, Pinduoduo stormed the e-commerce landscape in China with a bang and has already outperformed by some metrics in the country. Their next goal: to become the largest platform for agricultural products in the world.
“We provide a platform where merchants can sell their products directly to consumers. We serve almost 800 million users,” the company’s vice president, Andre Zhu, explained in an interview with Efe.
In 2020, Pinduoduo put its number of annual active users – those who place at least one order – at 788.4 million, ahead of Alibaba’s 779 million. It is a first victory against the great Chinese e-commerce giant, which, however, is still ahead in other metrics such as monthly active users.
Though still far from $635 billion, Pinduoduo staged a $1.7 billion New York IPO in 2018 and already has a market capitalization of about $170 billion.
How has a company founded in 2015 managed to grow so much in such a short time? “We implemented the right idea in the right place at the right time,” says Zhu, who says that in the middle of the last decade there was “a perfect opportunity” to push a platform like Pinduoduo, accessible only through a mobile app.
At that time, China was in full transition to the mobile internet, to which was added the popularization of today’s ubiquitous payments through the ‘smartphone’ and the development of logistics systems.
agricultural focus
Beyond that, Pinduoduo was born with a different focus, focused on agricultural products, a sector in which Zhu sees “great potential”, partly because it is one of the least digitized: even today, with the popularization of this type of platforms, the internet penetration rate in that industry is around 7%.
One of the services that has attracted the most attention from consumers and the media in recent times is Duoduo Grocery, a kind of virtual supermarket for local fresh products that emerged in response to the trend to make purchases online due to the coronavirus pandemic. covid and which is already present in more than 300 Chinese cities. “More than 12 million farmers already sell directly to consumers” through Pinduoduo, Zhu reveals.
Collection point, key to lower prices
One of the keys to its success is the ability to offer lower prices by leaving the products at a collection point instead of taking them to the customer’s home, since the so-called “last mile” of the delivery represents up to 30% of the logistics cost.
He Shuang, one of the farmers who grow the popular pomegranates in Huili county (central Sichuan), explains that working through Pinduoduo guarantees him “strong and predictable demand” for his products, something that was not the case when working with the traditional distribution channels.
Beyond finding products and purchasing them, users also find mini-games and live broadcasts on Pinduoduo
The Duoduo Grocery model, which already has important rivals such as Meituan Select, could be an example for similar services in other countries, says Natalie Wu, an analyst at Haitong International Securities, citing the increase in online food purchases both in United States as in Europe in the framework of the pandemic.
Another of the issues in which the emergence of Pinduoduo could be an example for e-commerce platforms in other countries is the focus on interaction: “No consumer would say no to getting better value for money and having an entertaining experience while shopping,” Wu says. And it is that, beyond finding products and acquiring them, users also find mini-games and live broadcasts on Pinduoduo (‘livestreaming’), in addition to facilitating purchases between groups of friends, something that also helps to concentrate demand and allows vendors offer more competitive prices.
The interaction also reaches companies: Zhu gives as an example a Chinese company that sold its robot vacuum cleaners for about 1,000 yuan (154 dollars, 127 euros) and that, after seeing what its customers thought of its products, eliminated rarely used functions and he managed to reduce the price to about 300 yuan (46 dollars, 38 euros) and thus increase his sales.
Pinduoduo assures that it is precisely this connection between customers and sellers that allows the prices of the products to be low and describes as wrong ideas the information that attributes them to aggressive subsidies offered by the company.
The largest agricultural platform in the world?
Despite its success in China, Pinduoduo still does not have an international expansion plan: “We are focused on the Chinese market, we believe there is still a lot of potential to develop,” says Zhu.
However, they do look abroad, specifically to attract merchants from other countries to sell on their platform: “There are opportunities to work with international merchants. We offer them to connect them with almost 800 million Chinese consumers, it is a huge market for any seller “, indicates the vice president of the company.
The idea is to sell fresh products “originated around the world” – for example, Spanish olive oil or Argentine shrimp – to Chinese consumers “at an affordable price”: “We are already the largest e-commerce platform for agricultural products in China”.
The next step? Zhu does not skimp on ambition: “What we aspire to is to become the largest platform for agricultural products and food in the world.”