Pinduoduo has attracted 300 million users in just two and a half years. How did it grow so explosively?

In the market landscape dominated by Alibaba and JD.com, the domestic full-category e-commerce track was completely blocked, but Pinduoduo became an exception. Since its launch in October 2015, the platform has attracted over 300 million users (more than 540 million on Taobao and more than 300 million on JD.com), with millions of merchants and a monthly GMV (total transaction volume) of over 3 billion. Please note that Pinduoduo is only 2.4 years old, and the voices criticizing it have never stopped. What has it experienced? How did it grow explosively?

01 Introduction

Taobao was founded on May 10, 2003. At that time, the leader of domestic C2C e-commerce was still eBay, which acquired Eachnet in 2002. Liu Qiangdong was still an offline agent for optical and magnetic products in Zhongguancun. It was not until 2004 that he fully switched to online and established JD Multimedia Network. It was not until 2005, when the Taobao team led by Jack Ma defeated eBay, that Taobao became the undisputed leader in China's e-commerce.

Since then, domestic e-commerce has entered a decade-long civil war, including traditional enterprise transformation of Suning and Gome , foreign-funded No.1 Store, discount e-commerce Vipshop , beauty e-commerce Jumei, etc., but apart from Taobao, the largest giant is JD.com.

The two have been in a love-hate relationship for more than ten years. Neither of them has the ability to kill the other, nor has it lost the possibility of acquiring the other. Other small e- commerce platforms are facing transformation or sale, and everyone is fleeing the e-commerce track. Everything seems to have entered a stable stage until the emergence of Pinduoduo, which broke this balance.

Pinduoduo positions itself as the "leader in social e-commerce." Social e-commerce, as the name suggests, is "social + e-commerce". The combination of the two has huge potential and has fascinated the entire industry. However, when JD.com joined hands with Tencent but no sparks were created for two years, and when Alibaba encountered obstacles everywhere from "Laiwang" to "Quanxi", people gradually began to believe that the combination of social networking and e-commerce was "incompatible".

According to the "Third Quarter China Mobile Internet Market Report" released by Cheetah Global Think Tank in 2017, Pinduoduo app's weekly active penetration and average weekly opening times per person have surpassed JD.com. In the fourth quarter of 2017, on the AppStore, Pinduoduo had long occupied the top spot in e-commerce and the second place in the overall ranking. It can be said that the results were very impressive.

JD.com has maintained its position as the second largest e-commerce company in China after ten years of hard work and persistence, and will never give it up to Pinduoduo. Friends who have read "Creating JD.com" should know some of the difficulties Liu Qiangdong has experienced. It can be said that JD.com's current achievements are very hard-won. So, who is stronger, Pinduoduo or JD.com? I think 99% of readers, including myself, agree that JD.com is stronger. However, why can a project incubated internally by a game company stand out in this extremely crowded track? Let’s take a look.

As I said before, Pinduoduo certainly has many problems, but this article is not intended to be a nitpicking article. We will deeply dissect a product from the perspective of product and operation . As for the analysis from the commercial and ethical perspectives, it is not within our scope.

This article explains the story behind Pinduoduo's growth through product design logic, operational strategy, user comments and other aspects , trying to answer questions about Pinduoduo's growth. What products and operational methods did they use to tear open a gap in China's e-commerce and become a super unicorn.

02 Introduction to Pinduoduo

Founded in September 2015, Pinduoduo is a third-party social e-commerce platform focusing on C2B group buying. Users can purchase high-quality products at a lower price by initiating group purchases with friends, family, neighbors, etc. Among them, the social concept formed through communication and sharing has formed Pinduoduo's unique new social e-commerce thinking.

Figure 1-Pinduoduo product interface

Pinduoduo's user types can be roughly divided into three categories : one is the group leader who actively initiates group buying; one is the group participants who receive invitations; and the other is the platform merchants. After in-depth experience with Pinduoduo, we obtained the following business logic and product function structure diagram:

Figure 2-Pinduoduo core logic

Figure 3- Pinduoduo product function structure

Pinduoduo has 300 million users in less than 3 years, and its monthly GMV has exceeded that of JD.com (according to Pinduoduo's internal statement, which needs to be verified). All this was not achieved overnight. Pinduoduo APP has been upgraded externally more than 100 times, an average of one upgrade every 8 days. It can be said that the entire team is working at a high speed and overload. Let's take a look at Pinduoduo's major development events:

In August 2015, Pinduoduo received millions of dollars in Series A investment ;

In September 2015, version V1.0 was officially launched;

In February 2016, the monthly transaction volume exceeded 10 million, and the number of paying users exceeded 20 million;

In the Tencent App Store's "Star APP Ranking" in June 2016, Pinduoduo successfully ranked among the top ten popular APPs in May;

July 2016: Completed USD 110 million Series B financing , led by Tencent;

In September 2016, Pinhaohuo merged with Pinduoduo, and Huang Zheng, CEO of Pinhaohuo, became the CEO;

On October 10, 2016, the single-day transaction volume for the anniversary celebration exceeded 100 million yuan;

On November 11, 2016, the GMV reached 205.7 million on Singles’ Day, setting a new record;

In December 2016, Pinduoduo’s monthly GMV exceeded 2 billion;

In March 2017, the monthly GMV exceeded 4 billion. In the same month, in the "2016 China E-commerce User Experience and Complaint Monitoring Report", the number of complaints about Pinduoduo ranked second in the industry, reaching 13.12%.

