Primarily used in tier-two and tier-three markets for inexpensive daily necessities. With the main feature being group purchases with friends, family, neighbors, etc., the user buys the product at a lower price.
Discover more about Pinduoduo essential information.
Pinduoduo Introduction
China is not short of e-commerce powerhouses. The online market is highly saturated; however, it is not impossible to start a social e-commerce platform as long as it offers the right solutions to the right consumers. Pinduoduo proved this, battling its way to the top next to Alibaba and JD.com.
Pinduoduo (PDD), the Shanghai-based company, raised US$1.6 billion through a U.S IPO in July 2018, which had stood out to be one of the largest deals of that year. The company claims 195 million monthly users and has managed to be successful in China’s highly competitive e-commerce space in just three years.
The Pinduoduo shopping model encourages users to share links of the purchase of items to friends and family and participate in group purchasing.
Pinduoduo is unlike many other social e-commerce platforms. The appeal that sets them apart is the group purchase function. Pinduoduo offers a wide range of products, from groceries to home appliances.
PDD features personal recommendations within the app, however, the uniqueness of Pinduoduo is the integration of “team” purchasing. Allowing users to select items or choose to participate in group buying, which then the product’s price becomes lower.
This model encourages buyers to share links of the items they are buying to friends, family, and social media circles through WeChat or QQ.
Every item on Pinduoduo allows a minimum number of buyers to complete the purchase. The platform offers a 24 hour buffer time for the group to complete its purchase. Should the buffer time not be met, the team purchase option cancels, and any money committed is refunded.
This purchasing model keeps users motivated and hooked for a more dynamic shopping experience, creating a viral sensation in China. Pinduoduo offers incentives through cash, coupon, lottery in addition to free products.
Pinduoduo offers meager prices, which is another compelling incentive for users. Their discounts go up to 90% from bed sheets to computers. The platform has daily items on sale for much lower prices. In 2018, PDD sold more than 6.4 million units of toilet paper at ¥12.9 (the equivalent to US$1.90) for ten boxes, additionally sold 4.8 million umbrellas for ¥10.3 (US1.51) per piece.
The company’s C2B models give manufacturers the ability to ship directly to their consumers, eliminating layers of distributors. This concept enables a reduction in the price tag for buyers and increases profit for manufacturers. The approach is highly effective for the sales of perishable goods such as agriculture and fresh products.
In 2019, PDD acquired 582.2 million active users, with at least one purchase per user on the platform during the year. In that same year, JD.com had 362 million, and Alibaba 711 million active users. PDD’s growth has been highly driven by its availability on China’s Tencent-owned messaging service – WeChat, which has over a billion monthly users.
WeChat is part of the country’s daily life, allowing users to make payments within the app, making it easier for consumers to access PDD through WeChat, allowing them to complete payments through the platform.
A large portion of Pinduoduo’s user base is from China’s lower-tier cities. Consumers are perhaps more price-conscious than those in the higher-tier towns, which JD.com and Alibaba dominate.
In 2019, PDD disclosed 45% of the gross merchandising value accounted for the first and second-tier cities, 55% of its GMV accounted for from the third-tier or below. GMV is the total value of orders for products and services placed on the Pinduoduo platform.
Pinduoduo Founder
Colin Huang, otherwise known as Huang Zheng, is the man behind China’s e-commerce success Pinduoduo. Huang is the third richest man in the country at the age of 41, with an estimated net worth of US$41.8 billion. Six years after establishing Pinduoduo, Huang has stepped down as chairman of this mega e-commerce platform.
During his short time as leader of PDD, Huang became an inspiration to many since debuting the company with an impressive Nasdaq IPO in 2018. PDD overtook Alibaba in the most significant number of annual customers with 788 million buyers in 2019.
Huang Zheng, born in 1980 to factory worker parents, grew up dreaming of becoming a scientist. He attended the Hangzhou Foreign Language School based on his teacher’s recommendation, later receiving his bachelor’s degree in computer science from Zhejiang University. During his first year, Huang was one of the few selected to attend Melton Foundation, an international non-profit. Later, Huang was able to travel to the U.S. for his Master’s degree at the University of Wisconsin-Madison.
Huang received his first salary at Microsoft during his internship. In 2004, he was offered a software engineering position for the then start-up Google.
Pinduoduo was not Huang’s first start-up. After three years at Google, he started his own e-commerce site, Ouku, after which he sold it for US$2.2 million in 2010. Later he founded Leqi, a website that connects foreign brands to Chinese e-commerce platforms. He also started a gaming studio, Xunmeng.
