Pinduoduo’s method of improving user conversion rate!

Pinduoduo, an e-commerce company, achieved revenue of RMB 6.54 billion in the first quarter of 2020, a year-on-year increase of 44%. What methods has Pinduoduo, which has risen and exploded rapidly, used to improve its purchase conversion rate? This article analyzes this.

1. Definition of Purchase Conversion Rate

Conversion goal: also called conversion target page or target page, refers to the task that the merchant wants visitors to complete on the website, such as the page that needs to be visited for registration, ordering, payment, etc.

Conversion: Conversion refers to a potential customer completing an action desired by the promoting merchant.

Conversion rate: the number of conversions completed by users within a certain period (one day, one week) divided by the total number of clicks on the promotion information. Conversion rate = number of conversions/number of clicks*100%

Purchase conversion rate: The conversion goal is for users to complete order settlement, that is, purchase conversion rate = total number of orders completed by users / total number of clicks on promotional information;

(Some e-commerce companies have different definitions)

2. Classification of the strengths and weaknesses of online shopping target products

Think back to what our motivation is for opening Pinduoduo. Based on the strength of the user's shopping target products, we can divide users into three types of users: those with clear target objects, those with vague target objects, and those who are strolling - those with no target products. In fact, these users essentially correspond to three different purchasing paths. For the same real user, when he knows he wants to buy eggs and toilet paper, he may not want to buy potato chips, cucumbers, flowers, etc.

Pinduoduo simulates various shopping guide methods in shopping malls in many user scenarios, achieving seamless connection to accelerate users' ordering. For example, when you browse casually, it recommends various coupons to users, and there is a countdown.

1. Clear purchase path for target items

When you find that there are no eggs at home and you really want to eat scrambled eggs with tomatoes, you will be very clear that you want to buy eggs. When you open Pinduoduo, you are likely to repurchase an order from your previous order, or search for eggs from the search bar, and maybe this time you want to try Deqingyuan’s eggs. After simply checking the information about eggs, you will most likely quickly place an order and complete the purchase.

One day you really want to eat apples, and you remember that the box of apples you bought from Pinduoduo last time were big and delicious, so you repurchase a box from your previous order.

The above scenario is a very clear purchase path for the target object. The order entry point for this type of user is often a previous order, or a clear keyword search in the search bar, and the product that the user finally orders has a high degree of match with the keyword. Moreover, this type of purchasing behavior has a shorter path and orders are placed faster.

2. Target fuzzy purchase path

The weather is getting hot, and you want to buy a sunscreen, but you are not sure whether to buy a spray type or an applicator type. Are you sure whether to buy AHC, ANESSA, or a cheaper one to apply on your feet?

At this time, the user's target product is vague. He may search for sunscreen in the search bar first, compare multiple options, and then place an order;

Summer is coming, and you want to buy a pair of shoes. You don’t know whether to buy sandals, white sneakers, or other single shoes, etc.?

It is possible that users will first browse the women's shoes section, see the shoes they like, and then place an order;

The purchase path of this type of users is often tortuous, and the conversion cycle is relatively long;

3. Wandering purchase path

A Pinduoduo user remembered that he had to check in at Duoduo DreamWorks today and do tasks like browsing products, so he just wandered around; then he saw that wet wipes were on sale, so he went in to take a look, and found them very affordable. When he thought that summer was coming, he could prepare more wet wipes, so he might place an order.

The above scenario is a purchase made by users while browsing, so Pinduoduo has also developed a lot of shopping guide games, allowing users to play some games, such as Duoduo Dream Factory. Users can get a free product after two weeks of hard work, such as checking in, browsing products, and searching for a certain product. During this strolling process, Pinduoduo leverages its strength in product recommendations to complete purchase conversions for strolling users.

3. Ways to improve user purchase conversion rate

1. Free Stimulus

What became popular at the beginning of Pinduoduo was that users could get free products by helping others, because free products are very attractive to all users. On the one hand, it helps attract new users to Pinduoduo, and on the other hand, it helps users to complete the process from placing an order to receiving the goods, thus completing their understanding of Pinduoduo's e-commerce.

Currently, Pinduoduo has several other “free” product activities. In addition to attracting new customers, these activities also have other shopping effects.

2. Low price stimulation and promotional purchases

I believe many people have seen low-price promotions similar to the one above. For any e-commerce company, low-price promotions can always attract a group of potential users to place orders. From the beginning to now, the prices of Pinduoduo's products have been relatively low. Huang Zheng once said that he found that many users, regardless of their living economic level, would care about price comparisons. Therefore, Pinduoduo’s products are generally cheaper than those on other platforms, and they also offer free shipping.

Pinduoduo also has a lot of promotional activities, many of which are similar to those on Taobao. They are all transformations of the traditional low-price promotion methods. If an e-commerce company launches a 2-yuan special sale, it will probably attract a group of users. Here we will only analyze the 10 billion subsidies and cash check-ins.

