This function also helped Pinduoduo to displace Taobao from the No. 1 position of e-commerce apps in just two years. According to 2022 market data, Pinduoduo surpassed JD.com as the second-largest Chinese e-commerce platform. With over 751.3 million monthly active users engaged in online shopping, it’s only natural for global product managers like you to develop an interest in the app. Based in Shanghai, Pinduoduo allows users to share what they want to buy on social media platforms like WeChat to form “shopping teams,” which helps them get lower prices.

The advertising platform also covers video ads, through browsing rather than searching. Merchandise sales revenues represented about 10% of the company’s revenues in 2020, per its financials. Productmint.com provides tailored content on all things business and tech. The site arose from my fascination with how modern-day businesses utilize technology and product-led thinking to become dominant players in their industry. Additionally, the farmers can then also promote their produce through the platform’s live streaming solution. Lastly, Pinduoduo itself also offers various training courses to established and new farmers.

How Pinduoduo Works compared to WeChat and QQ

The in-app game is aiming to mimic a real shopping experience how to read and interpret trading charts for beginners for the users in order to maintain as longer as the user retention. The Brand Card is aiming to promote the branded products on the platform. This is important for the platform that most of the Chinese consumers reply heavily on the reviews and recommendations of the items from the existed buyers to make decision. It utilizes the social networking to connect like-minded shoppers and various gamifications to draw so many users gradually addicted to the platform.

Being at the pulse of time and having a state-of-the-art online presence will allow you to join the digital playground in China and around the world. Pinduoduo’s transaction fees are considerably lower compared to other platforms like JD.com and Taobao, which charge anywhere between 2 to 10 percent per sale. As of the time of writing, the commission fee stands at 0.6 percent, meaning if a product is sold for $100, a merchant has to pay $0.60. This, in turn, significantly increases conversion rates on the platform. Having one of the first ad spots is thereby an extremely lucrative spot for merchants. The actual placement, as well as the price paid by merchants, is ultimately determined via an online bidding system.

Whether it’s crafting compelling advertising campaigns, utilizing social platforms, or collaborating with relevant KOLs, we have all the digital solutions you need. velocity trade Contact us today, and let us help you navigate the intricacies of China’s sneaker business scene. Since Pinduoduo represents a unique target market of mostly low-income households with lower levels of education, there is still a huge growth potential for the platform to gain even more market share. If you look at the data in the graph below, it’s easy to see that the users have evened out between the two genders. In 2022, the male demographic has covered 51.8% of overall users in the platform, while the female user base gets 48.2%.

At the time, the company said the funding will help its “strategic flexibility for expansion to bring more interactive experiences and value-for-money products to our users.” “They (PDD) have made no in roads into existing market share of tier 1 cities,” Jacob Cooke, CEO of WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told CNBC. In 2019, Alibaba had added only 39 new projects, the lowest since 2014. The e-commerce platforms represented by Juhuasuan have become the signature products of Alibaba group again.

Before you launch any campaigns to advertise your PDD shop, conducting a market study is a crucial step if you want a successful venture. This procedure allows new marketers to grasp the current trends and customer behavior within their industry. It’ll also give your team more insight into resonating with their potential audience.

Pinduoduo revenue generation

The rivalry between Alibaba and Pinduoduo reached new heights in March when employees of the latter reported that they were blocked from accessing Taobao. To further establish itself and take advantage of increased online activities due to the novel coronavirus, popular forex chart patterns Pinduoduo raised $1.1 billion in a private share placement. In June, 14 store owners protested in front of the company’s headquarters in Shanghai over what they deemed were inappropriate rankings assigned to them. Influencers can be a great way to reach a wider audience and increase brand awareness on Pinduoduo. Influencers will often have their fan base and followers, who are more likely to engage with their content. Since there is no search bar or conventional methods for finding out specific products, Pinduoduo may confuse you at first glance.

• This encourages buyers to share links to the item they are buying with friends and family or over social media.
• Collaborating with KOLs can give your brand or product a boost in reputation and credibility.
• Tencent, the tech giant behind We Chat, and other investors funded more than 110 million USD in 2016.
• Since Pinduoduo represents a unique target market of mostly low-income households with lower levels of education, there is still a huge growth potential for the platform to gain even more market share.

