The scale of user scenario requirements for low-priced goods is actually enormous. Separate shopping sets a higher price, and uses the psychology of the user to take the advantage to guide the user to initiate a single order. Secondly, this is a new platform and new competitive opportunities. In fact, there are some very interesting things that Pinduoduo has invented in the space of e-commerce that Alibaba and JD.com have openly and massively copied (we will cover that in the later part of this article). At the top left of the product map (after sliding down, in the middle of the top navigation bar), the positive user behaviors of other users’ initial orders, successful orders, five-star evaluations, etc., are continuously displayed on the floating layer, and the user endorsement is used to increase the user’s trust in the product. Less intermediate circulation links mean lower intermediate costs and non-branded goods. 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. 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. Pinduoduo can achieve a certain degree of mass customization to the upstream supply chain through the aggregation of consumer demand. If you can buy reliable products at low prices, users in first- and second-tier cities can also become loyal users of the products. This unique business model allows Pinduoduo to carve out its niche at the beginning, but its success depends on the excellent quality of the product itself. As a result, the small manufacturers who originally pushed back the low-end supply chain have achieved the ultimate in single products. With the further development of Pinduoduo, the user group is no longer limited to “Beijing Fifth Ring Road”, and the proportion of users in first- and second-tier cities has gradually increased. First of all, most of these merchants are small manufacturers or low-end sellers that cooperate with small manufacturers. When Pinduoduo’s CEO Colin Huang’s net worth of USD 45 billion surpassed Alibaba founder Jack Ma’s last month, the world still knew quite little about this new e-commerce heavyweight in China. Pinduoduo is a rising e-commerce platform in China. In some scenarios, low-priced goods have great appeal. First, these gamification are still mainly one-sided profit and can not achieve mutual benefit. At first, I genuinely thought it was a new name for Sean “P Diddy” Combs and left it at that. This creates urgency and excitement. By taking out the top search box they reduce the frequency that users leave the current browsing item. 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. Regarding market share, Pinduoduo had achieved the seemingly impossible: organic growth despite a preexisting duopoly. 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. Would-be buyers have 24 hours to complete a buying group, and the app shows the discount increasing with each additional buyer added. The basic shopping guide of Pinduoduo is roughly as follows: category tab + product recommendation, simple user demand screening through category tab, and then promotion of users’ purchasing desire through low-priced recommended products. Also from the beginning of the 15th and 16th years, smartphones have rapidly spread to cities below the third and fourth tier cities, and a large number of sinking users who have been taken into the mobile Internet have brought a huge wave of underutilized traffic benefits. One is to dismantle the whole red envelope, and the task can be achieved faster by grabbing the red envelope. 1 . The quarterly growth of active users is 2X of those of JingDong and Alibaba. 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. 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. 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. Over Pinduoduo’s short history, it has tested two business models. 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. If a friend has a red envelope activity, at the same time, they can also get the amount of their own, mutual benefit, and guide users to share with each other to form multi-directional communication; if there is no red envelope activity, the friend will send a red envelope to the friend, forming a new spread. To break through the supply chain, many efforts should be made to develop the C2B model. A 50 yuan red envelope can form a huge sharing chain, and the most powerful thing is that the amount is only effective if the conditions are met-so, continuous feedback and reluctance to sink the cost will make users find ways to start after the task To complete (of course, the chain of control tasks should not exceed the user’s patience limit); and if the user fails to complete the task, all the previous sharing is just to do the wedding clothes for the platform-the platform gains massive new users through the user’s sharing. The second is the lottery. 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 reason is that most people’s pursuit of high-quality goods will not cover all aspects. © 2020 Forbes Media LLC. 