How does Pinduoduo achieve user growth?

Recently, Pinduoduo has been caught up in a counterfeit scandal and has been pushed into the forefront of public opinion. Although it was criticized by netizens as having "many pitfalls", Pinduoduo still managed to overtake its competitors when the demographic dividend of e-commerce was almost gone. This article will take you to review Pinduoduo's products and operating logic and see its merits.

Since 2017, remarks about the arrival of the ceiling for online traffic growth have continued to appear in major media outlets. At the same time, business models such as ofo, offline KTVs, and claw machines that leverage offline traffic to gain capital favor have also been at the center of controversy.

However, three companies unexpectedly overtook others: Kuaishou , Pinduoduo, and Qutoutiao .

This article mainly analyzes Pinduoduo's growth logic.

I. Basic Situation

Online time: October 2015

Number of users: now exceeds 300 million

GMV: exceeded 1 trillion in 2017, ranking third in China (in the same year, Taobao 10 trillion, JD 13 trillion)

Daily order volume: exceeded JD.com in November last year

2. Pinduoduo’s Growth Logic

Judging from the above data, although it has been online for two and a half years, its GMV has already reached the third place in domestic e-commerce, far exceeding old e-commerce companies such as Vipshop and Mogujie , and its daily order volume has even exceeded that of JD.com.

What kind of products and operational strategies are behind such a rapid growth rate?

The following article will attempt to analyze Pinduoduo's growth logic.

2.1 Basic Understanding of User Growth

In order to conduct a more in-depth analysis, the author first reviewed the book " Growth Hacker " written by Fan Bing. The theoretical part of this book describes a complete growth hacking practice process.

The theoretical part of the book is summarized as follows:

1. Building a growth team;
2. A good product is the key to growth – find the product’s “aha!” moment;
3. Identify levers for growth;
4. Fast-paced experimentation.

To sum up: first build a complete growth hacking team, find the core value points of the product for user growth ("aha!" moments), and then through rapid iterative growth experiments, let more users experience the "aha!" moments and achieve growth.

At the same time, the article also mentioned an important user growth model - the AARRR model , which stands for " attracting new users -activation- retention -payment-self-propagation". In the following text, I will also use this model to sort out Pinduoduo's growth logic.

2.2 Pinduoduo’s Growth Model

2.2.1 Attracting new customers

Currently, the main channel for Pinduoduo App to attract new users is WeChat ecosystem diversion .

When users help friends bargain, they are prompted to download the app to bargain more

After the first bargaining, the copywriter strongly reminds users to download the App

For users in third- and fourth-tier cities who are highly sensitive to prices, discounts seem to be the best way to attract new users.

Here is another little detail:

This can be understood as: Pinduoduo's "price discrimination" against users with different price sensitivities - if 10 yuan does not attract you, it means the discount is not enough, so I offer you a discount of 30 yuan, will you come?

In addition, pre-installed software by mobile phone manufacturers and cooperation with variety shows have brought considerable traffic to Pinduoduo.

Pinduoduo sponsors "Go Fighting" and "Sing! China"

2.2.2 Activation

In the traditional AARRR theory, activation refers to the behavior of users registering and logging into their accounts after downloading and installing the App. After all, the account system is the cornerstone of building a social firewall for most apps with social attributes (such as Moments, Zhihu, Weibo, etc.).

What is different is that after the user downloads and installs the Pinduoduo App and opens the App for the first time, it does not guide the user to log in to the App.

What I understand is that users will be guided to log in during the subsequent shopping process, which will help reduce loss during the login process. In the shopping scenario, users have already made impulse purchases, so it is very natural to let users choose to log in via WeChat .

2.2.3 Retention

After talking about activation, let’s talk about how Pinduoduo promotes user retention.

First of all, based on the WeChat ecosystem, Pinduoduo has extremely strong user reach capabilities.

At present, Pinduoduo’s efforts to retain its users include:

(1) Service account push message

Pushing messages through service accounts has become Pinduoduo's first means of reaching users. When users do not actively open the Pinduoduo App or mini-programs , messages through service accounts can stimulate users to actively use related services.

Trial membership, cabin luggage (high-frequency daily necessities), free gift, 2.69 million people, these words are undoubtedly stimulating the minds of users. Even I, a college student in a first-tier city, feel that it is a good deal, not to mention Pinduoduo's main target users .

(2) Screen opening gift packages and discounts

In the previous step, we mentioned that Pinduoduo reaches users through the WeBank service account and guides users to the Pinduoduo mini program and App. When users enter the App, Pinduoduo creates a sense of discount and surprise for users through pop-up windows on the opening screen, further guiding users to use Pinduoduo's services, thereby completing the retention process.

