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PINDUODUO - a Close Look at the Fastest Growing E-commerce App in China, 2018.08 (WalkTheChat)

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PINDUODUO - a Close Look at the Fastest Growing E-commerce App in China, 2018.08 (WalkTheChat)

  1. 1. PINDUODUO a Close Look at the Fastest Growing E-commerce App in China 1. How fast is Pinduoduo growing? 2. User Demographics 3. Benchmark with other Platforms Source: WalkTheChat Brought to you by: Truong Bomi Cofounder/ CEO
  2. 2. Highlights Pinduoduo went above 100 billion RMB per year of merchandise sold on the platform 2 years after its launch… it took 10 years for JD.com to get there Monthly Active Users (MAU’s) reached 195 million in June 2018: that’s 31% of Alibaba’s MAU’s Pinduoduo users are predominantly female, living in Tier 3+ cities The average order on Pinduoduo is 6 USD, against 30 USD on Taobao/Tmall and 60 USD on JD.com
  3. 3. PDD Growth PDD Growth User Demographics Benchmark w/ other Platform
  4. 4. User Demographics PDD Growth User Demographics Benchmark w/ other Platform
  5. 5. Purchasing behavior
  6. 6. BENCHMARK with other platforms PDD Growth User Demographics Benchmark w/ other Platform
  7. 7. Pinduoduo features There are two words that come to mind when thinking of Pinduoduo: addictive and viral. The App is doing everything to push you to share the App with your friends. And once you did, it does a great job at keeping them hooked. The App combines a bunch of tactics in order to achieve these results.
  8. 8. Group Buying
  9. 9. Free Products
  10. 10. Sure enough, my awesome WeChat friends helped out and installed the App, and on the next day… This can sound like a crazy strategy, but it’s not. The package sells for 99 RMB full price, 79 RMB in group buying. But Three Squirrels makes a heavy margin on this, and most likely only charges Pinduoduo around 20-30 RMB to ship the free product. That’s 3 RMB per high-quality App installs, linked with a WeChat social account. The promotion also leads one person to actually get a delivery, engage with products and share about the experience with friends. This is exactly the kind of strategy that propelled Pinduoduo on the top of the App stores. Moreover, people might keep scanning the QR code after the free product has been claimed. In my case, 25 friends scanned the QR code trying to help me get the free product: that’s a cost of less than 1 RMB per follower for Pinduoduo!
  11. 11. Short-term Coupons
  12. 12. Ask Friends to “Bargain”
  13. 13. Red envelopes + Leaderboard
  14. 14. Lotteries
  15. 15. Customer service messages
  16. 16. Automatic payment
  17. 17. A brief history of Pinduoduo January 2014: Pinduoduo was founded by Huang Zheng (黄峥), a former Google employee September 2015: Pinduoduo receives A round investment from an impressive list of investors, including the former Taobao CEO Sun Tongyu September 2016: B round of funding of 110 million USD, including Tencent and IDG as investors December 2017: Cheetah mobile ranks Pinduoduo as #2 e-commerce App
  18. 18. One might wonder what caused such an explosive growth. Besides all of the tricks we mentioned above, Pinduoduo has one specificity: it is doing exceptionally well in smaller cities (Tier 3 and smaller).
  19. 19. Customer Persona | Small-city FEMALE at 40 Moreover, the majority of the Pinduoduo users are female above 40 years old in smaller Chinese cities. These users are extremely price- sensitive, but they make frequent purchase and they are often in control of purchasing for the whole family. These users might not have much experience with e-commerce purchase, but once they learn how (and bring all their friends into the platform) they can bring long term profits to the Pinduoduo: they have high purchasing power, and are continuously using the App.
  20. 20. Conclusion E-commerce is hyper-competitive, especially so in China. It is important for new players to stand out with unique offerings that attract customers, and Pinduoduo is one such success case, crafting a convergence between social and commerce that discovers and capitalizes on a new source of users in lower-tiered cities. As internet access in China’s rural areas continues to improve, it is likely the bargain-hunting app will sustain growth as its services reach remote areas. It is highly visible in a lower-end demographic area, carving out a niche for itself that thrives with a high-volume trade. Pinduoduo has experienced a meteoric rise to the top of the Chinese e-commerce landscape over the last 2 years. At the core of its success was a strong emphasis on social commerce, viral marketing & retaining users. Although this trajectory is very unique, a lot of brands and platforms can take cues from Pinduoduo’s success. By applying some of these tactics to your own business, you too can have more users with stronger levels of engagement.
  21. 21. Brought to you by: Truong Bomi Cofounder/ CEO

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