Whilst social media platforms popular in the West haven’t quite got social shopping off the ground, China’s popular platforms have managed to integrate buying into the user journey much more seamlessly. It’s just another example of China racing ahead of the West in social eCommerce adoption.
China’s rapid adoption of social commerce
Tactics like this may undermine customer confidence in the brand. The app’s been accused of using brand confusion to attract buyers and employing tactics such as selling nappies in packaging that resembles leading market brands. Like many fast-growing new companies, Pinduoduo isn’t uncontroversial. That’s a good choice for rapid turnover and easy user decision process. Whilst rival Taobao offers a wider range of products, discoverable using search, Pinduoduo reduces any choice paralysis by only offering a small number of deals available in a time-limited period. Keeping things really simple has also been helpful for users.Īs the shopping app acquires users at a low cost with a with a myriad of incentives, viral strategies witnessed by Pinduoduo tend to work quite well in China with its huge consumer base. Eliminating these costs have also helped Pinduoduo scale quickly. Pinduoduo does this by eliminating the middleman (distributors) to help keep cost really low.Įffectively the app just organises consumers into buying teams who then purchase goods such as bulk buy soap, corn plasters and cleaning products straight from the manufacturer.īecause the app acquires users and brings them back in through a daily stream of deals, there’s little need for marketing or advertising spend.
That’s where Pinduoduo is cleaning up – so long as it can make those tight margins work. Under this market, the middle market tends to lose out and there’s a strong downward pressure on prices for basic goods. This describes the consumer habit of insisting on rock-bottom prices for more humble purchases such as nappies and house slippers but cheerfully splashing out on luxury items such as designer sunglasses and handbags that enhance social status. But this suits China’s ‘hourglass’ market approach. The average basket size on Pinduoduo is only around $6 – about a tenth of the average basket size of its more upmarket rival JD.com. Targeting these lower-income households and offering hugely discounted goods is a low-margin business model. New initiates into online shopping often benefit from the encouragement of those around them – which is why Pinduoduo’s social approach works so well to engage this audience. Pinduoduo’s core audience are mostly novice online shoppers, but like many Chinese consumers, they’re avid bargain hunters. It’s a canny way to engage a slice of the population that’s fairly new to the internet and to online shopping. It’s been called China’s fastest-growing app and as of December last year it’s been second only to Taobao in the eCommerce app market. Last year Pinduoduo’s penetration rate grew nearly 20%. It’s a highly effective way for services to grow – after all, most mobile users in China use WeChat. RELATED: WeChat Marketing: Effective Strategies for Your Brand in China
Users that sign up for the service can get astonishingly low deals by bringing other buyers on board within 24 hours using the popular messaging tools such as WeChat and QQ. Pinduoduo has successfully managed to engage this audience who generally find their needs aren’t being catered to online because they find eCommerce platforms such as Tmall too expensive. It’s estimated that 60% of its users are thought to come from this demographic, with most of them women in their mid-thirties.Įcommerce apps are hugely popular in China but the market has never seen one grow at this rate before. The genius of Pinduoduo is that it caters to an audience that’s previously been neglected lower income households in smaller, less powerful cities across China. There’s plenty to learn from what Pinduoduo is doing, although it’s not a model you’d necessarily want to emulate. Its name translates as “shop more together” and it’s already got around a third of a billion customers thanks to its viral operating model. With 300 million monthly active users, the group buying app Pinduoduo has grown rapidly and is now thought to be a threat to giants such as Alibaba and Tencent. Just when we thought there was nothing left on the table in China’s crowded digital commerce space, a newcomer has swept in and found a whole new audience.
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