2.2.4 Payment

In fact, looking at the entire Pinduoduo App, most of the functions are to guide users to spread the word by themselves (see 2.2.5 for details). The task of getting users to pay and make impulse purchases most likely falls on the action of group buying. How does Pinduoduo guide users to complete the group buying task through product design?

( 1) Short decision path

The shopping cart function is not designed so that users can quickly complete the payment action, that is, complete the payment behavior, in impulse consumption scenarios.

Shortening the shopping path as much as possible can effectively reduce the churn rate along the path and increase the proportion of users paying.

(2) Impulsive purchases within apps

As mentioned above, users complete payment behaviors through impulse consumption scenarios, so how does Pinduoduo amplify users’ impulses?

My understanding is: design "attractants" everywhere in the App. For example: the home page carousel notification mentioned below.

Click on the carousel notification to go directly to the group buying page

(3) Impulsive consumption on WeChat

Not only within the App, but also within the WeChat ecosystem , Pinduoduo uses group chat as a carrier to combine the two actions of self-propagation and guiding payment into one.

My personal understanding: The carousel notifications at the top of the homepage and group sharing in WeChat groups are both ways to guide people to impulse consumption.

The difference is: the former is shared by strangers, so the conversion rate will be lower; while the latter is combined with the endorsement of acquaintances, so the conversion rate will be very high.

2.2.5 Self-propagation

After experiencing Pinduoduo's mini program and App, my feeling is: this is a product that exudes the light of self-propagation. Most of its growth activities are designed to guide users to spread the word. The core is actually - targeting value-sensitive users, using discounts + bargaining, group buying and other product mechanisms to guide users to spread to WeChat group chats and Moments , thereby completing a series of actions such as self-propagation, attracting new users, and paid activation.

Self-propagation activity design is the core of Pinduoduo's product design, so I will elaborate on it in 2.3 Pinduoduo's growth activity design.

2.3 Pinduoduo’s Growth Activity Design

2.3.1 Zero Yuan Purchase

User positioning: The customer base in third- and fourth-tier cities is largely untapped, and most of them socialize among acquaintances.

First of all, users in third- and fourth-tier cities have always been a customer group that is difficult for e-commerce platforms such as Taobao and JD.com to reach. Because the Internet penetration rate of this group of users is not high, Taobao and JD.com have a certain usage threshold for them, so Pinduoduo can easily occupy the minds of users.

Secondly, the social circles in third- and fourth-tier cities are relatively fixed, so based on the endorsement of acquaintances’ social interactions, Pinduoduo’s promotion can have a very good effect.

Decision cost: Zero-yuan purchase means no need to spend money.

Compared with the group buying model, the smarter thing about zero-yuan purchase is that you don’t need to pay for it yourself. Then for users, the decision-making cost is almost zero.

Because social currency is very cheap (relative to prices) in the social circles of acquaintances in third- and fourth-tier cities, the extremely low decision-making cost ensures that this cycle can be run countless times.

Channel: The “sharing within the group” model accurately targets customer groups with similar user attributes, improving the conversion rate from exposure to new customers.

The more advantageous feature of groups based on the WeChat ecosystem than on the Taobao platform is that users within the group have a certain degree of similarity in user attributes. For example, if they are all users from third- and fourth-tier cities, then the products they like are more likely to be similar, which also improves the conversion effect of exposure to new customers.

2.3.2 Group Buying

“Zero-yuan purchase” is mentioned above, but you should know that it is just a way for Pinduoduo to attract new users and turn every new user into an old user. However, these users do not actually pay on the platform. In order to convert them into paying users , Pinduoduo designed a product feature called “group buying”.

(1) Social Currency

In fact, the essence of group buying is the same as zero-yuan purchasing, which allows users to use their social currency to get price discounts.

The concept of social currency that I propose here refers to the influence you have on social networks . The greater your influence, the more social currency you have.

In fact, if you send a group buying link to a group and it is accepted by the users in the group (for example, if you send it to a relative group composed of users in third- and fourth-tier cities), then everyone will recognize the benefits you bring to everyone, and your social currency will increase. If you post it to a white-collar group, maybe everyone generally does not approve of such low-priced goods, and your social currency will be reduced.

So, having said that, it is not difficult to understand why users in third- and fourth-tier cities are Pinduoduo's user base, because Pinduoduo's product content and prices have met their demands, so the old user-new user model can run.

(2) Group buying process

Product browsing page - click "One-click group purchase" - select specifications and colors - enter the payment page - click "Pay now" - enter the purchase completion page - click "Invite friends to join the group" - the chat list page pops up - select and send, and now the purchase and sharing process is completed.

During the entire process, the actions are connected smoothly, the guidance for the next step is sufficient, the learning cost is very low, and it is conducive to new netizens to get started quickly.

2.3.3 Other growth activities

In addition to the two core growth points of group buying and zero-yuan purchases, we can also see from Pinduoduo's App that this company's gene is sharing, because more than half of the functional modules on the homepage are related to sharing.

