Coupled with other incentives such as cash, coupon, lottery and free products, Pinduoduo manages to acquire users at a very low cost. Combined with the extra satisfaction of scoring a good deal with your friends as a team, Pinduoduo soon became a viral sensation in China. The name Pinduoduo means “Together, More Savings, More Fun.” It’s a great summation of the company’s core group-buying value proposition, which has been described as “Groupon on Steroids.” But there are key differences.
It enables these buyers, often women in charge of household purchases, to obtain deep discounts by getting their friends to participate in group buys of items ranging from produce to diapers. The most typical Pinduoduo users are price sensitive women that reside in low tier cities. But how to maintain these users and its growth momentum is a big challenge for Pinduoduo now given rising product quality complaints. Although Pinduoduo claims to have several channels to lower product prices, increasing product quality and counterfeit complaints still raise concerns for a possible low-cost and low-quality association.
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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.
The U.S. government indictment demonstrated deep knowledge of the Russian spies’ activities, including their real-world meetings at a cafe in Moscow. Many also questioned the validity of entertaining features in Pinduoduo’s value proposition. “We have observed that a few users find shopping on Pinduoduo to be very entertaining, which is attributable to its extremely low pricing and interaction among Weixin users,” according to research institute 86 Research. “They don’t really understand how the other makes money,” Huang said to Bloomberg. Set up a store for free on the Pinduoduo Seller app with a phone number and a verified ID card. As of 2019, Pinduoduo has amassed a 7.3% market share, coming behind JD.com (16.7%) and Alibaba (55.9%) according to eMarketer.
Pinduoduo is an e-commerce platform that offers a wide range of rock bottom priced products from home appliances to daily groceries. Its key differentiator from other Alibaba’s Taobao and JD.com is it’s ‘team purchase’ model. 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. His previous startups include consumer electronics e-commerce site Ouku.com, Leqi, e-commerce platform marketing agent service and a WeChat-based role-playing game company. As Pinduoduo gets into life as a public company, the firm is following the e-commerce giants in cleaning up the platform.
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. Rising income may give part of Chinese urban citizens the freedom to vote for quality, but RMB 1 difference in price tag may be enough of an incentive for their countryside counterparts, who have been more neglected by e-commerce so far.
- Lesser-known brands were chosen over famous brands to erase any premium that comes from branding.
- This approach is particularly effective for the sales of perishable agricultural and fresh products, where the speed for matching supply and demand is critical.
- By using readily available natural gas as the feedstock, C-Zero hopes to produce emission-free hydrogen for less than other green hydrogen startups.
- The Shanghai-based company just went public raising $1.6 billion through a U.S.
- 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.
- This is evident in many game-like features that Pinduoduo uses to re-engage users, including special deals and promotions.
Financially, the platform could even out part of discounts with less marketing budgets. 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. 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 and better hooked for a more interactive and dynamic shopping experience.
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Pinduoduo users can invite friends and family on social media to join a group deal in order to generate discounts. By purchasing in groups, price-conscious shoppers attain more competitive prices. But it is succeeding thanks to a new ecosystem consisting of super app WeChat, mobile payment infrastructure, and mobile-first users.
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Over 88.4 percent of Pinduoduo’s RMB 1.2 billion ($180 million) Q1 revenue was spent on marketing. 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.
There are many factors, but one of the most currency converter calculator aud/nok interesting is how Pinduoduo has successfully gamified shopping for the most mundane everyday products to drive re-engagement and user retention. In many ways, Pinduoduo represents the most successful example of how a mobile commerce app can be designed from the ground up to engineer social sharing, viral engagement and repeat buying as part of the user experience. Lesser-known brands were chosen over famous brands to erase any premium that comes from branding. Additionally, the costs for advertising and marketing are also lowered through user sharing to social media. Through social sharing, users are sending the product information precisely to friends and groups that may have similar income and consumption preferences. Viral marketing is a more clever way to build the identity of all the lesser-known brands on its platform.
Although the country’s e-commerce market is highly consolidated, it’s not impossible for startup teams to crack this market as long as they are solving the right problems for the right group of customers. The social nature of this platform has led to its How many traders are successful exponential growth in third-tier cities in China. Pinduoduo suffered a net loss of RMB 292 million ($43 million) and RMB 525.1 million ($77 million) in 2016 and 2017, respectively. Its net losses reached RMB 201 million ($30 million) in the first quarter of this year. The net loss is expected to be widened, mainly attributable to investments in branding and ads.
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. It’s the combination of the viral acquisition loop and the addictive shopping experience that has caused Pinduoduo to become bigger than eBay in just four short years. It’s no coincidence that founder Huang “Colin” Zheng, an ex-Google engineer, had prior startup experience on a consumer electronics e-commerce site as about alfa forex альфа форекс well as a WeChat based role playing game company.
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The company set up an RMB 150 million ($22 million) fund to deal with after-sales disputes. In 2015, Huang launched Pinhaohuo, a social commerce platform for fruits, with the team from his second startup Leqi. Cost performance is still the most important factor to consider for consumers.