It utilizes the social networking to connect like-minded shoppers and various gamifications to draw so many users gradually addicted to the platform. When Pingduoduo was starting out, there was a shift in the Chinese e-commerce landscape. Launched in 2015, Pinduoduo has been now a leading social e-commerce application and one of the fastest growing platforms in China.
- Pinduoduo became especially popular in second- and third-tier Chinese cities where consumers were more budget conscious, and nearly doubled its revenues in 2020 amid pandemic-inflicted lockdowns.
- The company combines products the user may need, like toiletries, with other things they may want to buy.
- As previously stated, PDD smartly integrated the app with ways to form a buying team so consumers will be enticed to spend on bulk items.
Alibaba also has a separate website called AliExpress that services markets like Europe and the U.S. “They (PDD) have made no in roads into existing market share of tier 1 cities,” Jacob Cooke, CEO of WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told CNBC. Currently, 100% of PDD’s revenue comes from what it calls “online marketplace services.” This is broadly made up of commission PDD takes from sales on its platform as well as advertising it runs. This encourages buyers to share links to the item they are buying with friends and family or over social media.
Company profile
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. Temu’s “main challenges will be cultivating trust and awareness among customers,” Jacob Cooke, CEO of WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told CNBC. A large part of PDD’s user base is from smaller Chinese cities where there are perhaps more price-conscious consumers. JD.com and Alibaba appear to dominate in the so-called tier 1 cities in China.
However, over the years, the purchases from the local male demographic have increased. 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. Buyers can access the platform and make group purchases by visiting Pinduoduo directly or via popular social networks such as QQ and Weixin. According to Business Insider, because of his background, Huang knew that he could create something unique in the e-commerce space.
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. Pinduoduo is now valued at a market cap of $81 billion which means its forward price to earnings multiple stands at around 32x. The total gross merchandise volume (GMV) on the Pinduoduo platform has increased from US$72.75 billion in 2018 to $383 billion in the 2021 calendar year. Set up a store for free on the Pinduoduo Seller app with a phone number and a verified ID card.
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. Through the social aspect of the platform, users can also play games, which helps them save money. In particular, one game offers users cash rewards for inviting others to the platform, which helps Pinduoduo bring in more users. The platform retains the users with games that encourage them to play and see more products every day. PDD was founded just nine years ago, but it carved out a niche with its discount marketplace before expanding into the online agricultural space. From 2018 to 2022, its annual revenue grew at a stunning compound annual growth rate (CAGR) of 78%, and analysts expect 81% growth in 2023.
What is Pinduoduo and how to get started
Consumption improvement was founded with the goal of increasing the unit price of each product, service and customer. Alibaba’s strategic realignment of consumption improvements is very determined and striking. Most traffic resources appear to be distributed to Tmall.com rather than Taobao.com. It caused many Taobao shopkeepers, whose competitiveness is the lower price, to complain that they were treated unfairly by Alibaba.
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.
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JD is known for being able to deliver items on the same day or day after. And last year, JD rolled out a group buying app called Jingxi, which is also accessible through WeChat. Alibaba and JD have found success in larger so-called tier 1 and tier 2 cities in China which include the likes of Beijing and Shanghai.
Pinduoduo’s history and major milestones
They may not have a lot of money to spend, but they want to take part in the national pastime and, on the way, offer their family members discounts as a way to combat loneliness. 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. The Price Chop mechanism encourage users to get the items that they want for free by sharing with their networking within 24h.
By sharing Pinduoduo’s product information on social networks such as WeChat and QQ, users can invite their contacts to form a shopping team to get a lower price for their purchase. The mechanism keeps the users motivated https://traderoom.info/ and better hooked for a more interactive and dynamic shopping experience. Coupled with other incentives such as cash, coupon, lottery and free products, Pinduoduo manages to acquire users at a very low cost.
Because of recent issues about security, you can’t download it from Apple’s App Store or Google Play Store. Since the listing of the Pinduoduo Inc ADR on the NASDAQ in July 2018, the Pinduoduo stock price has increased by more than 100%. PDD benefited from China’s antitrust crackdown on Alibaba in 2021, which hobbled its top competitor by banning its aggressive promotions turnkey forex and exclusive deals with merchants. But if PDD grows larger than Alibaba, it could also be hit by similar antitrust fines and restrictions. That’s still a rich valuation, a market capitalization of $172 billion on expected 2023 sales of $28 billion at current exchange rates. But nearly one-quarter of those sales, $6.5 billion, are hitting net income.
Pinduoduo users
Media outlet LatePost last week attributed Pinduoduo’s overseas push to travails in the company’s home market. LatePost said Pinduoduo will assign its top executives to the goal of U.S. expansion. Pinduoduo’s stock price on Nasdaq has dropped over 75% since its peak in February of last year. That drop has wiped $181 billion off Pinduoduo’s market capitalization; the firm was valued at $241 billion in February 2021 compared with $60 billion today. Huang himself has lost over $53 billion amid the decline in value of Pinduoduo’s stock.