Each item has a minimum number of buyers required to complete the purchase. If that number is not met within 24 hours, then the group buy is cancelled and those who have already committed money will be refunded. Find out more at or stay updated by following us on the social media below.
They may not have a lot of money to spend, but they want to take part in the national pastime and, on the way, offer their family members discounts as a way to combat loneliness. The in-app game is aiming to mimic a real shopping experience for the users in order to maintain as longer as the user retention. Member Card are different kinds of the rewarding, aiming to help users save money via vouchers or special discount by sharing amongst their friends.
I’m usually in Beijing, but happen to be in San Francisco at the moment. Originally, we were going to go to the factory and film how it was made. It is a very basic bag, costs about $8, so you can’t expect too much. But it looks about like what I ordered, although it’s a bit smaller. This year, 2023, we think the domestic business is probably on track to generate something like $25bn of free cash flow. And that, on some level, is funding the growth of Temu, at least in the first instance.
That means that 55% still comes from tier three cities or below. “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. “Direct buyer traffic to PDD is primarily generated from word of mouth referrals by its existing buyers as well as the effect of its marketing campaigns,” Shanghai-based Guotai Junan Securities, said in a report from March.
3 Pinduoduo adapts a C2M model
If you look at staffing levels, PDD told us it had about 13,000 staff. In China, all their operating companies are owned by various people. That could https://www.currency-trading.org/ be a problem if there’s any dispute between shareholders and the people who own all these companies that produce the majority of their revenues.
- You do usually have to have some sort of assets or important staff where you’re claiming your headquarters are, and it sort of points to this bigger question about PDD.
- That company has some contracts with operating businesses in China.
- And no one has yet been able to do it and make a lot of money from doing it, although Shein is beginning to show that the model could have potential.
- As much as 65% of the Pinduoduo’s transactions are completed through its WeChat mini program.
- Member Card are different kinds of the rewarding, aiming to help users save money via vouchers or special discount by sharing amongst their friends.
ETOC also provide free educational content to help brands understand more about China e-commerce and digital marketing. Duo Duo Orchard was the first popular game on the platform, users can grow virtual fruit trees, collecting water droplets to water their tree by shopping, browsing, and interacting with other users on the platform. The Mini game is an in-app games to allow users enjoy playing the online game beyond purchasing.
Everything you need to know about Pinduoduo, the fast-growing rival to Alibaba and JD in China
Pinduoduo has captured this chance which helped boost itself through the rural online sales. Since I started following Pinduoduo, the question for me has been, why do they operate the way they do with this extreme secretiveness? At least within China, Pinduoduo has really proven that their business model does work, according to their financial statements.
“A portion of the Company’s buyer traffic comes from its user recommendation or product introduction feature which buyers can share with friends or contacts through social networks such as WeChat and QQ.” Behind that success has been its “social shopping” model that encourages users to share links to items they purchase with friends and participate in group buying. So they’re really an asset-light e-commerce marketplace, all online. Pinduoduo has leveraged its platform and developed the Internet+ Agriculture initiative to facilitate direct sales between small-scale farmers and consumers. The platform makes recommendations to consumers based on their shopping preferences due to which it is able to aggregate demand and generate large volumes of orders for farmer merchants. This reduces the farmer’s dependence on large distributors which reduces the overall cost and improves the supply chain.
And that also means there’s a pool of tech talent available here in Ireland. Ireland’s also an English-speaking country, and it’s based in the EU. So Pinduoduo is listed on NASDAQ, but unusually, as all these other Chinese companies have done, these homecoming listings to list in Hong Kong and kind of lessen some of their US risk, Pinduoduo has always held off. This is probably the most important thing to happen to global e-commerce in quite a long time. They expanded into this overseas venture, call it September 22. And now they’ve expanded into almost 50 countries globally, essentially leveraging domestic light manufacturing to sell all sorts of things to the rest of the world.
Instead of making multiple trips to wet markets, community group buying programs see orders made on mobile and pick-up arranged at a nearby location. Further, the total number of active buyers on Pinduoduo in 2021 (users who placed one or more orders throughout the year) https://www.forex-world.net/ hit a record of 868.7 million, up 10% compared to 2020. And on Sunday, PDD announced it would invest in convertible bonds issued by Hong Kong-listed GOME Retail. The investment will see GOME’s product range, logistics and after-sales customer support integrated with PDD.
But at the same time there are lots of questions about it, the way it was founded, the way it’s structured, the way it interacts with investors. Alibaba took a controlling stake in Singapore-based Southeast Asian e-commerce site Lazada in 2016 and has since invested money in the business to expand its presence in the region. Alibaba also has a separate website called AliExpress that services markets like Europe and the U.S. Pinduoduo launched its U.S. online shopping site as the Chinese e-commerce giant makes its first major push overseas. Pinduoduo has seamlessly integrated its platform with major social networks in China and created a highly engaged social buying ecosystem.
PDD went from zero market share to, we think now, slightly over 20 per cent of the market. There are currently also some categories that have very few products. For example, the men’s wristwatch category had just two products listed. Pinduoduo is now valued at a market cap of $81 billion which means its forward price to earnings multiple stands at around 32x.
Certainly, they couldn’t see the basis for a good return on investment there. So investors are extremely excited about the potential of Temu. What seems worth noting, though, is there have been other companies asked to comment on what’s the impact been on their business. Surely, it’s going to have some consequence, but we haven’t seen any impact to our business yet.
What is Pinduoduo’s model?
Pinduoduo’s active buyer numbers make it one of the largest e-commerce platforms in the world. This active user base also attracts merchants to Pinduoduo and the scale of its sales volume allows https://www.investorynews.com/ the latter to offer competitive prices thereby creating a virtuous cycle. Last year, PDD disclosed that 45% of its gross merchandising value (GMV) came from first and second-tier cities.
The global rise of Chinese cosmetic brands
To get the item for free, the user must share their link with as many friends as possible. The Price Chop mechanism encourage users to get the items that they want for free by sharing with their networking within 24h. The Daily Check-in mechanism is to encourage users open the apps everyday with the redeemable points reward which can be deducted in their item purchasing. It utilizes the social networking to connect like-minded shoppers and various gamifications to draw so many users gradually addicted to the platform.
Business model
We’re in an age where it’s become very obvious that there is an environmental cost to fast fashion and to overconsumption. But over the past two years we’ve seen these companies whose whole business model is premised on us buying more, throwing it away, and updating our wardrobes, filling our cupboards with things that we didn’t even know that we needed or wanted. As of March 2021, Pinduoduo says it has trained more than 100,000 new farmers in how to operate e-commerce businesses and has committed to train 100,000 more in the coming years.