With consumers increasingly interacting with the digital world via mobile phones and social apps, it’s now becoming imperative for brands to leverage the power of social platforms. Social commerce has been something of a buzz recently and Chinese shoppers are always eager to land a good bargain. It’s not hard to see why the world’s largest e-commerce market is being transformed by the fast-growing app known as Pinduoduo. Pinduoduo is the second most used online shopping app behind Taobao with over 385.5 million monthly active users. The use of super apps as a means to access essential services has become more of a necessity in China. Apps like Xiaohongshu and Pinduoduo have become increasingly popular because they are able to manage the needs of the consumer all in one location.
What is Pinduoduo?
Founded by a former Google engineer in 2015, Pinduoduo is the fastest growing app ever recorded in the history of the Chinese internet. The social e-commerce app allows consumers to find deals on products with the added value of recruiting friends to join in and buy at a discounted price. It also gives customers the ability to make purchases through popular social apps such as WeChat and QQ. Pinduoduo covers major product categories including apparel, mother and childcare products, food and beverage, fresh produce, cosmetics and other personal care items, sports and fitness items as well as auto accessories.
What’s even more consumer oriented about the app is that it offers products at up to 20 percent cheaper compared to their market price. That is because Pinduoduo allows customers to buy directly from manufacturers, removing the hassle and additional costs of using a middleman. The app also enhances the consumer journey by adding gaming elements and giving out coupons and rewards.
Purchasing Behavior on Pinduoduo
Pinduoduo caters to a very particular user demographic consisting of predominately females that live in 3rd tier cities. Users are less educated with 42.4% of them not having a college degree. The majority of monthly purchases are between the ages of 25 and 40. Younger users below the age of 24 often use the platform but are less likely to make a purchase. Pinduoduo users are also more likely to buy expensive products with discounts over cheaper products with no discounts at all.
The Pinduoduo Group Buying Concept
The core function of Pinduoduo is the ability to make group purchases. Consumers are encouraged to share product details with family and friends to form a shopping crew to enjoy a more attractive price option available under “team purchase”. All product purchases are encouraged under this option but there is also the official individual price option. All products ordered by a certain group are deliverable separately to each member’s address.
There are also other buying incentives such as the free-product feature. Some products are sharable with friends who can then bargain for a lower price. Every time a friend bargains for a product, the price will decrease. The user even has the chance to receive a free product if enough friends sign up for the bargain. Giving users the opportunity to invite other buyers drastically increases user engagement, which is what gives Pinduoduo its unique shopping experience. Features such as group buying and free products enable the same function as shopping in real life.
Setting Up Shop on Pinduoduo
The process to start a business on the app is quite simple. There are five items that you need before applying which are a Chinese Business License, an Organization Code Certificate, a Tax Registration Certificate, an Account Opening Certificate and a Chinese phone number. After obtaining the above items, directly apply on their official site and download the app for shop management. It takes about 2 working days for the approval process and once approved, you can open more than one shop with the same business and tax license.
Opportunity for Brands
Considering that Pinduoduo represents a unique target market of mostly low-income households with lower levels of education, there is a still a huge growth potential for the platform to gain even more market share. There is still a large chunk of lower-income households who lack education and experience with digital technology, but the technology gap is continuing to evolve at a rapid pace. The incorporation of group buying has the ability to attract consumers from tier 1 and tier 2 cites who may find an even better deal on Pinduoduo instead of using traditional shopping platforms. Pinduoduo is still finding new and innovative ways to grow, but in the meantime, it has definitely unlocked a market that can be extremely beneficial for brands.
This social e-commerce app provides all the necessary features and added extra functions that attract consumers to shop. It appeals to anyone who is price-sensitive and time-conscious and is just beginning to tap into major cities around China. The app reflects an in-person shopping experience that contributes to the overall value of the platform. It’s still early days for the popularized start-up, but we are excited to see what the future holds.