10 billion subsidies:

The number of 10 billion is definitely attractive enough, and users get the following:

• Pinduoduo is really rich and is willing to pay its users;
• The prices of products from many well-known brands are very low, but Pinduoduo has hundreds of billions of subsidies and is insured by PICC Property and Casualty Insurance Co., Ltd. If you encounter fakes, you will definitely be compensated; this platform is trustworthy and you can buy at a low price with confidence;
• Complete the transformation of users’ perception of Pinduoduo from a low-priced counterfeit goods platform to a quality assurance platform;

Cash check-in:

In the past, signing in would give users points, which they could then redeem for merchandise. Later Taobao coins can also be used for direct deductions, but only for some products. In addition to giving users real cash, Pinduoduo’s cash sign-in also gives users a 12-hour cash red envelope. At the bottom of the page are the corresponding recommended products to attract users to place orders.

3. “Red envelopes” attract

Pinduoduo’s red envelopes are everywhere!

The way of sending red envelopes makes people excited and thrilling. The popularity of WeChat red envelopes in those years shows that everyone loves red envelopes. The form of Pinduoduo's red envelopes is very similar to WeChat red envelopes, and is more attractive than coupons. Because many users have already formed the understanding that coupons must be purchased at a certain amount before they can use the coupons, some coupons with no threshold will be more attractive to users in the later stage. Users’ perception of red envelopes is that it is money, direct money, and users are very enthusiastic about it.

Later on, some red envelopes are essentially coupons. Among the red envelopes issued by Pinduoduo, users can choose freely, which is a great user experience. Pinduoduo’s backend can also conduct big data analysis and mining, and perform group analysis on different users.

4. Group ordering model

Many e-commerce companies have adopted the group-buying model before. First, they take advantage of the herd mentality of users when shopping. If others have bought something, they may also consider buying it. Second, the group-buying discounts are greater, and users can get the same product at a lower price. But later on, many users found that the discounts offered by group purchases were not much greater?

Let’s take a look at Pinduoduo’s group-buying model. At first, I didn’t understand why there had to be a separate purchase. Would anyone choose to buy separately?

First, the price difference is obvious, and most users will not choose the expensive one; second, Pinduoduo's group buying is mostly done by 2 to 3 people, with a very small number of people. Even if you initiate a group buying by yourself, there will be users you don't know who will complete your group buying very quickly; third, if you are really in a hurry, you can participate in other people's group buying, and it is a group buying of two people, which is very fast and solves the difficulty of attracting users for group buying with more than ten people. After all, the probability of you and your friends needing to buy the same product in the same period is relatively small;

So why keep buying them separately? The author believes that there is a lot of knowledge involved in Pinduoduo’s direct display of prices on the order button.

• In contrast to the price of buying separately next to it, it tells users to quickly place an order together, you can save 10 yuan, and you will earn money if you buy it;
• When shopping online, users will pay attention to product details, comments, etc. When they are interested and scroll down to learn more, they may forget the price of the product. If users are told clear price numbers like Pinduoduo, users can quickly place orders after understanding the details and combining the price budget.

In short, Pinduoduo has maximized the interactive design details of the group buying page, allowing users to place orders quickly and complete shopping conversions.

5. Countdown mode

• There is a countdown for group buying - the event is too popular, it will be too late if you don’t place an order now;
• The red envelopes have a countdown - it's so hard to get a red envelope, it would be a shame not to use it;
• Coupons also have a countdown timer, which is shorter than traditional coupons, and still encourages users to place orders as soon as possible;

Why didn’t it cause any dissatisfaction among users?

Because users often hear in shopping malls that promotions are only for one day, so hurry up and buy! ! !

Moreover, the low prices and discounts given are real and users can feel it!

This function does indeed speed up the speed at which users place orders and make decisions. Moreover, more and more Chinese netizens are living a fast-paced life, and they want to get benefits while paying attention to efficiency.

6. Remove shopping cart

Why remove the shopping cart? Especially subverting the traditional look.

It’s not about “We are different!”, it’s about getting users to buy as soon as possible!

Moreover, Pinduoduo's model is that users do not need to collect a lot of products to enjoy discounts. They can also enjoy discounts by purchasing them separately. It is more like a psychological influence that allows users to buy as soon as they say they will. If users are optimistic, Pinduoduo will give you low enough prices, enough red envelopes, and coupons to satisfy your impulse order.

Of course, if users choose some complex products, such as women's clothing, they may need to compare more, add them to favorites first, then compare prices from different stores, and then enter the purchasing stage. So is it possible to have a comparison list of 2-4 items to help vague users make more appropriate choices?

7. Real-time personalized recommendations

The algorithm technology of recommendation system has been around for a long time, and the common collaborative filtering algorithm is used to complete the product recall process.

