Pinduoduo, launched in 2015, is a social e-commerce platform that promotes 'team buying' through social media, enabling users to secure discounts by forming purchase groups. The company's growth was financed through significant investments, culminating in a $1.63 billion IPO on NASDAQ, primarily aimed at expanding operations and enhancing technology. Pinduoduo's marketing strategy leverages social media interactions, positioning itself as the third largest e-commerce entity in China but faces challenges from established competitors like Alibaba and JD.com.

1. Business Model
THE NEW LOW COST SOLUTION TO SELL BIG IN E-COMMERCE INDUSTRY

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Launched in 2015, Pinduoduo is a social e-commerce
app that’s based on “team buying,” where customers
can use social media to build a “shopping team” to get
a better price on a product. The bigger the shopping
team, the bigger the discount.
Users can also earn free shipping, free products, and
other rewards by playing games and entering
competitions — all of which are geared toward
encouraging customer referrals and social sharing.
And that’s the main unique selling point of Pinduoduo:
It’s designed to incentivize customers to share products
via social media and, in turn, increase sales for the
brands that sell on the platform.
ABOUT PINDUODUO

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FUNDING
Four months after Pinduoduo received undisclosed A
round from IDG and Lightspeed China in March
2016, the company secured over $110 million in
Series B financing four months later from Baoyan
Partners, New Horizon Capital, Tencent, and others.
In April 2018, Pinduoduo completed a new round of
financing raising $3 billion at a valuation of nearly $15
billion.
IPO And BEYOND
Pinduoduo made its debut on the NASDAQ Stock
Exchange, raising US$1.63 billion. The deal is one of
the Largest Chinese Tech IPOs of the Year in the
U.S. According to Pinduoduo, the fund raised will be
used mainly to expand the company's business
operation, promote research and development, and
enhance its technology infrastructure.

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BUSINESS MODEL
PINDUODUO
.
RAPID GROWTH OF MARKET
KILLER CONTENT & BUNDLING
SERVICE
PRICE
OPEN INNOVATION
DOMINATION OF THE MARKET
EVOLUTION.
INITIAL MARKET FORMATION
DOMAIN
TARGET GROUP
INTERACTIVE SYSTEM

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MARKETING STRATEGY
According to people’s role in information
transmission on Pinduoduo platform on
Pinduoduo platform, they can be divided into
four categories:
1) super-star,
2) key opinion leader (referred to as KOL)
3) a location-based relationship related parties
(referred to as LBS related parties) (Such as
fellow villagers/neighbors)
4) friend of a friend (referred to as FOAF)
The importance of the relationship has been
highlighted as a major marketing ingredient of
success for any business enterprise. In a
sense, the role of social media enabling
customers to talk to one another is an
extension of traditional word-of-mouth
communication.

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USER INTERFACE

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Steps to complete a team purchase on Pinduoduo
1
User can also claim Free products for
getting users to follow Pinduoduo
official accounts, Short term coupons to
encourage flash purchasing, Lotteries,
where users can win products for a very
small fee and Leaderboards to track the
most rewarded users on the platform
4
Once a user has found a product, they’ll
see that it’s available for two different
prices: one as an individual buyer, and
one that’s discounted according to how
many other buyers the user can unite
with on a “shopping team.”
2
User will then create a product code for
that particular product and post it to
their social media profiles, such as
WeChat. Their friends and followers can
then join them to form a team, which will
unlock a discounted price for each
buyer.
3
A user will open up Pinduoduo and
likely notice a product that’s
catches their eye, thanks to a
highly intelligent algorithm that
personalizes each user’s feed.

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COMPETITORS
According to market research
consulting company eMarketer,
Pinduoduo is the third largest e-
commerce player in China,
holding 5.2% of market share,
following Alibaba and JD.com,
which hold 58.2% and 16.3% of
market share respectively.
Pinduoduo achieved a mere
0.1% of market share when it
first entered the market .
The number of active buyers of
the Pinduoduo platform has
reached 415 million annually and
its gap with Alibaba & JD is
shrinking.
(millions)

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SWOT ANALYSIS
OPPORTUNITY
• Rising consumption
power of lower-tier cities
and rural markets provides
huge opportunities for
Pinduoduo.
• High Internet penetration
and large numbers of
social media users allow
Pinduoduo to build its
customer base quickly.
O
STRENGTH
• Backed by Tencent,
users can easily share
deals on WeChat platform
and easily bring others into
the fold; it can gain high
traffic with relatively lower
costs.
• Customers can buy
products at a cheaper
price, while retailers can
clear inventory.
S
WEAKNESS
W
THREAT
• Faces increasing
market competition -
Alibaba and JD.com
have tapped the group
buying market.
• Pinduoduo’s business
model is not in line with
the consumption
upgrading trend in
China
T
• Generates revenue
mostly from
advertisement but not
from products; its
business model may not
be sustainable in the long
run.
• Depends too much on
WeChat to spread the
deals and generate new
orders

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