Analyzing Pinduoduo Pdd business model & Strategy

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. Like Alibaba’s Taobao and rival JD.com, Pinduoduo is an e-commerce platform that offers a wide range of products from daily groceries to home appliances. Pinduoduo’s twist lies in its integration of social components into the traditional online shopping process, which the company describes as the “team purchase” model.

Analysis of the development of the battle Alibaba VS Pinduoduo in 2020

According to a video on the company’s English website, Pinduoduo is meant to be a “virtual bazaar” to combine the experience of discovering new things and sharing with friends. Compared to other ecommerce players, the Pinduoduo business model offers one attractive additional and free service called “team purchase”. Users can share Pinduoduo’s product information on social networking platforms like WeChat and QQ messenger apps. Pinduoduo has a typical revenue generation strategy for an eCommerce giant under the marketplace business model.

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The company remains China’s leading marketplace in terms of users while employing close to 10,000 people. The platform’s rapid success allowed the team to raise another funding round (Series C) of about $213.7 million in February 2017. By the end of the year, Pinduoduo had already surpassed 200 million users – in just two years of being operational. A team needs to be formed within a 24-hour timeframe and contain a set number of buyers willing to pay the price set by the manufacturer.

Key financials

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. Another by-product of Pinduoduo’s ever-increasing relevance was heightened regulatory scrutiny. As part of China’s crackdown on the tech sector, which saw them blocking the IPO of Jack Ma’s Ant Group amongst others, the Shanghai Consumer Council issued a warning to the company. For instance, Alibaba and Pinduoduo had best forex indicator in the world forced merchants on their platform into exclusivity clauses, which prohibited them from joining competing services. The platform also continued to gripe with the effects of fake products. In April 2019, the United States added Pinduoduo to its notorious markets list, which flags platforms that are known to have a high share of fake products on it.

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.

Who is the target market of Pinduoduo?

Users will get one Brand Card after they purchased a branded item, and they can alternatively share with their friends to attract them browsing and ultimately purchasing the branded products. This is an effective xm group review incentive for the platform to promote its branded products. As Pinduoduo gets into life as a public company, the firm is following the e-commerce giants in cleaning up the platform.

If you look at staffing levels, PDD told us it had about 13,000 staff. And I really think that doesn’t feel like a very satisfactory explanation. And it certainly goes against what we might have learned from a lot of business schools about how innovation happens inside companies. When we do our work on PDD and Temu the job is essentially an exercise of triangulation between different data points. We talk to a lot of the logistical providers that help both PDD and Temu in the international market. There are 56 Wall Street analysts who cover PDD Holdings as a stock, and 53 of them recommend that their clients buy it.

We speak to different industry contacts that are in the e-commerce trade, both domestically and cross-border. And we do get some management access on top of that, where they can talk in qualitative terms and give you some idea of what they’re trying to achieve high level. So it’s not completely opaque, but yes, it’s less hands on when it comes to investors than, for example, some of my other companies that guide quarterly revenues and earnings and so on. It’s grown by just bringing these cheap prices to consumers that can’t afford branded and other goods. Back in 2020, during the height of the mini internet bubble, they had a market cap of nearly $200bn, which they are at again today.

• China hawks in the US are certainly not happy that US consumers are becoming more and more reliant on these platforms, but the question is whether or not they can actually do anything about it.
• The company sells everything from groceries and home appliances to iPhones.
• Its mobile platform provides buyers with a wide selection of merchandise as well as an interactive shopping experience, while enabling sellers to seamlessly connect with customers.
• These ads then appear across Pinduoduo’s platform in the form of banners, links, as well as company logos.
• The Daily Check-in mechanism is to encourage users open the apps everyday with the redeemable points reward which can be deducted in their item purchasing.

It was created by Colin Huang as Shanghai Dream Information Technology Co., Ltd. in 2015. Users can download the Pinduoduo app on their smartphone or access the platform via its website. Over 80% of the company’s revenues came from online marketing services in 2020.

Online Marketing Services

Yet in just eight years, the Chinese e-commerce platform Pinduoduo has managed to stand apart and become a leading presence among Chinese e-commerce platforms. When Pinduoduo was initially unveiled in 2015, it seemed there were no grounds for another e-commerce platform to take root in China. JD and Taobao had already accumulated a grasp over the online market of the country with their powerful presence. Pinduoduo’s growth came from an existed crowded Chinese ecommerce environment, dominated by Alibaba and JD.com. As much as 65% of the Pinduoduo’s transactions are completed through its WeChat mini program.

He would then go on to start Xunmeng, a gaming studio that created web-based role-playing games. Xunmeng would form the basis for many of the gamification elements that are now present in Pinduoduo’s app experience. Pinduoduo, which can be roughly translated to “Together, More Savings, More Fun.”, is an online marketplace that promotes group buying. Contact us today and let us help you launch your brand into a success. We offer a free consultation with one of our experts that will learn about your brand and present the best solutions to sell your products in China. Want to have a first free consultation session about e-commerce and digital marketing in China?

According to the video below, shoppers are shown the standard price of an item alongside the discounted price. To “unlock” the discount, they have to form “shopping teams” of two or more people. They can join an existing team of friends or strangers or create their own team. Last August, the company started Duo Duo Grocery which is a next-day grocery pickup service that allows users to order products online and collect them from designated pick-up points the next day. 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.

• This demographic data clearly shows that Pinduoduo’s user base comes from rural areas with moderate to low cost of living.
• To maximize your return on investment, identify which campaigns are most effective for reaching your target customers and focus your efforts on those.
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• She has a knack for decoding human behaviors impacting collective culture and a passion for sustainable planning and storytelling.

The purchases how to read forex charts users can make include apparel, mother and childcare products, food and beverage, cosmetics and other personal care items, sports and fitness items, as well as auto accessories. “A portion of the Company’s buyer traffic comes from its user recommendation or product introduction feature which buyers can share with friends or contacts through social networks such as WeChat and QQ.” 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. In the first quarter of 2020, Pinduoduo’s annual active buyers increased by 42 million, while Taobao Tmall only increased by 15 million. There is fierce competition among the two giants to dominate the e-commerce market.