In April 2017, Pinduoduo ranked first in the IOS e-commerce segment for the first time.

In June 2017, Pinduoduo ranked fifth in the e-commerce app rankings released by Analysys, entering the first echelon of the industry.

In September 2017, the number of users exceeded 100 million, the monthly GMV exceeded 1 billion, and the average daily orders exceeded 1 million;

In October 2017, it occupied the first place in the iOS overall ranking and shopping category for nearly a month.

In December 2017, the number of users exceeded 300 million. The latest e-commerce APP data released by Cheetah showed that Pinduoduo once again surpassed Tmall , Suning.com, Vipshop, and JD.com. Its weekly active penetration rate was second only to Taobao Mobile, ranking second among all e-commerce apps.

In January 2018, the "Poverty Alleviation and Agricultural Assistance Report" was released. In 2017, a total of 3.4 billion yuan was invested in the public welfare promotion of agricultural products in poor areas to solve the problem of millions of farmers having difficulty selling their products. It covered 730 national-level poverty-stricken counties, supported 48,000 rural merchants, and generated more than 900 million poverty alleviation orders throughout the year.

In February 2018, the "2017 Pinduoduo Consumer Rights Protection Annual Report" was released. In 2017, 10.7 million suspected infringing products were removed from the shelves, and 40 million infringing links were blocked. At the same time, a 150 million consumer protection fund was established, and the "ten times compensation for fake products" policy was written into the platform agreement.

03Product Growth Analysis

2.1 Analysis of overall product development trends

Up to now, Pinduoduo iOS has released 103 versions, with an average of one version released every 8 days. The pace can be said to be very stable. How does the Pinduoduo team arrange feature priorities and control the release rhythm? Let’s take a look together. In order to more intuitively see Pinduoduo’s entire development trajectory and speed, we have sorted out Figures 4 and 5.

Figure 4- Total downloads and user growth of Pinduodong Android app (2015.10-2018.03)

Figure 5- Changes in Pinduoduo’s overall ranking and shopping category rankings on iOS (2015.10-2018.3)

Through the above picture, we divide Pinduoduo's development stages into the following three sections for interpretation.

Figure 6- Analysis of Pinduoduo's development history

Phase 1:

October 2015 to December 2016 - Product exploration period.

During this stage, the Pinduoduo team focused on polishing the product and quickly verifying the business model . At the beginning of its establishment, relying on the positioning of "social + e-commerce" and taking advantage of WeChat's 800 million active users, it quickly attracted a large number of long-tail e-commerce users. The biggest contradiction during the entire stage was in offline supply chain control and merchant supervision. The negative comments received mainly focused on not receiving goods, poor quality, counterfeit goods, etc.

Phase 2:

December 2016 to October 2017 – the first wave of growth.

During this stage, after adjustments during the exploration period, the entire enterprise has reached the passing line in back-end supply chain management. By implementing a series of actions such as internal anti-corruption, severe crackdown on counterfeiting, and targeted poverty alleviation, Pinduoduo began to gradually exert its strength on the operational side, and continued to attract new users through operational means such as continuously increasing offline advertising and sponsoring popular variety shows. The product downloads and praise rates have steadily increased.

Phase 3:

October 2017 to present - period of rapid growth.

During this stage, through the gradual exposure brought by the first wave of growth, Pinduoduo completely came into the public eye. It had long occupied the No. 1 position in e-commerce product downloads, and its transaction volume exceeded that of JD.com, achieving a counterattack as a newcomer in the e-commerce industry and becoming an absolute dark horse . As the second half of the year entered a period of frequent activities in the e-commerce field, it completely detonated the market through the form of cash red envelopes.

above. This is just a simple summary of Pinduoduo’s important development stages. Let us now interpret the strategies and methods adopted by Pinduoduo’s products and operations around these stages.

