As we all know, China’s e-commerce platforms Alibaba and JD have been ruling the market for years. However social e-commerce platform Pinduoduo has proved that’s it not impossible to shake it. Founded in 2015 by Coling Huang, an ex-Google engineer and his The Shanghai Dream Information Technology Co. Pinduoduo has become the fastest growing app in the history of Chinese internet. It is the second largest Chinese online shopping platform with around 385, 5 million monthly active users, right behind Taobao.
How Pinduoduo works?
Pionduoduo relies on the customers from 3rd and 4th tier cities. The majority of the users are woman, who buy goods for their household, using the opportunities that the app provides to get products with enormous discount. People from 3rd and 4th tier cities are constantly gaining greater access to internet and higher disposable income (most marketers advice brands to pay attention to these cities in their 2019 marketing strategy, since there is a growing enthusiasm among their population for international brands). What differs Pinduoduo from other e-commerce platforms is the active purchasing though WeChat and QQ, where the majority of Chinese internet users are concentrated. The customers share the product information they want to buy to their moments or in the discussion groups, and in that way, they group people who want to buy the product so they get a huge discount or sometimes they even get the product for free (under the option “team purchase” consumers get their goods for much lower prices). Products are delivered separately to each group member address. This strategy keeps the users engaged and motivated and makes their shopping experience more existing and dynamic.
What else makes Pinduoduo attractive for the customers are the extremely low prices they can achieve. The app works directly with the manufactures, so it skips the layers of distribution, which leaves space for enormous discounts and in the same time raises the profit for the manufacturers. Pinduoduo focuses on a range of products including food and beverage, mother and childcare products, cosmetics and other personal care products as well as auto accessories.
One of the challenges the app is facing, like all the others e-commerce platforms in China is fake products selling. Pinduoduo has developed several strategies which help them facing these problems. In 2018, after having problems both with USA and China regulations for enlisting fake goods, the company has asked more than 1000 shops to back down and delisted approximately 4 million items. They have also enlisted recognizable brands such as Apple, Xiaomi, Huawei. The brands have launched the “flagship stores” on the platform, which increases the credibility and leaves the space for Pinduoduo to reach the customers in 1st and 2nd tier cities to use the platform and get the original goods for lower prices, by using group buying and social e-commerce component of the app.
This app still has innovative ways to grow. It has shown its potential in the last three years, and international brands who are trying to push their products to Chinese market should get familiar with it. For further information about marketing strategies in China, contact the Tolmao group and we will ensure you the best services!