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Member Card are different kinds of the rewarding, aiming to help users save money via vouchers or special discount by sharing amongst their friends. The Daily Check-in mechanism is to encourage users https://www.fx770.net/ open the apps everyday with the redeemable points reward which can be deducted in their item purchasing. When Pingduoduo was starting out, there was a shift in the Chinese e-commerce landscape.

“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. A large part of PDD’s growth has been driven by the fact that it can be accessed on Tencent-owned messaging service WeChat, which has over a billion monthly users. WeChat is a key part of daily life in China and allows people to make payments within the app.

Every friend that clicks on the link (no purchase required) drives an incremental discount for the initiator. Here’s a look at how the platform works, its financial performance and how it competes with Alibaba and JD.

Business model

Further, the increase in the purchasing power of China’s middle class and rising GDP numbers make e-commerce companies like Pinduoduo a good bet for long-term investors. 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 the latter to offer competitive prices thereby creating a virtuous cycle. The big data and AI of the platform enables manufacturers to pinpoint the customer needs and preferences which ultimately to produce in a reasonable quantities of end products.

There is an option to just buy the item directly but the price of that product is higher than that of buying it in a group. Pinduoduo is now valued at a market cap of $81 billion which means its forward price to earnings multiple stands at around 32x. In return, users will receive free fruit from Pinduoduo after the virtual tree reaches its maturity virtually. Chun also noted that Alibaba and JD are building up relationships with factories for the C2M model of business. And with the Alibaba’s strong cloud computing business, it “may have more to offer to the factories” in terms of digital capabilities, Chun said.

In 2019, PDD said it had 585.2 million active buyers — those that made at least one purchase on the platform during the year. Alibaba said it had 711 million annual active consumers on its Chinese e-commerce marketplaces in the 12-month period ended September 30, 2019, the latest available figure. Pinduoduo has seamlessly integrated its platform with major social networks in China and created a highly engaged social buying ecosystem.

3 Price Chop

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. 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.

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. To get the item for free, the user must share their link with as many friends as possible. Its users are drawn by deals on a wide range of good which include things like clothing, fresh productsm electronics, as well as common household necessities like tissue paper.

Comparatively, the forward price to sales multiple for peer e-commerce companies such as Etsy and Hello Fresh stand at 30x and 29x respectively. Analysts tracking Pinduoduo have an average target price of $70.55, which is around 10% above its current trading price. Since the listing of the Pinduoduo Inc ADR on the NASDAQ in July 2018, the Pinduoduo stock price has increased by more than 100%. The GMV basically represents the value of the total amount of goods purchased on the company’s platform.

Users usually get one Free Pass Card after completing two purchases on Pinduoduo. In March, PDD carried out a private placement of $1.1 billion worth of newly issued Class A ordinary shares. At the time, the company said the funding will help its “strategic flexibility for expansion to bring more interactive experiences and value-for-money products to our users.” Pinduoduo removes the middle-man from the supply chain and provides an opportunity for farmers to interact directly with consumers, thus helping them get a better price for their produce.

The investment will see GOME’s product range, logistics and after-sales customer support integrated with PDD. 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.

1. While Alibaba and JD.com make most of their money from e-commerce, they both have other emerging businesses such as cloud computing.
2. This active user base also attracts merchants to Pinduoduo and the scale of its sales volume allows the latter to offer competitive prices thereby creating a virtuous cycle.
3. 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.
4. The big data and AI of the platform enables manufacturers to pinpoint the customer needs and preferences which ultimately to produce in a reasonable quantities of end products.
5. The company aims to bring more businesses and consumers online so that local communities and rural agricultural prodcuers can benefit from the growth of the digital economy.

But within the world’s second-largest economy, the e-commerce firm is growing faster than major rivals Alibaba and JD.com and gaining share quickly. The total gross merchandise volume (GMV) on the Pinduoduo platform has increased from US$72.75 billion in 2018 to $383 billion in the 2021 calendar year. 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 fastest growing platform in China — Pinduoduo

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. Buyers can access the platform and make group purchases by visiting Pinduoduo directly or via popular social networks such as QQ and Weixin.

Does Pinduoduo support rural communites?

Last year, PDD disclosed that 45% of its gross merchandising value (GMV) came from first and second-tier cities. Driven by sharing on WeChat, Pinduoduo’s average customer acquisition cost is only $2, compared to $39 and $41 for primary rivals JD.com and Taobao. But even more impressive is its 7-day retention rate of 77%, the highest of any e-commerce platform in China. This retention comes from the continuous re-engagement at the prospect of winning deep discounts.

It’s the combination of the viral acquisition loop and the addictive shopping experience that has caused Pinduoduo to become bigger than eBay in just four short years. The unique value of Pinduoduo mostly lies in its strong user engagement which differentiate itself and Groupon. The group buying model though is not just financial stimuli, besides, Pinduoduo utilizes the group buying model as its social incentives to encourage consumers to help them expand the user base through social platform sharing.