Summary of the gameplay and purpose of the functional modules on Pinduoduo’s homepage

Pinduoduo homepage module

It can be seen that nearly half of the content on the homepage is related to sharing, and the end point of sharing is: guiding new users to download the App, follow the official account (mainly to attract new users), and promote activation (auxiliary).

From this we can judge that the main growth target of Pinduoduo’s current products is still new users, not old users.

After clarifying the goal of product growth, I tried to think about how to further optimize it from my perspective.

3. Thinking about Pinduoduo’s next growth direction

From the analysis of the functional modules on the homepage above, we can conclude that the current growth direction of the product is more focused on attracting new users, so this section also provides some thoughts from the perspective of new user growth.

3.1 Macro Dimension (Strategic Level)

From a macro perspective, Pinduoduo's new customers come from both horizontally and vertically. Horizontally, it means extending from users in third- and fourth-tier cities to first- and second-tier cities; vertically, it means continuing to deepen the user base in third- and fourth-tier cities and increase penetration.

3.1.1 Vertical Play

The main goal is to increase Pinduoduo's penetration rate in third- and fourth-tier cities, so let's think deeply - where is the current bottleneck for users to share links and attract new users?

Sharing links has a significant effect in attracting new close friends (relatives), but the purchase frequency of these close friends is fixed and it is impossible for them to make high-frequency purchases over a long period of time, so it is necessary to attract ordinary friends to join.

Simply sharing a link may mean harassment to ordinary friends. As mentioned above, in the circle of ordinary friends, sending a product link that does not meet the other party's needs may mean a reduction in social currency, and users may not be willing to share.

So, the question becomes “How to increase users’ willingness to share with ordinary friends and the subsequent conversion rate?”

I think there are several ways:

1. Guidance tips: When users share, actively mention the concept of "social maintenance" to encourage users to contact ordinary friends who they rarely contact as much as possible, rather than frequently posting to close friends.
2. Improve brand tone: enrich Pinduoduo's product line, launch higher quality and higher-grade products, and at the same time do a good job in brand promotion to enhance the public's favorability towards Pinduoduo. When users perceive that Pinduoduo's brand tone has improved, they will be more likely to make decisions to share.
3. Providing incentives: Incentives such as high amounts of cash can help increase willingness to share. Of course, other incentives can be used in addition to cash.

3.1.2 Horizontal Play

The main goal is to migrate to first- and second-tier cities and gradually increase penetration.

I think this is the same as the first point of the vertical strategy, which is to improve brand quality, because users in first- and second-tier cities have higher quality requirements for e-commerce products. Therefore, if you want to develop horizontally, product quality and brand management are two things that must be done.

3.2 Micro Dimension (Execution Level)

After talking about the micro dimension, let’s go back to the Pinduoduo app to see if there are any points worth optimizing in the product design.

Because I am considering it from the perspective of attracting new users, I experienced the entire process of the "BangBang Free Group" and thought as follows:

(1) User value : Allow old users to obtain products for free, but this requires the use of their social resources;

(2) Product value : One old user can attract several (5-20) new paying users, and through subsequent product design, they can be guided to become Pinduoduo buyers;

(3) User scenario : When the number of members in a help group is small (for example, only 3-5 people are needed), users may post the message to a small group and ask three or five friends to help fill the group.

However, when a larger number of people is needed (for example, 20 people), it is difficult for users to successfully form a helping group if the group is not very active (of course, these data can be seen in the product backend, and as an outsider, I can only analyze it based on common sense).

So considering the large number of people who need it, I think we can add a "share to friends circle" function here.

• Cost: The path for sharing to Moments can also be seen in other functional modules (reusable), and the implementation cost is negligible.
• Benefits: Improve the success rate of user help groups, give users positive feedback, promote the use of this function next time, and increase overall activity and the number of new users.

(4) User incentives : After users confirm their participation in the “BangBang Free Group”, product design that encourages users to actively forward information should be the core, because it is the first step in determining whether the entire process can be successful.

However, during the product experience, I found that the perception given to users by the copywriting prompts did not seem strong enough.

The page after the user participates in the "BangBang Free Group"

I understand that for users, what they care about most is how much money they can save, so the original price of the product and how much money the user can save should be highlighted on this page. This will give users a stronger perception and they will be more motivated to share the link.

Modified page

IV. Conclusion

This article sorts out Pinduoduo's growth strategy and puts forward some of its own thoughts. Of course, in the absence of internal product data, many ideas are unrealistic. Internal data support is needed to make a functional change. At the same time, it is also necessary to use a/b testing to pre-test the function launch.

Here are my previous thoughts on Pinduoduo (not limited to growth):

Thank you for reading this, welcome to communicate

Source: Product Deep Thinking (ID: p mbr uc e)