CHINAS SOCIAL COMMERCE – THE NEXT BIG THING
Pinduoduo is now the third largest online company in China behind Alibaba and Tencent surpassing Baidu. 5.1 million merchants and more than 582 million active buyers are already on the platform – a massive development for the e-commerce company which was only founded October of 2015. Pinduoduo’s success is based on clever social e-commerce mechanics as well as on targeting an often neglected chinese consumer and merchant base: rural chinese and farmers.
EDUCATION × EMPOWERMENT = SUCCESS
Fresh produce such as fruit and vegetables are key to Pinduoduo’s success. In 2019 38% of Pinduoduo consumers bought agricultural products from the platform. The Duo Duo University helped educate farmers about e-commerce and selling on Pinduoduo. Pinduoduo gave more than 1,400 hours of offline training to nearly 500,000 farmers across China creating DuoDuo Farms that market their products through the platform. On the curriculum were e-commerce, financing, marketing and business operations in order to empower the farmers selling their produce on Pinduoduo and building a successful business.
MORE EFFICIENT MARKETS: SMART MATCHING OF SUPPLY AND DEMAND
The social e-commerce mechanics of Pinduoduo drive engagement among users. Group buying, a lottery, affiliation programs and gamified content are just a few of the behavioural technologies applied on the platform. But even more social commerce provides a more merchant driven value proposal. Pinduoduo offers more than just letsbuyit.com reloaded. By steering the demand through specific group ads and recommending certain products e.g. ripe fruits in seasons, through newly launched products or clearances the merchants can improve the match between their sales and their needs and are able to plan demand better. Aggregating demand that fits to certain requirements of the merchants helps to reduce inefficiencies for the individual business and for the overall market. Further demand steering and sharing the insights from the platform with regional authorities helped to optimize regional distribution of producers, agricultural planning as well as pricing and logistics.
REINVENT AGRICULTURE FOR SUSTAINABLE BUSINESS
With the focus on farmers and social e-commerce technologies, Pinduoduo reinvented the whole agricultural supply chain. By group buying they bundled demand, provided machine learning tools for decision support for farmers and reduced costs structures through cutting wholesale and giving farmers direct exposure to their customers. Targeted recommendation and demand aggregation helps to steer demand and supply to an equilibrium reducing inefficiencies. Further food waste was reduced, and farmers have the chance to effectively build their own business.
Pinduoduo continues to develop and is expected to remain one of the leading platforms in China. The focus of value creation and the needs of consumers with the use of scalable but above all locally feasible activities will create a lot of innovation in the future.