If you look at the data in the graph below, it’s easy to see that the users have evened out between the two genders. In 2022, the male demographic has covered 51.8% of overall users in the platform, while the female user base gets 48.2%. Pinduoduo has seamlessly integrated its platform with major social networks in China and created a highly engaged social buying ecosystem.
But within the world’s second-largest economy, the e-commerce firm is growing faster than major rivals Alibaba and JD.com and gaining share quickly. Analysts expect Pinduoduo’s revenue to rise 58% in 2022, then grow 33% to 148.9 billion yuan ($23.4 billion) in 2023. They expect its GAAP net income to grow 63% in 2022, then climb 52% to 19.3 billion yuan ($3 billion) in 2023. Alibaba ranked first with a 47.1% share, JD came in second with a 16.9% share, and all of the other players held shares of less than 2%. Pinduoduo has already generated 7.77 billion yuan ($1.22 billion) in net profits on a generally accepted accounting principles (GAAP) basis in 2021, so it will likely exceed its 10 billion yuan target sometime in 2022. Its revenue rose 3% year over year to 27.23 billion yuan ($4.27 billion), which missed analysts’ estimates by $440 million.
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. But Pinduoduo is reaching the fastest user growth among younger Chinese generations, and especially the Chinese Gen Z. In the long run, “Ten billion subsidies” is a quick way to attract consumers in the early stage of the platform, but not a sustainable business model. After Pinduoduo users become scale, the scope and role of subsidies will be reduced accordingly. Despite the subsidies, some consumers remain loyal to specific brands, not channels like Pinduoduo.
Lastly, Pinduoduo also focused on attracting users from China’s lower-tiered cities. These users, which were traditionally ignored by the bigger players, were also more plus500 review price-conscious and, at times, lived in remote areas of the country. With group purchases, it suddenly became economically more sensible for sellers to ship there.
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. The advantage of PDD over other social commerce channels in the country is its consumer-oriented approach. It offers products at up to 20% cheaper compared to their market price by letting users directly purchase from manufacturers.
- Since the listing of the Pinduoduo Inc ADR on the NASDAQ in July 2018, the Pinduoduo stock price has increased by more than 100%.
- Users can play a game called Duo Duo Orchard, which requires them to plant and nurture a virtual tree with droplets that they earn from using the app.
- Pinduoduo, which can be roughly translated to “Together, More Savings, More Fun.”, is an online marketplace that promotes group buying.
- As such, it had surpassed well-established competitors like JD.com, which went public before Pinduoduo was even started.
- The company’s team purchase model transforms online shopping into a dynamic social experience and its platform resembles a virtual bazaar.
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.
Later in 2018, Pinduoduo has also started to incentivize users to go to the standalone Pinduoduo app, over 60% of active users have come from and rely on Pinduoduo’s WeChat mini program. The Free Pass Card enables users to enjoy the group-buying discount without having to form a team. Users usually get one Free Pass Card after completing two purchases on Pinduoduo. Sekkei Digital Group is an agency of digital hustlers, marketers, developers, and brand builders working between France and China. From a single service to a full suite of marketing-centric operations, we raise the profile of brands on online media in China.
Another counterfeit heaven in China?
According to the 2020 market data, the two dominating age groups in the app are people between 36 and 45 years old or 46 and higher. However, there is massive potential for companies to gain traction in lower-tier cities in China in the upcoming decade which will be a key driver of revenue growth. Further, the increase in the purchasing power of China’s middle class and rising GDP numbers make e-commerce companies like Pinduoduo a good bet for long-term investors. One price is for individual buyers while the other is for community group purchases, and is generally lower.
Pinduoduo focuses on the social shopping element
The big data and AI of the platform enables manufacturers to pinpoint the customer needs and preferences which ultimately to produce in a reasonable quantities of end products. 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 well as a WeChat based role playing game company. He deliberately sought to combine a game-like experience with e-commerce. This is evident in many game-like features that Pinduoduo uses to re-engage users, including special deals and promotions. You get free products for getting friends to install the app, and there are leaderboards showing people who have had the most friends sign up.
5 Mini Game
Alibaba took a controlling stake in Singapore-based Southeast Asian e-commerce site Lazada in 2016 and has since invested money in the business to expand its presence in the region. Alibaba also has a separate website called AliExpress that services markets like Europe and the U.S. In addition, Pinduoduo needs to think about how to strengthen user loyalty to the platform. Pinduoduo’s founder, Colin Huang (Huang Zheng) believes that most present-day Chinese consumers have used the Pinduoduo platform.
Pinduoduo users
On top of that, sellers often have to invest heavily in advertising and logistics – costs they ultimately pass on to consumers. Pinduoduo, which can be roughly translated to “Together, More Savings, More Fun.”, is an online marketplace that promotes group buying. Find out more at or stay updated by following us on the social media below. Want to have a first free consultation session about e-commerce and digital marketing in China?
Duo Duo Orchard was the first popular game on the platform, users can grow virtual fruit trees, collecting water droplets to water their tree by shopping, browsing, and interacting with other users on the platform. The Brand Card is aiming to promote the branded products on the platform. Member Card are different kinds of the rewarding, aiming to help users save money via vouchers or special discount by https://broker-review.org/ sharing amongst their friends. It utilizes the social networking to connect like-minded shoppers and various gamifications to draw so many users gradually addicted to the platform. When Pingduoduo was starting out, there was a shift in the Chinese e-commerce landscape. Launched in 2015, Pinduoduo has been now a leading social e-commerce application and one of the fastest growing platforms in China.
Last year, PDD disclosed that 45% of its gross merchandising value (GMV) came from first and second-tier cities. In 2019, PDD said it had 585.2 million active buyers — those that made at least one purchase on the platform during the year. Alibaba said it had 711 million annual active consumers on its Chinese e-commerce marketplaces in the 12-month period ended September 30, 2019, the latest available figure. However, Pinduoduo subsequently expanded into the agricultural market with a “farm to table” platform that allowed farmers and small produce vendors to directly ship their agricultural products to online shoppers.
The app has quickly grown since it was founded in 2015 with 195 million monthly users, according to Tech Crunch. Meant to be a “virtual bazzar,” Pinduoduo is an e-commerce platform that allows users to share the shopping experience with friends in exchange for discounts. Pinduoduo’s main users from these low-tier cities earn less salaries, they also spend less on housing, leaving them income available for frivolities. Many of Pinduoduo’s users only became internet users in recent years, and use the app not only for shopping, but as a way to spend their free time. Pinduoduo started by targeting price-conscious (as opposed to brand-conscious) buyers in third and fourth tier Chinese cities – an underserved market. 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.
Furthermore, engagement is increased by having customers play games in order to collect discounts. 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. The company capped the year off by turning another cost center, payments, into a revenue-generating outlet. In December, it launched its own digital wallet called Duoduo Pay to the more than 731 million members on its platform. 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.
PDD pioneered the concept of mixing online shopping with social media interaction between sellers and their consumer base. The bold business decision of the company has led China to quicken the transition of the country’s commerce sector from offline to online. Behind that success has been its “social shopping” model that encourages users to share links to items they purchase with friends and participate in group buying.