How Pinduoduo makes money

These three analysts increased their price targets by 3% on average, consistent with the move in PDD shares the day after the release. The average of their price targets indicates an upside of nearly 15% in PDD shares in relation to their Mar. 24 closing price. There’s obviously the potential for geopolitics to influence the business. One of the more visible things is the de minimis provision in the US, which allows parcels to go into the US without paying tax if it’s under $800 of value.

So back in 2020, in the years before then, they were sometimes spending more on sales and marketing than their total revenue. The question is really, will that same model work with Temu, and will it work with American shoppers and European shoppers. All the e-commerce platforms are tremendous in China and could generate tons of sales. You need to answer all these questions with a reliable agency in China to make the right decision.

Sales

Obviously, Tmall and Taobao benefit from the strike force of Alibaba. But Pinduoduo is reaching the fastest user growth among younger Chinese generations, and especially the Chinese Gen Z. As previously stated, most of these users came from lower-tiered cities. Pinduoduo, in order to establish itself with more affluent users in cities like Beijing and Shanghai, began onboarding international brands onto its platform. Dubbed Duoduo International, the platform would host authentic products from brands like Apple or Nike.

In 2019, nearly 600,000 merchants sold farm produce through Pinduoduo. That translated to some 12 million farmers who supplied their fruits and vegetables to the merchants. In August 2020, Pinduoduo pledged to sell $145 billion worth of farm produce annually by 2025.

• Although Pinduoduo claims to have several channels to lower product prices, increasing product quality and counterfeit complaints still raise concerns for a possible low-cost and low-quality association.
• Our estimate is that they will lose over $4bn in 2023 full year in order to get the business off the ground.
• It has also partnered with third-party online payment service providers such as QQ Wallet, Alipay, and Apple Pay to facilitate payments.
• A huge turning point occurred in the third quarter of 2017 when the weekly active rate, penetration rate, and open rate of the Pinduoduo app all surpassed those of JD.

How to Know if You Should Choose Pinduoduo or Alibaba?

The story of Temu is really a story of how dominant Chinese manufacturing continues to be. We’ve seen geopolitical tensions between the US and China, but in spite of all of those trends, you’ve seen these companies shipping Chinese manufacturing almost directly to consumers in the west. That is a testament to the continued strength of Chinese manufacturing base. I have found that their marketing campaign has been very, very dedicated, so I think that may have kind of given me rose-coloured glasses, so that you can’t see beyond the fact that you’re getting a great deal. The only difference between this that I bought in Temu for 11 euros and the product that was being advertised by the company here is that they had maybe one or two extra middle layers. What seems worth noting, though, is there have been other companies asked to comment on what’s the impact been on their business.

Just weeks after the protest, in July, Pinduoduo went public on the Nasdaq stock exchange at a valuation of $24 billion. As a result of its astronomic growth, Pinduoduo was able to raise another massive funding round. This time, in April 2018, mostly existing investors poured in another $1.4 billion into the company, valuing it at $15 billion.

The company sells everything from groceries and home appliances to iPhones. The app has quickly grown since it was founded in 2015 with 195 million monthly users, according to Tech Crunch. Pinduoduo’s active buyer numbers make it one of the largest e-commerce platforms in the world.

Pinduoduo is a Chinese e-commerce channel where users can participate in group buying, which typically involves pooling with others to purchase items at lower prices. It integrates social mechanisms that encourage shoppers to share deals with contacts, leveraging their social networks to drive down costs through bulk purchase discounts. PDD pioneered the concept of mixing online shopping with social media interaction between sellers and their consumer base. The bold business decision of the company has led China to quicken the transition of the country’s commerce sector from offline to online. Meant to be a “virtual bazzar,” Pinduoduo is an e-commerce platform that allows users to share the shopping experience with friends in exchange for discounts. However, there is massive potential for companies to gain traction in lower-tier cities in China in the upcoming decade which will be a key driver of revenue growth.