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. For counterfeit goods, the platform can be rectified by strict review and severe punishment; for counterfeit goods, it can be rectified and guided both ways; but for inferior goods, it is subject to the small and medium-sized merchants’ own production capacity, not the platform can do it with a single effort Resolved quickly. Pinduoduo is becoming a major force in China's e-commerce industry. I Was Networking, but He Thought It Was a Date, You Don’t Have to Be First But You Must Be Formative to Win, Inside the Takedown That Put Carlos Ghosn in Jail, Richard Branson — How The Virgin Brand Came To Life, The Damnation of Differentiation: How to Be Seen in an Ocean of Competitors Just Like You, Food Safety and Traceability With Technology, how to make merchants willing to sell at very low prices, how to find the target user group on the buyer’s side. One was called its online direct sales business, which ran under the name Pinhaohuo. Founder Colin Huang has mentioned that their strategy is the “Costco+Disney model”. The purpose of the latter is to attract more traffic through social elements. Pinduoduo was founded initially back in 2015 as Pinhaohuo (PHH). The growth story behind Pinduoduo is nothing short of impressive. Pinduoduo now claims more than 343.6 million active buyers with an annual GMV of RMB 262.1 billion, or $38.5 billion. The replacement and mutual promotion of the means (red envelope subsidy) and the purpose (guided order placement) are also subtle. Background ; Pinduoduo was founded in September 2015 by Colin Huang, an ex But not everyone is impressed with the company’s business model. Let’s take a deep breath and dive into our 3–week research of the Pinduoduo success. Pinduoduo gathers consumer demand and provides small and medium manufacturers with sufficient demand information. It has so many deals that I want to spend all my time and money on it.”. 2019 4th Quarter Operational Loss: RMB 1.34 billions (compared to 2.1 billions YoY). This balancing act applies not just to product design, but to your distribution, business model, and even what categories you operate in. E-commerce is essentially to solve the problem of the connection between people and goods. This retention comes from the continuous re-engagement at the prospect of winning deep discounts. Does Pinduoduo have to step on it again at the same pace, or a new way? Mastering the supply chain is the core moat for e-commerce. The impact of this consumption escalation movement on consumers is irrespective of the impact on small and medium-sized businesses. The low prices and thrill of getting a good deal have made it popular with value-conscious consumers, initially in the smaller cities and rural areas, but gradually in the top-tier cities as well. At this point, the practice of Pinduoduo is very different. Based on this, manufacturers can make reasonable planning of production resources for a certain period of time. The prerequisite for a successful APP is simply whether the business model works, and if the market is large enough for it. But Pinduoduo and other newcomers such as the Little Red Book and Shihuituan are challenging the traditional business-to-consumer model. However the company has proven to be able to churn out unprecedented growth quarter over quarter: 2019 full year GMV (Gross Merchandise Value): RMB 1.997 Trillion, 113% growth YoY. 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. 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. 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. First we downloaded the App and experienced it first hand. Hence, when evaluating e-commerce stocks, one should consider three key metrics. 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. With its “collective buying” shopping model, Pinduoduo has won some impressive victories in a time of overwhelming competition. The name Pinduoduo means “Together, More Savings, More Fun.”  It’s a great summation of the company’s core group-buying value proposition, which has been described as “Groupon on Steroids.”   But there are key differences. For shoppers who love a bargain, it’s an irresistible experience. The same goes for the ultimate models of Netease Yanxuan, Xiaomi Youpin and Beijing-made. Chinese e-commerce platform Pinduoduo is planning to raise up to $6.1 billion through a convertible notes offering and equity. Pinduoduo's latest net profit (on an adjusted basis) signals that the business is approaching critical mass. The purchase bar below shows the two buttons of separate purchase and initiation of a single order. Many aspects of Pinduoduo, from the underserved target markets to the unparalleled distribution afforded by WeChat, are singular and cannot be reproduced. ... PDD’s real innovation lies in its business model, and that is the element that its bigger rivals can mimic. Business Overview. 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). The established e-commerce function is reversed: it’s “Goods find People” rather than “People find Goods.”. Pinduoduo is the fastest growing e-commerce startup in the history of China. Let’s see how Pinduoduo guides users in this process. Specifically every one wanted to know about exactly how they are able to catch up with the big e-commerce boys in only 4 years since launch. These phenomena are what I call “social+” companies: companies that take a single category—from gaming to music to ecommerce—and build an integrated social experience around it. The B2C model Tmall and JD.com have limited support for small merchants at the long tail, and the survival space and benefits of the merchants in Taobao’s tail are increasingly encroached upon. This enables item discovery and a space where purchase decisions are dynamic and can be influenced by other people. It enables these buyers, often women in charge of household purchases, to obtain deep discounts by getting their friends to participate in group buys of items ranging from produce to diapers. 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