Pinduoduo’s success, these factors are indispensable

Posted by Admin on May 11, 2021 in Chinese market

Pinduoduo, established in September 2015, is a third-party social e-commerce platform focusing on c2m gruop shopping. By initiating group buying with friends, family and neighbors, users can buy high-quality goods at a lower price and experience more benefits and fun. The social concept formed through communication and sharing has formed Pinduoduo’s unique new social e-commerce thinking.

On April 9, 2020, APP Annie, a third-party data platform, released the list of global popular applications in the first quarter of 2020, showing that Pinduoduo Mau (monthly active user) has surpassed Taobao. In recent years, Pinduoduo has developed rapidly. So why is Pinduoduo developing so fast?

Cheap commodity price

In terms of price, the price of goods on Pinduoduo platform is much cheaper than that on Taobao and JD, and the number of goods purchased is less, you can also enjoy the package mail service, and sometimes there is a situation of 1 yuan second kill, which attracts a large number of consumers in the third and fourth tier cities.

In addition, Pinduoduo will spend more than 10 billion yuan to subsidize the big brands in the whole network, including apple, Xiaomi and other brands. On the basis of the cost price, Pinduoduo will pay for the subsidy. From clothes, shoes, skin care products to TV, air conditioner and refrigerator, there are many things to participate in the activities, so as to attract more consumers. And they guarantee: all the goods marked with “10 billion subsidy” are authentic. Guarantee measures are: unite China Life Insurance launched a genuine insurance, false one compensate 10. In general, the 10 billion subsidy is the price after the platform makes profits, which directly reduces the price to attract consumers.

Group buying and distribution

Group buying mode, many people join this group buying activity the price can be preferential. Many consumers in the group buying, in order to make this activity success, they will reshare these information to Wechat, which has also played a great role in Pinduoduo’s user growth.

Distribution mode, in short, when you become a distributor, if users buy goods from you, you can get a rebate. From this point of view, it seems that the users on this platform are also businesses. For this kind of distribution mode, users only need to move their fingers to complete things, most of them are willing to do.

Tencent’s support

Another reason why Pinduoduo can be promoted on a large scale on Wechat is that users can invite friends to help bargain so that they can get the goods they want for free. This kind of welfare greatly improves the participation of users. From the listing of Pinduoduo, in terms of shareholder structure, Huang Zheng, as the founder, accounts for 50.7% of the shares, while Tencent, as the second largest shareholder, accounts for 18.5%. It is not difficult to find that the development of Pinduoduo over the past three years is inseparable from the Tencent platform, and a large number of users place orders through Wechat. Because of the existence of Tencent, Pinduoduo’s customer acquisition cost is lower. Pinduoduo’s rapid development is inseparable from the strong support of Tencent, the second shareholder.

It took 10 years for JD, 8 years for Vipshop and 5 years for Taobao to go public. Pinduoduo was established in April 2015 and listed in July 2018, which took only two years and three months.

Pinduoduo’s success has a lot to do with its preemption of the sinking market. There are not many people in China who can spend more than 50000 yuan online a year, most people may spend thousands of Yuan online, with an average of 1000-2000 yuan. And Pinduoduo provides good and cheap goods, which can just meet their basic needs of daily consumption.

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