It is mainly divided into user-based collaborative filtering algorithm and commodity-based collaborative filtering algorithm.

The process of user-based algorithm implementation:

1. Gather user preferences based on historical data;
2. Find similar users and recommend the products they bought;

Commodity-based collaborative filtering algorithm:

1. Pay more attention to users' product click data;
2. Find similar products that users are more interested in

The first type of recommendation behavior is more like your best friend or good friend recommending products to you; when you see your best friend wearing beautiful lipstick, you may ask her what color lipstick it is, and then your best friend recommends that you buy one to try. The principle of this technology is that among a large user group, users can be clustered and analyzed. If you and your bestie have a high similarity in lipstick preferences, then the same lipstick as your bestie will be recommended to you.

The second type of recommendation behavior is more like a saleslady in a cosmetics store recommending products to you; she sees you looking at lotions from several brands, then comes over to ask you if you want to buy lotions, then asks about your shopping needs, and then recommends products to you based on her experience and expertise;

Therefore, there is another type of recommendation algorithm, which is comprehensive recommendation. It is a combination of the above two types. It recalls products that are not completely similar, sorts the products by importance, and displays them on the front end for users to browse and choose.

Recommendation algorithms are very useful in e-commerce and can save users time in selecting products.

Pinduoduo's recommendation system is very real-time. If you click to view crayfish several times in a row, then you will see corresponding crayfish product recommendations on any page you go to, and they will be crayfish with a variety of high cost-effectiveness. Then they will also push "red envelopes" to you to encourage you to complete the purchase of crayfish.

8. Rankings

On the group buying page, if a product is included in the ranking list, it will be displayed accordingly with a specific numerical ranking;

Click to enter the best-selling list, and there is also a praise list;

Because e-commerce users are basically concerned about the sales volume and quality evaluation of products;

On the best-selling list, there is Pinduoduo's own hot-selling index, which is different from the traditional display of the number of transactions. It may consider different purchase attributes of different commodities. For example, the sales of a watch and toilet paper are not on the same scale, so a relative comprehensive indicator is given;

And there is another detail. Pinduoduo also explained that the source of the data is the sales volume and total transaction volume data of the last 7 days. First of all, the weekly data of 7 days is very reasonable, which provides merchants with many opportunities and also provides users with more and better alternative products.

In the praise list, there is a review bar at the bottom of each product, showing the user's review content. This interactive design is also very good.

It is possible that a user sees a product of interest and chooses a comprehensive product from these rankings that has good sales and positive reviews.

9. Game Shopping Guide

Pinduoduo used gaming thinking to do e-commerce from the very beginning, and did it very professionally! !

• Users can slowly obtain free items while playing games;
• When users are doing game tasks, they can complete the purchase order conversion when they are browsing;

4. Purchase Link Model Analysis

1. Advertising user conversion link model

• AIDMA Link Model

AIDMA is a marketing model proposed by American advertising scientist Lewis in 1898. It describes the consumer psychology process from seeing an advertisement to making a purchase.

• AISAS Link Model

The AISAS model is an advertising model proposed by Dentsu in 2005 that is suitable for the Internet communication environment.

The above two models are marketing advertising models, which reveal how to guide users and complete user advertising click conversions. Explaining the user conversion path from the perspective of psychology and behavioral science is also worthy of learning and reference for e-commerce shopping guides.

2. E-commerce conversion link

Recalling the e-commerce user path classification mentioned earlier, according to the strength of the user's purchase goal, it can be divided into clear purchase goal link, vague purchase goal link, and strolling link; based on the above analysis, let's summarize the complete link model of these three types of users in an ideal state.

(1) Target-clear link

Open the product you want to buy from search, previous orders, or homepage recommendations, match the price with your psychological budget, and complete the order. Then the perfect expectation for stores and platforms is that users can repurchase, so it is a matter of how the platform and stores can provide good logistics services and ensure product quality. Then the Pinduoduo platform helps merchants to establish a positive repurchase system for seed users, maintain users' store awareness and product awareness, and complete purchase conversions faster.

(2) Purchase target fuzzy link model

The great thing about Pinduoduo is that it has done a lot to make users excited during the shopping process, such as receiving random red envelopes, a big gift box, or a huge coupon, and all of them are only valid for a short time. If the product is suitable, users will be very willing to complete the purchase.

For example, it costs 5 yuan to buy two cucumbers at a fruit store, but with the various discounts you get on Pinduoduo, you only have to pay 11 yuan for a box of three kilograms of cucumbers. Isn’t that very affordable and cost-effective? At that time, you can chop the cucumbers, eat them raw, and use them as a cucumber mask. It is really affordable and exciting. Place an order now.

