Pinduoduo is a platform where you should buy things, and you should buy them now.
Cheap products are great.
Gross Merchandise Volume (GMV) has been exploding on Pinduoduo reaching 262 billion RMB in June 2018, just before the IPO. Thomas Graziani August 27, 2018 New WeChat features. Last year alone, the platform took down 10 million problematic listings and set up an RMB 150 million fund to compensate users that reported such issues as shoddy goods, rotten fruits and difficulties in getting refunds.
Typically, users have to pay a small entry fee (0.01 RMB) to get into a lottery. Let’s take a close look at it. In order to get a cooking pot worth 150 RMB (which in reality might only be worth 50RMB), you’ll have to have around 25 friends to log in to the WeChat shop. And right behind, the number #2, was Pinduoduo. Pinduoduo is a Chinese e-commerce platform that allows users to participate in group buying deals, mostly through Tencent’s Wechat app. Students on the App are also more likely to use it without purchasing: they make up for 19.1% of non-purchasing users, but only 9.3% of active buyers.
This is a great and cheap way for brands to do marketing without having to invest too much. And in doing so, you gave strong social proof supporting the brand, by letting your friends know you really care about getting this product. But what about free products? The platform scaled up quickly and has since expanded the product range to include essentially all the household items you can think of, groceries, fashion, beauty, and electronics.
Pinduoduo also went through their IPO in July raising $1.63 billion. There is however also a significant percentage of users (40.9%) who are buying products on impulse that they didn’t plan to buy otherwise. You might already be using this function if you’re using Didi Dache for ride hailing: once you finish a ride, it is automatically billed to your WeChat Payment account without the need for further validation. Pinduoduo offers coupons. You just have to get enough new users to follow the Pinduoduo Official Account, install the App and sign up via WeChat login. We'd love to hear from you. You can share certain products with friends. These messages are customizable messages that can be sent 48 hours after the user followed the account or interacted with it. Pinduoduo users are mostly displaced from Taobao and other platforms: they are for the most part (86.3%) users who are usually used to buying online. Moreover, people might keep scanning the QR code after the free product has been claimed.
Pinduoduo is by far the most common substitute for Taobao. The users of Pinduoduo are also less educated than Taobao users: 42.4% of them don’t have any college degree, against 30.2% in the case of Taobao. Pinduoduo is an online shopping platform that gives users discounts for purchasing in groups. Taobao/JD and Pinduoduo have completely different user behaviors: 93.1% of Taobao/JD users find products through keyword search, while most of Pinduoduo users are looking at which special deals are available every day. The package sells for 99 RMB full price, 79 RMB in group buying. That's why it might be a better idea to resort to a more understandable alternative of the likes of the above-mentioned Amazon. Using cash red envelopes to reward users for inviting friends is another old trick of viral marketing. After this first purchase, you won’t have to enter your password anymore and will be able to do one-click payments. Unlike the “Broadcast” messages that are limited (4 per months for service accounts), these messages are unlimited and can be customized for each user. These users are extremely price-sensitive, but they make frequent purchase and they are often in control of purchasing for the whole family. Farmers feel relieved from the heartbreak of seeing their hard work go to waste as the fruits rot, as they ship fruits off in bulk to Pinduoduo shoppers, who typically get their produce at 60 to 80% off. Taobao is still leading the fight. Average orders on Pinduoduo are, as one might expect, low: 10 times smaller than the average orders on JD.com. 9 App installs will get you 1.3 kg of nuts from the food startup Three Squirrels (三只松鼠). Besides all of the tricks we mentioned above, Pinduoduo has one specificity: it is doing exceptionally well in smaller cities (Tier 3 and smaller). 1 App install will get you a small box of candy. Each time a friend volunteers to help you “bargain”, the price decreases a bit. That’s just what Pinduoduo offers. It is also one of the world's largest internet companies. China wants Twitter to shut down accounts that smear China, This dock promises to turn your Switch into an arcade cabinet, This subway in China lets you buy a ticket from a hologram, Computex Taipei postponed again, this time until 2021, 12 arrested for selling cheats for China’s version of PUBG Mobile, What is Pinduoduo? That’s 3 RMB per high-quality App installs, linked with a WeChat social account. At the core of its success was a strong emphasis on social commerce, viral marketing & retaining users. One more viral mechanism from Pinduoduo is the use of lotteries.
