What’s the secret behind Pinduoduo’s fastest IPO in history?
In terms of GMV and active users, Pinduoduo is the fastest-growing e-commerce platform in China. It has become the third-largest e-commerce platform in China after Taobao & Tmall, and JD.com.
Pinduoduo reached 300 million users in less than THREE YEARS. On July 26, 2018, Pinduoduo was officially listed on NASDAQ in the United States, with a market value of $29.58 billion.
For a similar achievement, JD.com used ten years, Vipshop used eight years, Taobao used five years, Pinduoduo used two years and three months. Also, Pinduoduo was considered to have created a unique trend of "social e-commerce."
Simply saying, Pinduoduo is another e-commerce platform that sells affordable products, but it is very different from Taobao, JD, Amazon, or eBay. What is unique about Pinduoduo? Let's take a look!
Social E-commerce:
The rapid rise of Pinduoduo made people recognize social e-commerce for the first time. Its marketing strategy combines social networking, discount, and gaming features all in one.
Talking about social e-commerce, we had to mention Tencent first. As an investor of Pinduoduo, Tencent has already entered into several partnerships with Pinduoduo, enabling the company to utilize its network with QQ and WeChat to obtain a robust market of social media users.
With the feature of "砍一刀 (Kan Yi Dao)," users get discounts on products by distributing links and letting others click on the links. The communication and sharing of products have formed Pinduoduo's unique new social e-commerce mindset. Pinduoduo makes users become platform salesmen through various social games, such as group sales, price-cutting, sharing, live streams, etc., to expand the platform users and sales scale. At the same time, the users themselves get discounts or commissions with sharing.
The social influence of acquaintances is a base of the design of social e-commerce. At the same time, the goods with lower prices attract customers quickly, and the message spreads quickly based on the WeChat relationship chain.
Targeting Market and Product Positioning:
Pinduoduo's user base is comprehensive. The company targets small-town and rural markets, including nearly 300 prefecture-level cities, 2000 counties, 40000 towns, and 660000 villages.
Pinduoduo's market targeting strategy is slightly different from other well-established e-commerce platforms. Pinduoduo has successfully bypassed the main battlefield of the first and second-tier cities of JD.com and Taobao; and took small cities, counties, and towns as the key market.
Pinduoduo's goal is "for the consumption of the majority of Chinese people." According to the survey, 90% of Chinese families have an annual income of less than 200,000 RMB, and cost-effectiveness is still the primary consideration when consuming. Pinduoduo is keen to target a group of people who are not yet covered by e-commerce giants but have a massive demand for online shopping. It is aimed at the almost forgotten price-sensitive users. The precise positioning of the customer base combined with the fantastic price is the most significant advantage of Pinduoduo.
The age structure of Pinduoduo's active users is still relatively young, with users aged 18-35 accounting for nearly 70% of the total. As of June 2020, the percentage of users aged 26-35 increased by 2.2% Year-over-Year. While the rate of users aged 18-25 declined since September 2019, down 1.6% Year-over-Year.
Overall, Pinduoduo has a clear target audience, differentiated product positioning, and an innovative social e-commerce strategy, working on increasing cooperation of mid-to-high-end brands and overall platform supervision.
Another trend is that social media is no longer simply a platform for sharing and communication in China but has evolved into super applications that can rival or even surpass e-commerce sites. Massive opportunities are now flooding into Chinese social media such as WeChat, Douyin (The Chinese TikTok), and KuaiShou. How to seize the opportunity has also become the focus of the businesses in China.
