Pinduoduo – WhatsApp Group

Founded just six years ago, Pinduoduo made a big splash on China’s e-commerce landscape and has already overtaken giants like Alibaba on some metrics in the country. Its next goal: to become the largest agricultural products platform in the world.

“We provide a platform where merchants can sell their products directly to consumers. We serve almost 800 million users,” company vice president Andre Zhu explains in an interview with Efeagro.
In 2020, Pinduoduo placed its number of annual active users – those who make at least one order – at 788.4 million, ahead of Alibaba’s 779 million. It is a first victory against the great Chinese e-commerce giant, which, however, is still ahead in other metrics such as monthly active users.

Though still far from Alibaba’s $635 billion valuation, Pinduoduo staged a $1.7 billion New York IPO in 2018 and already has a market capitalization of about $170 billion.

How has a company founded in 2015 managed to grow so much in such a short time? “We put into practice the right idea in the right place at the right time,” says Zhu, who says that in the middle of the last decade there was “a perfect opportunity” to promote a platform like Pinduoduo, accessible only by mobile application.

At that time, China was in full transition to the mobile internet, to which was added the popularization of the now ubiquitous payments through the ‘smartphone’ and the development of logistics systems.


Beyond that, Pinduoduo was born with a different focus, focused on agricultural products, a sector in which Zhu sees “great potential”, in part because it is one of the least digitized: even today, with the popularization of this type of platforms, the internet penetration rate in that industry is around 7%.
One of the services that has attracted the most attention from consumers and the media in recent times is Duoduo Grocery, a kind of virtual supermarket for local fresh products that emerged in response to the trend of shopping online due to the coronavirus pandemic. covid and is already present in more than 300 Chinese cities.

“More than 12 million farmers already sell directly to consumers” through Pinduoduo, Zhu reveals.
One of the keys to its success is the ability to offer lower prices by leaving the products at a collection point instead of taking them to the customer’s home, since the so-called “last mile” of delivery accounts for up to 30% of logistics cost.

He Shuang, one of the farmers who grows the popular pomegranates in Huili County (Sichuan, center), explains that working through Pinduoduo guarantees “strong and predictable demand” for his products, something that did not happen when he worked with the traditional distribution channels.


The Duoduo Grocery model, which already has important rivals such as Meituan Select, could be an example for similar services in other countries, Natalie Wu, an analyst at Haitong International Securities, tells Efe, citing the increase in online food purchases. both in the United States and in Europe in the context of the pandemic.

Another issue in which the emergence of Pinduoduo could set an example for e-commerce platforms in other countries is the focus on interaction: “No consumer would say no to getting better value for money and having an entertaining experience while shopping,” says Wu.

And it is that, beyond finding products and purchasing them, users also find mini-games and live broadcasts (‘livestreaming’) in Pinduoduo, in addition to facilitating purchases between groups of friends, something that also helps to concentrate demand and allows vendors offer more competitive prices.

The interaction also reaches companies: Zhu gives the example of a Chinese company that sold its robot vacuum cleaners for about 1,000 yuan (154 dollars, 127 euros) and that, after seeing what its customers thought of its products, it eliminated functions little used and he managed to reduce the price to about 300 yuan (46 dollars, 38 euros) and thus increase his sales.

Pinduoduo assures that it is precisely this connection between customers and vendors that allows product prices to be low and describes the information that attributes them to aggressive subsidies offered by the company as misconceptions.

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