools which are accelerating the growth of the tree.
Opera’s new browser can code websites and games for you
As a social commerce channel, marketers can expect Pinduoduo to overflow with Key Opinion Leaders. These online personalities are often trusted by a large follower base and hold power over their purchasing decisions. When it was first launched in China, Pinduoduo users were predominantly female. However, over the years, the purchases from the local male demographic have increased. 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.
5 Mini Game
“They don’t really understand how the other makes money,” Huang said to Bloomberg. Additionally, the farmers can then also promote their produce through the platform’s live streaming solution. Lastly, Pinduoduo itself also offers various training courses to established and new farmers. As of the time of writing, the commission fee stands at 0.6 percent, meaning if a product is sold for $100, a merchant has to pay $0.60.
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 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. As Pinduoduo gets into life as a public company, the firm is following the e-commerce giants in cleaning up the platform. The company set up an RMB 150 million ($22 million) fund to deal with after-sales disputes.
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. 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. 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, or $38.5 billion.
- Likewise, in 2023, the company generated a gross profit of more than 21 billion USD.
- The more you shop on the platform the more water droplets you receive, or team purchases and sharing items alternatively enable users to obtain special tools which are accelerating the growth of the tree.
- Compared to other ecommerce players, the Pinduoduo business model offers one attractive additional and free service called “team purchase”.
- With society connected through the world wide web, customers are no longer bound to local markets.
Merchandise sales
How Pinduoduo works may be more relevant for your international service business than you think! In today’s world, it is no secret that ecommerce has infinite potential for customers and businesses. Over 80% of the company’s revenues came from online marketing services in 2020. The company charges merchants fees for transaction-related services provided, and it also rewards merchants who sell high-quality productsand provide superb services with preferential fee rates. Pinduoduo is a Chinese agriculture-centric platform founded by Colin Huang and Chen Lei in 2015.
Even if Pinduoduo doesn’t make a sell during a user engagement, it is likely to generate revenue when a user clicks on an ad. Lastly, Pinduoduo also focused on attracting users from China’s lower-tiered cities. These users, which were traditionally ignored by the bigger players, were also more price-conscious and, at times, lived in remote areas of the country. With group purchases, it suddenly became economically more sensible for sellers to ship there. We offer digital solutions to skyrocket your business – from web development to digital marketing. Reach Chinese customers and an international audience with our professional services.
- Its net losses reached RMB 201 million ($30 million) in the first quarter of this year.
- 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.
- This marks an increase of 3.6% from the same period of the previous year.
- “They don’t really understand how the other makes money,” Huang said to Bloomberg.
Days after his departure, Pinduoduo finally surpassed Alibaba in terms of annual buyers with 788 million (compared to Alibaba’s 779 million). The rivalry between Alibaba and Pinduoduo reached new heights in March when employees of the latter reported that they were blocked from accessing Taobao. To further establish itself and take advantage of increased online activities due to the novel coronavirus, Pinduoduo raised $1.1 billion in a private share placement.
But it is succeeding thanks to a new ecosystem consisting of super app WeChat, mobile payment infrastructure, and mobile-first users. But the growth of Pinduoduo has sparked an argument focusing on whether the platform represents consumption downgrading. It is just one more piece of evidence for how big and segmented the Chinese market can be. 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.
The Price Chop mechanism encourage users to get the items that they want for free by sharing with their networking within 24h. According to Business Insider, because of his background, Huang knew that he could create something unique in the e-commerce space. In 2015, according to Tech Crunch, he founded Pinhaohuo — an e-commerce platform for fruits.
Accurately target and engage your audience, and lower your marketing cost at the same time, whether on Google or China’s own search engine Baidu. They are driven by their extensive ecosystems, technological innovation, and large number of consumers. In fact, the latest reports project the worldwide retail ecommerce sales to continue to skyrocket and surpass 8 billion USD globally in 2027. And China is the largest ecommerce market with a revenue of more than 2 billion USD.
To “unlock” the discount, they have to form avatrade review “shopping teams” of two or more people. They can join an existing team of friends or strangers or create their own team. Despite its user-friendly interface and low prices, some individuals choose not to use Pinduoduo. Let’s take a closer look at the problems that people face at this marketplace.
This social sharing of deals is primarily done on WeChat, the super app that is used by a billion people in China. WeChat’s parent company Tencent, recognized Pinduoduo’s potential and became an investor in 2016, promoting Pinduoduo and turbocharging its user acquisition. Driven by sharing on WeChat, Pinduoduo’s average customer acquisition cost is only $2, compared to $39 and $41 for primary rivals JD.com and Taobao. But even more impressive is its 7-day retention rate of 77%, the highest of any e-commerce platform in China. This retention comes from the continuous re-engagement at the prospect of winning deep discounts.