Pinduoduo and Vertically Integrated Social Commerce

Like Amazon used books, PDD used fruit as a wedge to build what became one of the world’s largest ecommerce companies in five years. It went a step further than Tencent building games, or Facebook selling ads, and created an asset-light vertically integrated social gaming company. It built farmers, and eventually manufacturers, a business-in-a-box ... See more

While some of Pinduoduo’s incredible growth could be attributed to WeChat, one of the biggest shifts in Chinese consumer behavior has been from the “search, pay, and leave” model of traditional ecommerce to social commerce. That wasn’t just WeChat. Much of PDD’s recent success has been due to its game-like mechanics.

As it amassed users, Pinduoduo began predicting, and then influencing consumer demand elsewhere. Its team buying model flipped the retailing model from supply-driven to demand-driven. It would be as if Facebook went a step further than partnering with direct to consumer brands dropshipping from overseas, and instead created a Shopify-like tool for ... See more

The biggest difference between Pinduoduo and incumbents was that the product was designed for mobile. Instead of manually searching for products like on Amazon or Google, products were sourced to users in a feed similar to Facebook, Instagram, Twitter, or TikTok. In the early days, the app often had no more than 20 SKU’s at any one time. This allow... See more

Where others failed with asynchronous purchases of “nice to have” high-end products, Pinduoduo created a synchronous mobile shopping experience equivalent to going to the mall with friends.

A live streamed event in June of 2019 sold 400 cars over Pinduoduo in 18 seconds.

Pinduoduo recently announced a move into real estate. Users paid a ~$1k refundable deposit to take part in a team purchase on a 1,000 unit property under development. 600 units were sold. It appears unrelated to the core business at first, but real estate has a high GMV and typically precedes many other large purchases made by new families. Similar... See more

Pinduoduo, meaning “together, more savings, more fun”, eliminated layers of middlemen and flipped the retailing model from being supply-driven to demand-driven. The team used a mobile-first approach that gave it a fundamentally different product DNA than incumbents. It used fruit as a wedge to combine consumption with entertainment and created a ve... See more

Pinduoduo’s model was simple: buy everyday items and receive discounts of up to 90% by completing in-app actions or inviting friends to buy them as well. Prices were set by suppliers, and a user's very first purchase was almost always subsidized at a discount by PDD. Subsequent purchases could be made at the full-price, or discounted with a team or... See more

Competitors’ interfaces were search-driven, required heavy investment in SEO, and often centered on multiple product displays. PDD’s feed-based interface placed more exposure on single products. This gave it full control over distribution to influence consumer purchase decisions in ways most favorable to PDD and its suppliers’.