Pinduoduo was not Huang’s first start-up. After three years at Google, he started his own e-commerce site, Ouku, after which he sold it for US$2.2 million in 2010. Later he founded Leqi, a website that connects foreign brands to Chinese e-commerce platforms. He also started a gaming studio, Xunmeng.
Although Alibaba and JD.com dominated the e-commerce industry in China, in 2015, Huang decided to establish Pinduoduo, offering group deals and connecting farmers and buyers. Just after three years of PDD, Huang took the company public on Nasdaq.
The reasoning behind Huang stepping down from PDD was to make way for a new generation of leaders to take over. After working hard for years, he donated US$100 million to his alma mater, Zhejiang University, in order to support and carry on research in biomedical science, agriculture, and food.
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Offers a rapid delivery speed for all orders on a vast selection of products across every major category.
JD.COM Introduction
Before deciding to enter China, research is crucial; Tmall and JD.com (partially backed by Tencent) are the country’s two most prominent players in the e-commerce landscape. So, what are the critical differences between the two platforms? From historic tendencies Tmall for fashion, JD for electronics.
JD.COM Inc. owns JD.COM, otherwise known as Jingdong, formerly called 360buy, China’s top e-commerce platform. It is one of the three major online retailers in China by transaction and volume and is Alibaba TMall’s primary competitor and Pinduoduo
JD.com offers various selections of products in every major category, ranging from electronics, home furnishings & appliances, and apparel to fresh foods, with fast-speed delivery to their Chinese consumers.
In addition to its online shopping platform JD.com with mobile apps for Android and iOS users, JD.com also launched Jingxi in 2019 to take on its competitor Pinduoduo to cater to China’s lower-tier segments.
By March 2020, JD.com’s daily active mobile users increased by 46% compared to the previous year, 2019.
History
JD.com was founded by Liu Qiangdong, otherwise known as Richard Liu, in the summer of 1998. By 2004, Richard Liu decided to take his company to the worldwide web.
Richard Liu committed his savings of ¥12,000 (US$1,800) in 1998 to lease a small unit in Beijing’s technology hub of Zhongguancun, where he established JD Multimedia, which later became JD.com
The Growth of JD.com
Liu saw the opportunity to utilize the potential of the internet to support his business during the SARS outbreak in 2003 and moved his business JD.com online on June 18, 2004, which is now considered JD’s first 618 promotion.
Although it started as an online optical store, it quickly evolved into selling electronics, mobile phones, computers, and much more. Jingdong Mall changed its domain name to 360buy.com in June of 2007, later changed to JD.com in 2013.
The volume of merchandise continued to increase from ¥32.7 billion in 2011 to ¥125.5 billion (US$20.7 billion) in 2013.
The number of products offered through Jingdong’s online direct sales and marketplace JD.com has grown exponentially from 1.5 million in stock-keeping units (SKUs) of December 2011 to 7.2 million SKUs of December 2012, then to 25.7 million SKUs in December 2013 further to 40.2 million SKUs in December 2014.
The electronics and home appliances category accounted for most of Jingdong total GMV 80.1%, 65.3% and 63,6%, consecutively from 2011 to 2013. Its general merchandise and others accounted for a minor of 19.9%, 34.7%, and 36.4%, respectively.
The total amount of active customer accounts ranged from 12.5 million, 29.3 million, and 47.4 million, which fulfilled approximately 65.9 million, 193.8 million, and 323.3 million orders in 2011, 2012, and 2013.
In 2007, JD.com made a strategic decision to build and operate its nationwide infrastructure. With 86 warehouses in 36 cities across the country with 1,620 delivery stations and 214 pick-up stations across more than 450 cities across China by 2014. By April 2014, their company grew to 24,412 delivery personnel, 11,145 warehouse employees, and 5,832 customer service employees.
JD.com offered same-day deliveries or the day after, and its speedy deliveries leveraged its nationwide infrastructure. In March of 2014, the company provided same-day deliveries in 43 cities and next-day deliveries in 256 cities across China.
Although it started as an online optical store, it quickly evolved into selling electronics, mobile phones, computers, and much more. Jingdong Mall changed its domain name to 360buy.com in June of 2007, later changed to JD.com in 2013.
The volume of merchandise continued to increase from ¥32.7 billion in 2011 to ¥125.5 billion (US$20.7 billion) in 2013.
The number of products offered through Jingdong’s online direct sales and marketplace JD.com has grown exponentially from 1.5 million in stock-keeping units (SKUs) of December 2011 to 7.2 million SKUs of December 2012, then to 25.7 million SKUs in December 2013 further to 40.2 million SKUs in December 2014.
The electronics and home appliances category accounted for most of Jingdong total GMV 80.1%, 65.3% and 63,6%, consecutively from 2011 to 2013. Its general merchandise and others accounted for a minor of 19.9%, 34.7%, and 36.4%, respectively.