(3) Wandering Link Model

In the browsing link, Pinduoduo has demonstrated the power of a real-time and timely personal push system. While users are browsing, we can keenly discover products that users may be interested in. It’s like when you go to the mall to buy groceries and suddenly you see a toothpaste promotion. You pick it up and take a look, and then the salesgirl tells you that if you buy this toothpaste now you can also get a toothbrush for free, and the promotion is only for these two days. Would you consider buying it? It’s like when you go shopping at a cosmetics store and don’t know which facial cleanser to buy, and the shopping guide comes over to introduce the products and recommends the right ones to you based on whether they are hydrating, gentle, and suitable for your skin. If you are still hesitating, the girl will guess which product you might like to buy, and then tell you that this facial cleanser is still on sale, you can buy one to try it out first, and she can also give you one or two samples. Well, Pinduoduo’s personal recommendations are just like the role of a shopping guide.

This may be a good development direction for AI shopping assistants in e-commerce in the future.

So think about it the other way around. If a user is browsing and finds that no product impresses him or her and he or she is not interested in any product, then it will be difficult for this user to complete the purchase order conversion.

As an ordinary user, you need to buy a lot of daily necessities, and there may always be a product worth buying.

The above models are all ideal user path displays. In reality, most user paths are much more complicated than this, so corresponding algorithm engineers, data analysts, data product managers, etc. are needed to analyze user behavior path data, identify problems, solve them, and then improve user experience.

5. Personal tips

When it comes to improving user purchase conversion rates, Pinduoduo has done a great job, and there is much more worth learning and drawing lessons from. In the previous analysis, I also mentioned some of my own ideas, as well as some ideas about social modules and game modules. Here are some personal suggestions for purchasing:

• Can live broadcast be placed on the homepage as an entry module?
• Pay attention to the column below and add a search query column?
• Can store search and photo search for the same item be made more eye-catching?
• After users click on the group buying message barrage on the homepage, can they directly enter the product details page and display the group buying message on the product picture?
• In the classification column, brands can be placed in the front; can some best-selling lists and well-received lists be recommended, somewhat similar to KTV song recommendations?
• Add a one-click reading function to the chat?
• Bargaining can get some cheaper goods for free. Is the bargaining method simpler?
• When users return to the page, is the rate of abandoning the low-price pop-up window more intelligent?

6. Support behind the scenes

Good idea - business model

The rise of Pinduoduo originated from a good idea. It used the thinking of game + social networking to do e-commerce, seized the user's low-price purchasing psychology, and set off a trend of main players getting goods for free. And it has done a good job in terms of user stickiness, providing cash red envelopes, making more money, etc., to cultivate users' habit of logging into Pinduoduo to shop whenever they have time.

Seizing the user trend - mobile Internet + rural e-commerce

In the prosperous era of mobile Internet, with a huge user base and an upward trend, we are focusing on e-commerce. We will also comply with the government's support policies for rural e-commerce, provide good services to various fruit farmers and merchants, and help them acquire more user groups.

High-quality services provided to merchants——B2C platform

Behind the low prices, there are also various thoughtful services provided by Pinduoduo to merchants. From entering the platform to launching products, and product logistics and distribution, there are excellent guidance and services. For details, see Pinduoduo's open platform.

Pinduoduo is also helping some OEM manufacturers to make their own brand products, which is great!

Powerful brand marketing——PDD

Pinduoduo spares no effort in placing advertisements on major platforms and has also received good support on the WeChat platform, allowing users to maximize their personal influence and focus on user growth.

PDD was listed on Nasdaq on July 26, 2018, and we can see that it is continuously promoting promotions with billions of subsidies to achieve brand building. Pinduoduo will also use most of the funds raised to expand the company's business and upgrade its technology. Huang Zheng himself also said that PDD's culture is still an entrepreneurial culture, a battlefield for hard work, and is committed to providing high-quality services to merchants and buyers.

On December 31, 2019, PDD sponsored Hunan Satellite TV's "New Year's Eve Concert". Although it had a strong promotional atmosphere, it increased the majority of netizens' awareness of PDD's red envelope e-commerce and massive sales.

There are also low-price subsidies for iPhones and other activities~~~

summary

Pinduoduo's success is huge. Its rapid rise in five years is difficult to replicate. However, we can learn a lot of ways of thinking from it to improve user awareness of our own products and increase conversions.

As an e-commerce platform, Pinduoduo has combined many methods and technologies to realize the AI ​​shopping guide model in online shopping malls, restoring the bidding effect of a real large supermarket and hypermarket. Provide users with low-priced product options, recommend more attractive products to users based on their click history and portrait data, and give users more discounts to impress users to place orders and complete payments. Buy it, it's really suitable. You can get all the discounts if you buy it. It's only for this one day, so hurry up and place an order!

Pinduoduo’s social module is also very powerful and should not be underestimated!

Author: Julie

Source: Julie