At the turn of 2020, Pinduoduo finally embraced the live streaming trend as well after seeing Alibaba and others derive bigger and bigger portions of their revenue from it. Farmers, in particular, benefitted from the solution as they could show prospective customers how their produce was made. For instance, iPhones on its platform were often heavily discounted in order to attract tier one and two city customers. Right from the start, Pinduoduo had to battle the distribution and sale of counterfeited products. One method of cracking down on those sellers was to label them in quality ranks A, B, C, and D, in which A is equal to the worst.
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The business model of Pinduoduo is dependent on users sharing products with their network, which effectively lowers the customer acquisition cost. 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. For this reason, we do not think that revenue is a very meaningful metric to compare the three companies, although Alibaba and Pinduoduo can be evaluated against one another in this regard. Turning to the two 3P-dominant companies, we see that Alibaba’s total revenue significantly exceeds Pinduoduo’s, with revenue from Alibaba’s core commerce segment being 7.3 times Pinduoduo’s total revenue in 2020.
Alibaba VS Pinduoduo: Who will win the Chinese e-commerce market?
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. Through this, brands can remove the hassle and additional costs of using a middleman. It also enhances the consumer journey by adding gaming elements and giving out coupons and rewards. Pinduoduo is also doubling down on its agriculture venture, unlocking a new growth engine. It expects 1 trillion yuan (around $150 billion) in annual agriculture GMV by 2025.
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So, if you want to generate visibility for your Pinduoduo shop, platforms like WeChat, Weibo, or Douyin can help you achieve this goal. Over the years, this social commerce app has utilized third-party checkout methods like WeChat Pay and Alipay. These virtual wallets have given Pinduoduo more access to tech-savvy shoppers who prefer complete digital transactions.
The fastest growing platform in China — Pinduoduo
- Pinduoduo is also doubling down on its agriculture venture, unlocking a new growth engine.
- The Free Pass Card enables users to enjoy the group-buying discount without having to form a team.
- As of 2020, Pinduoduo’s annual active buyers reached 643 million, and Taobao and Tmall’s is 755 million, a difference of 100 million.
- Price to earnings (P/E) ratio measures a stock’s valuation by dividing its share price by its earnings per share.
- This incentives users to bring friends and family onto the platform in order to access cheaper prices.
JD.com has reportedly also put billions of yuan behind a subsidy programme for merchants – a move that Pinduoduo itself used in 2019 as it fought to gain headway against incumbents Alibaba and JD.com. The move initially sent JD.com shares into decline as investor confidence faltered (the same situation that befell Pinduoduo after it launched its own subsidies) but JD.com’s stronger-than-expected Q results suggest that the strategy is working. While cheap products are only one prong of Pinduoduo’s success alongside its effective use of social connections and catering to an under-served market, its pricing has undeniably been an advantage as Chinese shoppers spend more cautiously. For consumers in China’s rural, ‘lower tier’ (i.e. smaller) cities, WeChat is a place of information and connection, and so this combined with Pinduoduo’s low prices allowed Pinduoduo to take hold within rural communities in a major way. Pinduoduo has seamlessly integrated its platform with major social networks in China and created a highly engaged social buying ecosystem.
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Pinduoduo’s main users from these low-tier cities earn less salaries, they also spend less on housing, leaving them income available for frivolities. Unlike their urban counterparts, consumers from rural areas also have less entertainment options, they are more willing to collect discount buddies, participate in sweepstakes, and join online virtual games as their social entertainment life. Many of Pinduoduo’s users only became internet what is csr users in recent years, and use the app not only for shopping, but as a way to spend their free time. It’s no coincidence that founder Huang “Colin” Zheng, an ex-Google engineer, had prior startup experience on a consumer electronics e-commerce site as well as a WeChat based role playing game company. This is evident in many game-like features that Pinduoduo uses to re-engage users, including special deals and promotions.
It has also partnered with third-party online payment service providers such as QQ Wallet, Alipay, and Apple Pay to facilitate payments. Last August, the company started Duo Duo Grocery which is a next-day grocery pickup service that allows users to order products online and collect them from designated pick-up points the next day. Community group buying has seen a rapid shift in fresh produce and grocery shopping habits in many parts of China. 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) hit a record of 868.7 million, up 10% compared to 2020.
It wanted to defeat Alibaba with its self-operated quality assurance and the high efficiency of self-built logistics, but it failed. Pinduoduo usually attracts less attention than Alibaba (BABA -0.79%) and JD.com (JD -0.94%), the country’s two largest e-commerce companies. What makes Pinduoduo so reliable for the common person is this power of relatability. The platform is built, run, influenced, and validated for and by people like you and me. This by and large works wonders in specific communities and for people residing in tier two and three cities who aren’t as exposed. If you are still wondering what is social commerce, check out this video below.
EM equities have been “all about India” over the past few years — a refuge for EM and global investors against a backdrop of considerable uncertainty (the path of US interest rates, China’s economy in a funk). While we also dream big, our investment process demands rigorous attention to valuation. Almost everyone believes that Alibaba and JD.com have reached the ultimate limit of China’s e-commerce and leave no room for e-commerce startups.
These opinions may differ from those of other Invesco investment professionals. The MSCI Emerging Markets Index captures large- and mid-cap representation across 26 Emerging Markets (EM) countries. With 1,198 constituents, the index covers approximately 85% of the free-float-adjusted market capitalization in each country. Environmental, Social and Governance (ESG) considerations may vary across investments and issuers, and not every ESG factor may be identified or evaluated for investment.
Pinduoduo, which can be roughly translated to “Together, More Savings, More Fun.”, is an online marketplace that promotes group buying. At the same time, it should also be noted that Pinduoduo’s rapid growth is at the cost of a huge deficit. The company lost 7 billion yuan last year and 4.1 billion in the https://www.1investing.in/ first quarter of this year. There is no doubt that in terms of the number of brands and long-tail products, Pinduoduo cannot be compared with Alibaba in a short time. The e-commerce masterpiece has optimized simple economic rules of scale to expand its presence and to seem appealing to the masses.