The total amount of active customer accounts ranged from 12.5 million, 29.3 million, and 47.4 million, which fulfilled approximately 65.9 million, 193.8 million, and 323.3 million orders in 2011, 2012, and 2013.
In 2007, JD.com made a strategic decision to build and operate its nationwide infrastructure. With 86 warehouses in 36 cities across the country with 1,620 delivery stations and 214 pick-up stations across more than 450 cities across China by 2014. By April 2014, their company grew to 24,412 delivery personnel, 11,145 warehouse employees, and 5,832 customer service employees.
JD.com offered same-day deliveries or the day after, and its speedy deliveries leveraged its nationwide infrastructure. In March of 2014, the company provided same-day deliveries in 43 cities and next-day deliveries in 256 cities across China.
Partnerships and expansion
In 2014, JD.com formed a strategic partnership with Tencent by giving the company exclusive access to Tencent’s WeChat and Mobile QQ. Platforms. Later in 2014, JD became China’s first e-commerce company to list in New York’s NASDAQ stock exchange under ‘JD..’ Towards the middle of 2014, JD Finance launched the country’s biggest crowdfunding platform. By October, Jingdong’s advanced automated logistics center began operation in Shanghai, being Asia’s number 1 warehouse.
By 2016, JD.com announced an alliance with one of the major U.S. retailers Walmart. In the agreement, JD took control of Yihaodian’s marketplace, with Walmart acquiring a 5% stake in the company.
In September of 2019, JD.com officially launched JD.com’s first social e-commerce platform. It was part of a strategy to penetrate the lower-tier cities and to compete with Pinduoduo.
In China, social e-commerce has a much higher conversion rate than traditional e-commerce. Its GMV reached ¥626.85 billion in 2018, with an increase of 255.8%.
With more than 80% of JD.com’s internet shoppers using social e-commerce channels, its fast growth is expected to exceed by ¥2.86 trillion by 2021.
Jingxi is available to all its consumers through multiple channels, including the Jingxi App, the Jingxi Mini Program, and their WeChat first-level entry point. The combination of social media and retail allows Jingxi to provide many products at attractive prices.
With more than 80% of JD.com’s internet shoppers using social e-commerce channels, its fast growth is expected to exceed by ¥2.86 trillion by 2021.
Jingxi is available to all its consumers through multiple channels, including the Jingxi App, the Jingxi Mini Program, and their WeChat first-level entry point. The combination of social media and retail allows Jingxi to provide many products at attractive prices.
Partnership with domestic manufacturers allowed Jingxi to reach more than one hundred industrial clusters, bridging the gap between manufacturers and consumers. Jingxi’s Singles Day Promotion season gained 75% more new users of the lower-tier segments, with more than 55% of its female users.
Liu Qiangong, the CEO of Jingdong, is the second-largest shareholder with more than a 15% stake in the company. Tencent owns 17.8% of its shares, making it the company’s largest shareholder. Additionally, Walmart holds a 9.9% stake in Jingdong, being its third-largest shareholder.
According to online reports, Jingdong comes from the combination of two person’s names: CEO Liu Qiangdong (dong) and his former girlfriend Gong Xiaojing (jing).
JD operates domestically through their e-commerce website JD.com and cross-border e-commerce through JD Worldwide (import). JD Global sells to overseas Chinese consumers, and JoyBuy.com runs the company’s export e-commerce retail.
Jingdong’s primary focus is selling directly to consumers from its platform, whereas Tmall serves as a marketplace for a company to sell to consumers.
Jingdong Worldwide is the company’s cross-border e-commerce platform. They are allowing domestic Chinese consumers to buy overseas products. Kaola and Tmall Global are Jingdong Worldwide’s main competitors.
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China’s leading e-commerce Tmall is the most popular online shopping platform in the country. The Alibaba-owned website has more than 700 million monthly users with hundreds of millions of products, both foreign and domestic, being bought and sold.
Global brands and products looking to drive growth in the market need to understand Alibaba’s flagship platform’s fundamental ins and outs to perform successfully.
What is the difference between Tmall and JD.com?
Before deciding to enter China, research is crucial; Tmall and JD.com (partially backed by Tencent) are the country’s two most prominent players in the e-commerce landscape. So, what are the critical differences between the two platforms? From historic tendencies Tmall for fashion, JD for electronics.
Contact us
Due to high demand of our services, we offer only a 40-minute free consultancy session
Soi sukhumvit 39 Khlong Toei Nuea, Bangkok 10110
211 Soi Pridi Banomyong 11, Sukhumvit 71 Rd., Khwaeng Phra Khanong Nuea, Watthana, Bangkok 10110