What is Pinduoduo?
image from internet
Pinduoduo(PDD), owned by Tencent Holding, is now the third-largest e-commerce player behind Alibaba and JD.com in China. It is a group-buying e-commerce mobile platform, which allows users to shopping as well as socializing. You see the product, share to friends, purchase the product and you both get discounts.
More context:
· Annual Active Buyers 2020: 585.2 million
· Revenue 2019: ~30.14 billion RMB
· Market Cap: $55.2 billion
· Major user group is 70% female in lower-tier cities (average annual income: 100-150k).
What makes it outstanding?
Groupon is not a new thing, however PDD makes it to the fullest. The more people join a group-purchasing, the lower the price of a product will be. PDD uses C2M (customer to the manufactures) as its unique business model, manufacturers range from small individual merchants to large suppliers (Nestle, Unilever, Swisse...), consumers create value for manufacturers and provide merchants ideas for new product developments.
Users become unofficial recruiters for the platform to keep Pinduoduo’s cost per acquisition lower than competitors when they persuade their friends to join their purchase via WeChat, QQ and QR code scanning reduces the price for consumers and raise profits for retailers simultaneously.（source）
More analysis from the UX angel...
User Journey
According to Pinduoduo’s annual report, a general customer journey of PDD starts from visiting the platform, then either goes to initiation of a new team purchase by inviting friends on social media or waiting for formation of team, or joining an existing team purchase that leads to team formation confirmation. After the confirmation of team formation, you would finally be redirected to product shipment and review sessions.
If by hypothesis a user had a very large number of friends willing to help him, he could almost have a free product. This may seem counterproductive, but in reality, it is an excellent strategy for expanding the public and making them aware of the brand.
Besides... they emphasise user engagement through purchasing process!
Free products
For each user who thanks to another follows the official account, installs the App or registers via WeChat, the former can receive a long series of free products.
entry of free product, image from internet
Very short-term discount coupons
Unlike other platforms, Pinduoduo coupons have a very short duration, typically 2 hours. This strategy is very clever because it pushes you to shop instinctively, not to linger and to always be active in the App. So to stay updated on all offers.
coupon interface, image from internet
The red-pocket ranking
Like many platforms, Pinduoduo also offers cash prizes to those who invite friends to sign up for the App. Unlike the others, Pinduoduo, has created a public ranking of the most awarded users, in which you can see the amount of their prize pool.
red-pocketing ranking interface, image from internet
Lottery
In order to participate in the lottery you pay a very low registration fee (0.01 RMB). You must then invite friends to participate and if there are enough members within the time limit the winner is drawn.
If the minimum entry fee is not reached, the lottery is cancelled. The registration fee is returned to all those who does not win and a coupon is given to them to be used on Pinduoduo.
Duoduo live-streaming
entry of duoduo live-streaming, image from internet
Duoduo Livestreaming has already been integrated into the Pinduoduo app, allowing all its 536.3 million active users to be live streaming partners to promote millions of products listed on its platform.
In order to ensure the security, facial identity verification, copies of ID card, and two days waiting are required for final approval from Pinduoduo. Those approved are allowed to promote goods during their live streaming sessions and earn commissions ranging from 1% to 80% of the value of the goods.
Duoduo Livestreaming is now Pinduoduo’s answer on how to integrate live streaming into its business after Alibaba’s Taobao has already shown that live steaming is an effective marketing tool.
Nonetheless, the easy payment which linked with Wechat favours senior users who are not familiar with online shopping and let them get on board quickly. Only the first purchase requires a password, while PDD automatically charge expense to the Wechat wallet for future payments.
Threats
However, PDD also experiences reputation crisis because of bad quality for the last few years. The price of a product could be incredibly low, e.g. you could buy a TV set with few hundred RMB, equalling less than £10. Obviously, regulation is needed and that’s why PDD has better reputation in lower-priced products such as organic food.
In today’s world, convenience and good bargains matter the most when people are shopping online while PDD managed to provide both. As long as it could regulate its merchants, the app’s future is quite promising.
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