Price and social features are not only the only path to Pinduoduo’s meteoric rise, and spotting the right user profile is the last piece to the puzzle. Pinduoduo is now valued at a market cap of $81 billion which means its forward price to earnings multiple stands at around 32x. Since the listing of the Pinduoduo Inc ADR on the NASDAQ in July 2018, the Pinduoduo stock price has increased by more than 100%. And last year, JD rolled out a group buying app called Jingxi, which is also accessible through WeChat.

3 Pinduoduo adapts a C2M model

Founded in September 2015, Pinduoduo is the fourth startup of Colin Huang, an ex-Googler who once worked on early search algorithms for e-commerce. His previous startups include consumer electronics e-commerce site Ouku.com, Leqi, e-commerce platform marketing agent service and a WeChat-based role-playing game company. However, there is massive potential for companies to gain traction in lower-tier cities in China in the upcoming decade which will be a key driver of revenue growth. Further, the increase in the purchasing power of China’s middle class and rising GDP numbers make e-commerce companies like swiss franc to hungarian forint exchange rate Pinduoduo a good bet for long-term investors. According to Business Insider, even though Pinduoduo sells products at low prices, the platform really makes money through its sellers. They pay for the advertising that’s featured and allows the app to keep prices so low.

With our extensive expertise in this niche, we offer you the avenue to unlock your brand’s potential and secure a formidable position as a leading brand in the industry. While it’s true that PDD doesn’t take commissions from sellers, remember that you’re still obliged to pay a service fee for utilizing its e-commerce features. Depending on your brand’s industry, PDD will require you to pay between 10,000 yuan and 50,000 yuan as a deposit fee. It’s not considered a registration expense because it’ll be used to refund unsatisfied clients. If your offerings don’t have these issues, the money will eventually return to your account. Although Pinduoduo recently launched a website for its e-commerce system, the fastest way to access it is through downloading its app.

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Although the country’s e-commerce market is highly consolidated, it’s not impossible for startup teams to crack this market as long as they are solving the right problems for the right group of customers. Last August, the company started Duo Duo Grocery which is a next-day grocery pickup service that allows users to order products online and collect them from designated pick-up points the next day. Another video on the company’s website says that instead of using white label forex software ultimate guide a search bar function, Pinduoduo gives its users a personalized feed of products.

Moreover, this direct-to-consumer model indicates to cut out the middlemen and further deliver price savings to the customer, which in turn generates more demand and economies of scale. “I doubt they will turn a profit in 2020,” says Cathy Roberson, president of Logistics TI, a research and consulting company. She says Pinduoduo will have to continue steep spending on marketing to compete with Alibaba and JD. Given the history between Pinduoduo and Pinhaohuo, then of the two largest players in the social e-commerce sector, the two companies merged to form one dominator. A huge turning point occurred in the third quarter of 2017 when the weekly active rate, penetration rate, and open rate of the Pinduoduo app all surpassed those of JD.

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. Founded in 2015, Pinduoduo is a mobile-only marketplace that connects millions of buyers directly with sellers. It has become one of China’s most popular e-commerce platforms in recent years for fresh produce, household items, clothing and electronics.

1. After 2-4 reviews completion by a user, the Brand Black Card will be granted.
2. Recommended items are placed front and center, a list tailored to each user from an algorithm developed by 100 of the company’s 700 engineers, according to one online tutorial.
3. This was Pinduoduo’s first ever annual operating profit since becoming a public company.
4. Hence, buyers actively introduce others to Pinduoduo allowing the company to lower customer acquisition costs and increase organic traffic without too much difficulty.
5. Launched in 2015, Pinduoduo has been now a leading social e-commerce application and one of the fastest growing platforms in China.
6. Appearing on organic search results will help your brand gain credibility and authenticity in the eyes of local consumers.

Only three years after it was founded, Pinduoduo stock was public on NASDAQ in 2018. Since the beginning of November 2020, the company’s stock has consistently been worth over $100 a share. 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.

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Pinduoduo is such a third-party trading platform that is based on social networks and connects C-side users and B-side suppliers. This social sharing of deals is primarily done on WeChat, the super app that is used by a billion people in China. WeChat’s parent company Tencent, recognized Pinduoduo’s potential and became an investor in 2016, promoting Pinduoduo and turbocharging its user acquisition. 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.

Buyers can access the platform and make group purchases by visiting Pinduoduo directly or via popular social networks such as QQ and Weixin. Further, the total number of active buyers on free currency strength meter Pinduoduo in 2021 (users who placed one or more orders throughout the year) hit a record of 868.7 million, up 10% compared to 2020. According to Business Insider, because of his background, Huang knew that he could create something unique in the e-commerce space. In 2015, according to Tech Crunch, he founded Pinhaohuo — an e-commerce platform for fruits. Pinhaohuo and work in the gaming space gave way for the beginnings of Pinduoduo. And on Sunday, PDD announced it would invest in convertible bonds issued by Hong Kong-listed GOME Retail.

By sharing Pinduoduo’s product information on social networks such as WeChat and QQ, users can invite their contacts to form a shopping team to get a lower price for their purchase. The mechanism keeps the users motivated and better hooked for a more interactive and dynamic shopping experience. Coupled with other incentives such as cash, coupon, lottery and free products, Pinduoduo manages to acquire users at a very low cost. Combined with the extra satisfaction of scoring a good deal with your friends as a team, Pinduoduo soon became a viral sensation in China.

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. Alibaba and JD have found success in larger so-called tier 1 and tier 2 cities in China which include the likes of Beijing and Shanghai. This has led to lower customer acquisition costs, according to analysts. While Alibaba and JD.com make most of their money from e-commerce, they both have other emerging businesses such as cloud computing.