Next to Taobao, TMall and JD.com, online China has another, slightly less sophisticated but very successful e-retailer. Pinduoduo, a Shanghai-based platform, combines e-commerce and social media and is very popular among many elderly people and residents of smaller cities in China.
Shanghai Daily profiles Pinduoduo and searches for the secret of its success. Basically, Pinduoduo is an e-commerce platform allowing users to participate in group buying deals. Users on popular social media sites like WeChat and QQ are encouraged to invite friends and family to form “shopping teams” to get better group discounts on products. Together, they access links to Pinduoduo merchandise – mostly popular daily shopping items, groceries, personal care items, clothing and toys. The offers are transmitted on social media like WeChat.
One of the secrets of Pinduoduo’s success is that its business model allows middlemen to be bypassed by shipping directly from manufacturers. Discounts on products can be as high as 90 percent, which makes Pinduoduo immensely popular.
The success is reflected by the growth of Pinduoduo’s user base, that rose to 418 million in 2018. The gross merchandise value in 2018 added 2.3 times from a year ago to $69.4 billion. The majority of the 600 million pieces of merchandise were sold went to smaller cities in China.
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