One might wonder what caused such an explosive growth. Here are some of the highlights: The power of Pinduoduo mostly comes from its social features: only 88.8% of active Pinduoduo users helped promote the platform in some way, either via sharing links or actively promoting products. 50% of the users that uninstalled the Taobao App installed Pinduoduo a month later. Chinese “dama” (literally, big mamas) are budget-savvy shoppers most eager to snap up a good deal. Pinduoduo was born in the mobile Internet era, bypassing the PC era’s search-based online shopping model which placed products first. In order to get the discounted price, I can find another friend to join the group-buy deal, and we’ll both get the product shipped to our respective address. Focusing on producing just a few SKUs in colossal quantities, these “Pin Factories” (拼工厂) are able to achieve and handle order volumes that have grown exponentially. That’s exactly what Pinduoduo does: the first time you pay, it enables “password-less payments” by default. Asia-Pacific (APAC) 501-1000 64.7% of Pinduoduo users come from Tier 3 cities or smaller, against only 50.1% of users for JD.com. We received on average 5 messages every 24 hours after subscribing – and these are very visible messages sent from a WeChat Service Account! The App offers a range of products for free. China's hottest online shopping startup. All rights reserved.
It is interesting to note that a subtle relationship exists between Pinduoduo and Taobao, Alibaba’s hugely popular marketplace. The App is doing everything to push you to share the App with your friends. If they get enough friends to join, users can then get a chance to win the product for only 0.01 RMB. They’re the perfect way to make recommendations based on order history. On the 9th of December 2017, Cheetah Mobile published a ranking of e-commerce Apps in China. Pinduoduo rewards users a cash red envelope between 5-20 RMB. Minimum operating system requirements: And once you did, it does a great job at keeping them hooked. Users changing phones are however more likely to install Taobao or JD than Pinduoduo. After all, the deal is so good, it deserves a spot on everyone’s Moments (the equivalent of a Facebook user’s feed). That's what this app offers us, trying to compete within China with other online shopping giants of the likes of AliExpress or Amazon. According to 2018 company filings, the average Pinduoduo order value is US$6 versus US$30 on Taobao/Tmall and US$60 on JD.com. That’s the one I went for. Pinduoduo also went through their IPO in July raising $1.63 billion. In my case, 25 friends scanned the QR code trying to help me get the free product: that’s a cost of less than 1 RMB per follower for Pinduoduo! Although this trajectory is very unique, a lot of brands and platforms can take cues from Pinduoduo’s success. The core function of the App is Group Buying: each item has an official price and a group-buy discounted price. They do most of the shopping for the family, and fortunately, they know just the place to score bargain-basement prices on everyday items, with discounts as deep as 90% off (look for overripe fruits that don’t last another day). The last trick we’d like to mention is the “automatic WeChat payments” that Pinduoduo is using. Not only do they reward users, but they also display a leaderboard of the users who made the most money out of inviting friends. Suddenly, the incentive that we picture in our mind is not a few RMB, but literally thousands. Everyday items come at as low as 90% off. Moreover, the majority of the Pinduoduo users are female above 40 years old in smaller Chinese cities. These users might not have much experience with e-commerce purchase, but once they learn how (and bring all their friends into the platform) they can bring long term profits to the Pinduoduo: they have high purchasing power, and are continuously using the App.
As one might accurately assume, Pinduoduo is not known for quality. Prices are cheaper, as its C2B model sells in bulk and eliminates layers of distributors by connecting consumers with farmers directly. And only 7.6% of Pinduoduo users come from Tier 1 cities.
This trick can also seem costly, but it can be worthwhile for the brand. Pinduoduo claims that over the course of two years, about 1,000 factories that produce to sell on the platform. However, Pinduoduo’s coupons have exceptionally short durations: usually only 2 hours.
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