Founded in 2015, Pinduoduo is the fastest-growing tech company and second largest online marketplace in China. It has pioneered several new trends including social e-commerce, team purchase and consumer-to-manufacturer (C2M) that have revolutionised online shopping in China.
Using its artificial intelligence algorithms, Pinduoduo shows users products that are specifically relevant to them and that they will like. This strategy helps Pinduoduo stand out from the crowd, and enables it to build brand loyalty amongst its users.
The key to the site’s success is team shopping, which encourages shoppers to form groups with friends and family to purchase items collectively. As a result, shoppers can buy the same item at a lower price than if they had purchased it individually.
To start a team purchase, consumers choose a product that they want to buy and then decide how many people they want to be part of their group. Then, they share a link to the product on their social media profiles, such as WeChat, and encourage their friends and family to join them in buying the item at a discounted rate.
As a result, the process of team buying creates a viral cycle. Often, the discount can be up to 90%, allowing shoppers to grab items for much cheaper than they would otherwise.
Pinduoduo also provides incentives to users who engage in certain behaviors, such as sharing their purchases with their friends and families or using a branded card for discounts. The company has created a variety of cards, some of which are free and others that come with a fee.
These incentives are an important tool for attracting new customers and encouraging existing users to spend more money on the platform. They are also a good way to increase market share for Pinduoduo’s branded products.
The C2B model, which is a type of e-commerce where the supplier sells directly to the customer, is another key component of the site’s success. It eliminates layers of distributors and not only reduces the cost for buyers but also raises the profit for manufacturers.
This is particularly beneficial for agricultural products, where the speed at which the supplier can match demand and supply is crucial. For this reason, Pinduoduo offers farmers a unique opportunity to sell their goods on the site.
Initially, the site targeted its services to consumers in China’s rural areas. By removing the middle-man from the produce industry and empowering farmers, it allowed them to interact directly with customers and earn higher prices for their products.
In addition, it also trained a large number of local farmers to help them set up their own e-commerce businesses. This helped Pinduoduo boost its user base in rural regions.
By the end of 2018, Pinduoduo had enrolled over 100,000 rural farmers to be part of its e-commerce program. The company plans to train at least 100,000 more in the future.
Pinduoduo has developed a range of e-commerce solutions for its agricultural business, including an online auction service that allows rural farmers to bid on their produce. This also allows them to display their produce in front of potential consumers, which can increase sales significantly.