pinduoduo business model
First of all, most of these merchants are small manufacturers or low-end sellers that cooperate with small manufacturers. None of these promotional hooks and viral strategies would work if the fundamental user experience wasn’t itself engaging. Of course, the introduction of high-end suppliers and brand companies should also be promoted, but Alibaba and JD.com’s Dashan are in front, and their conflict with the main station’s team play may be a difficult problem to solve gamification with weak sharing that emphasizes interactive interaction within the station. 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. Interestingly, compared with the general e-commerce business-driven characteristics, Pinduoduo has strong product-driven characteristics, and excellent product design and gamification directly contributed to its success. The business Pinduoduo is a third-party social commerce platform, mainly providing group buying offers at reduced prices. relying on WeChat’s huge flow welfare, the social fission gamification has made Pinduoduo’s traffic exponentially increase, but it also buried hidden dangers. Pinduoduo was founded initially back in 2015 as Pinhaohuo (PHH). Business Overview. Active users: 585 millions, with 167 million increase YoY. And how did Pinduoduo achieve it in the face of such large established competitors? Currently, I am the CEO & Co-founder of Appnext, a leading on-device and in-app discovery platform. It is also important. So we decided to dig extremely deep about this company. This balancing act applies not just to product design, but to your distribution, business model, and even what categories you operate in. ... PDD’s real innovation lies in its business model, and that is the element that its bigger rivals can mimic. Pinduoduo’s business model is largely misunderstood in the West, it’s simply viewed as another e-commerce company. How to build social+. Pinduoduo puts new spin on group buying Does Pinduoduo have to step on it again at the same pace, or a new way? Pinduoduo was initially founded in early 2015 as yqphh.com, or Pinhaohuo (PHH, “piece together good goods”). The basic characteristics can be summarized as using discounts and cash stimuli to induce users to share and continuously spread in the user’s social relationship chain, so as to achieve the purpose of acquiring new users and activating old users. Pinduoduo. Founded in September 2015, Pinduoduo is the fastest growing e-commerce startup in the history of China, attaining a GMV of $15 billion only two years from launch, a milestone that took incumbents Alibaba and JD.com 5 and 10 years to achieve. First we downloaded the App and experienced it first hand. Many researchers and entrepreneurs reached out to us with questions about their new group-buy business model. It’s the combination of the viral acquisition loop and the addictive shopping experience that has caused Pinduoduo to become bigger than eBay in just four short years. The shopping scenarios and shopping guides adopted by traditional e-commerce can be roughly summarized into the following categories: The difficulty of satisfying the demand with clear objectives, the demand with ambiguous objectives, and the goal with no purposeful loitering increases in turn. Going by the common classification of China’s municipalities into “tiers” of socioeconomic activity, about 60% of Pinduoduo’s users come from cities in the third-tier and lower, creating huge opportunities for the … This social sharing of deals is primarily done on WeChat, the super app that is used by a billion people in China. In this way, Pinduoduo is more like a social sharing driven version of Costco or Dollar General. I cover the evolution of the mobile marketplace and the app economy. Secondly, this is a new platform and new competitive opportunities. China. The low-price strategy allows Pinduoduo to take over the low-end supply chain. This is evident in many game-like features that Pinduoduo uses to re-engage users, including special deals and promotions. Compared with the branded products on the market, the price is much lower. Its top competitors include Alibaba’s Taobao, Tmall, and JD. WeChat’s parent company Tencent, recognized Pinduoduo’s potential and became an investor in 2016, promoting Pinduoduo and turbocharging its user acquisition. This platform has become a mainstream online shopping application. Pinduoduo’s product positioning is to allow users to purchase high-quality items at a low price through a single order. To break through the supply chain, many efforts should be made to develop the C2B model. Pinduoduo is the fastest growing e-commerce startup in the history of China. In a September article on Pinduoduo in Wired magazine, one such buyer, a 46 year old housewife and nanny from rural inner Mongolia, was quoted as saying: “I have to be careful not to use this app too much. PDD is a smaller company than JD in terms of revenue but has a larger market capitalization. Founder Colin Huang has mentioned that their strategy is the “Costco+Disney model”. Pinduoduo has doubters Due to its discount model, the company mainly sells cheap products to lower-income shoppers, especially in China's third- and fourth-tier cities. The main purpose of the above two links is to use streamlined design to create a sense of scene when users visit low-cost hypermarkets, to attract users to continue to slide down on the product recommendation page, and finally to attract users to click to enter the detailed page. Would-be buyers have 24 hours to complete a buying group, and the app shows the discount increasing with each additional buyer added. He deliberately sought to combine a game-like experience with e-commerce. Pinduoduo now claims more than 343.6 million active buyers with an annual GMV of RMB 262.1 billion, or $38.5 billion. The advantage of the stranger’s billing is that the order is quickly formed, but the more encouraging way of the product is to initiate the payment of the bill and then share it with friends in the circle of friends. The business is scaling rapidly. Social group platforms (exemplified by Pinduoduo in China) generate a demand-driven commerce ecosystem based on rich, gamified interactions that don't depend on prior relationships in a direct sales business model. This forces the game to continuously update, iterate and create, creating novelty and changeable rewards for users. The above has explained that Pinduoduo has designed the category + personalized product recommendation features around the strategy of low-cost Specials. The complete elimination of the shopping cart design shortens the user’s decision path drastically, because traditionally many users drop off during the checkout process.The whole package defaults to free shipping, reducing user decision-making costs and guiding users to place orders quickly.Pinduoduo Pindian (Group-pay) supports both stranger and friend lists. The purpose of the latter is to attract more traffic through social elements. Digital economy observers outside of China can be forgiven for missing the meteoric rise of Pinduoduo. This will inevitably become a difficult problem that can’t be circumvented on the development path of Pinduoduo-the pit that Taobao once stepped on. Merchants gradually gathered heard about Pinduoduo; new small and medium-sized businesses. The per capita disposable income of this group is lower, more sensitive to price, and the pursuit of cost performance. The direction of business platform efforts. Let’s Break Down Pinduoduo’s Business Model. Afterwards, the core purpose of the page design is to guide the user to make orders quickly. This creates urgency and excitement. Background ; Pinduoduo was founded in September 2015 by Colin Huang, an ex It’s just that the two have different approaches. 