Although it has historically dominated eCommerce in China, another of the Asian eCommerce giants has surpassed the giant of : Pinduoduo has broken the milestone and is positioned as the eCommerce with the most active customers in China according to Q4 2020, just released.
Pinduoduo becomes the leading eCommerce in China in active customers
During 2020, Pinduoduo recorded 788 million annual active users in Chinaa concept that measures the number of user accounts that placed one or more orders during this period, regardless of whether the products and services were ultimately sold, delivered, or even returned.
The most striking thing about this data is that it exceeds that of Alibaba, with a total of 779 million active users in China during 2020with which Pinduoduo, in addition to surpassing its great adversary, has also broken with the initial stereotype of being an application focused on consumers from less developed cities and with low purchasing power in China.
In addition, the company assured in its report that Pinduoduo’s fourth quarter 2020 revenue grew 146% year-on-yearmainly due to the increase in online marketing services, as well as the contributions of sales on its platform.
Of course, both companies still have plenty of room to grow, as China managed to reach 989 million Internet users in 2020, according to a report from the country. In any case, it should be noted that In terms of monthly active users, Alibaba still leads with 902 million users as of December 2020while the number of monthly active users for the same month of December of Pinduoduo was 720 million.
But… what is Pinduoduo and why is it so successful?
Some years ago, Colin Huanga Zhejiang University student worked as a fellow for a couple of years at , and then worked for three more years at google shopping algorithm. Returning to China in 2015, founded Pinduoduoand he dedicated himself body and soul to seeing his company grow… until this week when announced his resignation as it ensures that you want to spend your time on science research and food. ChenLei, until now CEO, will become the new president of the company.
Pinduoduo, who also known as PDDit is an eCommerce platformbut with a different approach since its business model is based on two premises: offer low prices for a sector of the population that does not have many economic resources, and the intensive use of especially the instant messaging platform .
You can more clearly imagine how Pinduoduo works by mixing the concepts of Facebook Y groupon. As an example, let’s say that a user searches the Pinduoduo app for any product, from paper towels to bags, sneakers, or even tech items like iPhones.
Finding the product the app will show two prices: the normal price and another lower price that can be obtained by sharing the item link with friends or family on . When the user finds more people interested in making this purchase, everyone can benefit from this group discountwhich can become up to 90%.
From an eCommerce focused on low prices to diversifying its offer
Pinduoduo’s business model helped the company to grow very quickly, achieving great popularity in a very short time: just over three years after its launch, the company achieved one that valued it at 15,000 million dollars (almost 13,000 million euros).
The success behind the growth of Pinduoduo is understandable. On the one hand has taken advantage of the great popularity of WeChat in China for your consumers to spread the word about your offers. This is a model of word of mouth marketing really functional.
Second, a large part of Pinduoduo’s sellers and brands are not recognized, but small Chinese companies, agricultural producers or manufacturers that they do not usually attract large orders, and that they can get sales volume through this platform. Over time, its popularity has led it to also be able to offer well-known products (such as iPhones) at attractive prices.
“Pinduoduo started with produce, with a vision to offer consumers the “Costco + Disney” experience with more savings and more fun.” says Chen Lei, current president and CEO of the company. “Now we have become the largest agricultural platform in Chinaand we hope that Pinduoduo will one day become the biggest grocer in the world.”
By forming part of Pinduoduo, small producers and sellers they may have an additional sales channeland that it is also cheap since they do not have to spend money on SEM positioning to appear in the listings, as it happens in other Chinese alternatives such as Taobao. In Pinduoduo brand awareness is given by the same users who share posts when searching for group deals.
Pinduoduo and live streaming commerce
As we have told you on other occasions, live streaming commerce has become a success in China in the last two years. In this sense, Pinduoduo has launched a live streaming tool called Duoduo live streaming so that companies can boost product sales on their platform.
To be a streamer, a Pinduoduo user must undergo a facial scan to verify your identity, upload copies of your identity document and wait two days for the final approval of Pinduoduo. Once verified, streamers can promote products during their live streaming sessions and earn commissions ranging from 1% to 80% of the value of the products.
Despite its great success, the company is not yet profitable: the net loss that Pinduoduo has reported was reduced to 210 million dollars (approximately 175 million euros) in the last quarter, and that is that although selling groceries and agricultural products is not as lucrative as electronic products, if it is an effective way to attract users.
So while Alibaba and JD compete for increasingly wealthy clients in China’s major urban centers, Pinduoduo has focused on capturing another lesser-known market: Low-income users from lower-tier cities and towns who can find products really cheap and conveniently.
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