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. The growth story behind Pinduoduo is nothing short of impressive. Pinduoduo business model replies on social e-commerce and is designed to unite more people, buy better things at lower prices, and experience more benefits and fun. Pinduoduo, on the other hand, gives the user an item feed they can browse that intelligent agents/AI help tailors and makes more targeted over time. Of course, it is even more worth mentioning that what makes Pinduoduo stand out (and also makes it highly criticized) should be its various social fission gamification outside the main process of Pinjang. PDD’s stock has … By taking out the top search box they reduce the frequency that users leave the current browsing item. Why it matters: Pinduoduo is looking to fundraise amid buoyed investor confidence on the company’s first-ever quarterly profit, reported in the quarter ended September.The fast-growing e-commerce platform plans to fund new business channels and cover … These small and medium-sized businesses that have been squeezed out and eliminated during the continuous upgrade are precisely the resources of Pinduoduo’s early merchants. Chinese e-commerce platform Pinduoduo is planning to raise up to $6.1 billion through a convertible notes offering and equity. The merchant has found it, and the next thing to solve is how to find the user. Pinduoduo was found in September 2015 in Shanghai by former Google engineer Zheng Huang and is a third-party social commerce platform that focusses on connecting manufacturers, suppliers and retailers with end-consumers in the B2C market. In fact, Alibaba already did. The author believes that the main supply chain of Pinduoduo in the future may be in the form of one to several super strong products corresponding to one manufacturer. But the lessons of building a socially shared, dynamic experience where the use of app itself drives consistent re-engagement are more important than ever. If you can buy reliable products at low prices, users in first- and second-tier cities can also become loyal users of the products. The supply chain of small and medium-sized manufacturers is the foundation of Pinduoduo, but it also drags down Pinduoduo’s further upgrade. Its stock is also underfollowed, as it has only 10K followers on Seeking Alpha compared to JD’s 84K and BABA’s 343K. The reason is that most people’s pursuit of high-quality goods will not cover all aspects. Many original waist and tail merchants have the opportunity to become head merchants on this platform, and the platform’s low-price strategy is bound to tilt its traffic resources to low-priced goods, so merchants Active profit making is the most effective means of competition in the new environment (compared to the complex operations of other platforms). Let’s see how Pinduoduo guides users in this process. I have more than 17 years of experience founding companies in the digital space, focusing on the future of consumer internet, mobile and marketing. In the e-commerce business model, a platform generates revenue through a commission on every transaction. The replacement and mutual promotion of the means (red envelope subsidy) and the purpose (guided order placement) are also subtle. If Huang could find a way to make buying the most mundane everyday household items exciting and fun, then app developers everywhere can try to find ways to do the same with their apps. Here is Huang’s core insight: that the mobile shopping experience is based on browsing, not searching, and that you could push deals rather than items. Pinduoduo operates a mobile e-commerce platform in China, with a wide range of products. The same goes for the ultimate models of Netease Yanxuan, Xiaomi Youpin and Beijing-made. If other e-commerce is using user interest preferences to guide users to place orders, Pinduoduo is using low-cost explosions to guide users to place orders. While the company has invented the ultimate social shopping experience through its low-cost strategy + social fission gamification this precise strategy has also become the barrier to growth after it has reach the current scale. As long as the attractiveness of the low price is strong enough, the shortcomings of poor accuracy of product recommendations become very small-the user’s threshold is low enough, then the user’s interest preferences that need to be met to cross this threshold are simple enough. And what can Pinduoduo bring to these businesses? Introduction – Pinduoduo and its business model. The business model ‘TEAM PURCHASE’ ... Duo Duo Farm operates on a tripartite partnership model involving Pinduoduo, local provincial governments, and agronomic research institutes (refer to Figure 3). © 2020 Forbes Media LLC. In a September, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights. Pinduoduo builds on this new model, supporting merchants by supplying consumer insights, R&D suggestions and preferences to help them tailor-make products for their targeted customers. Combined with the core gamification, the basic shopping process of a Pinduoduo user should be: Homepage-flip Category tab page (or click the recommended icon at the bottom)-look at the product recommendation list-view product details-initiate a single order-payment is successful. Opinions expressed by Forbes Contributors are their own. But not everyone is impressed with the company’s business model. The company was founded back in 2015 and has grown into a $135 billion market capitalization e-commerce powerhouse in a short time span. Today Pinduoduo’s $40+ billion market cap is the equal of JD.com and its 366 million monthly users and 536 annual active buyers are both second in China only to Alibaba. The impact of this consumption escalation movement on consumers is irrespective of the impact on small and medium-sized businesses. Recently, it has appeared with much greater frequency in my news feed in this initialized form: PDD. 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