2.2 Product Phase Iteration Analysis

1. Product exploration period (October 2015-December 2016)

Pinduoduo was not penniless when it was first established. Its parent company was a Shanghai gaming company - Shanghai Xunmeng Technology Co., Ltd. So why would a gaming company incubate an e-commerce project internally? This requires mentioning Huang Zheng, one of the founders of this game company, who is also the founder and CEO of Pinhaohuo. Pinhaohuo is Huang Zheng’s first project after he took a break due to illness. It focuses on "social fruit e-commerce" and quickly achieved profitability. Pinhaohuo adopts a self-operated model. After seeing that Pinhaohuo was making smooth progress on the social e-commerce path, the game team, relying on the product sense accumulated from making games, felt that the social e-commerce model could be operated as an e-commerce platform, rather than just adopting a direct sales model. So, they launched the Pinduoduo project.

Pinduoduo positioned itself as a "social e-commerce" at the very beginning of the project and has been moving along this path without asking about the east or the west.

The main user groups at this stage are housewives who are thrifty and price-sensitive.

The core user needs at this stage: buy the goods they need at a low price.

Pinduoduo’s business needs at this stage: attract merchants to join the platform and expand the platform’s product categories and business volume.

Product main iteration version & iteration logic analysis:

In terms of product iteration, this stage covers versions V1.0-V3.3.0. A total of 44 versions have been iterated on the iOS side, with an average of one version every 10 days. By experiencing the products of this period, one can clearly feel the various adjustments made by the Pinduoduo team and the detours they have taken.

Pinduoduo has been trying to find the most efficient way to search, and made three major adjustments to the search page during the exploration period.

From the above picture, we can see that the Pinduoduo team tried between "item visualization" and "more efficient search", and finally adopted the search page display method of item visualization. Search is like the Harmony Express for e-commerce platforms. It is responsible for the rapid connection between consumers and goods. The most important point is efficiency, followed by connection (mainly for groups without clear shopping goals). The Pinduoduo team extended the search function into search + search guide page. The search guide page is mostly used by users who only have a general idea of ​​the category or even just browse around. For them, connection and guidance are the goals that the product page needs to accomplish, and efficiency is not the top priority. The second iteration of the search page clearly put efficiency first, at the expense of a better connection and guidance experience. However, later, Pinduoduo returned to a design style that combines visual guidance and quick search and has been using it ever since.

On the other hand, Pinduoduo has made many attempts to change the second entrance of the teb bar at the bottom. In fact, this first-level entrance is mainly to receive traffic from those who have not found suitable products on the homepage and come here to browse. The modules include : "New Products", "Featured Topics", "Platform Popularity" and other sections. As a hodgepodge section with clear product goals but a wide variety of content, the name teb really made the Pinduoduo team struggle with various postures. It has evolved from hot list - ranking list - new arrivals. According to the content of this module and the needs of users, it may be a good idea to use the common "discovery" or even directly call it "Taobao".

Pinduoduo launched the 1 yuan purchase channel in iOS V2.3.2. This feature caused a lot of controversy, but it was very successful in driving a surge in Pinduoduo's downloads. As we all know, in August 2017, the Office of the National Leading Group for Special Risk Rectification of Internet Finance issued the "Opinions on the Characterization and Disposal of Online " One Yuan Purchase " Business", which clearly defined online "one yuan purchase" as disguised gambling or fraud, and will launch a new round of rectification and cleanup work on it. Since then, NetEase, Xiaomi and others have stopped their 1 yuan purchase business. The biggest difference between Pinduoduo's 1 yuan purchase channel and the previous 1 yuan shopping is that the previous 1 yuan purchase was an independent profit model while Pinduoduo's 1 yuan purchase module is a product traffic tool . If you fail to win a prize in a 1-yuan purchase on Pinduoduo, a refund will be given and a platform voucher will be given. This avoids policy risks, caters to public demand, and successfully drives traffic to the product.

User Reviews

From the perspective of the product life cycle , although this is Pinduoduo's exploration period, their development is too brutal. In just one year, the number of users has reached nearly 100 million. For this rookie e-commerce product, it can be said that this is a mixed blessing. Both good and bad reviews are at two extremes. The overwhelming majority of good reviews are: cheap; the overwhelming majority of bad reviews are: liar.

We found from the thousands of positive reviews during this period that "cheap" is the word that appears most frequently in Pinduoduo's positive reviews. This label was actively marked by the Pinduoduo team for early business expansion. Because no commission is charged and it is free to be on the homepage, Pinduoduo even requires merchants to sell goods at a loss in order to grow its business. This is very familiar to merchants who have experienced the Taobao era. There is even a saying that goes: small losses are no loss, big losses are a sure profit. Therefore, most businesses will actively cooperate and work together to expand the market.

On the other hand, the surge in business volume brought great support pressure to the entire team, and it was even dubbed a "scam company" by the public. On the one hand, there is a surge in business volume, and on the other hand, there is weak control over the back-end supply chain. The two have become opposing forces that tear Pinduoduo apart. There are reports that a large number of users have successfully group-purchased but had their orders cancelled (in fact, they participated in the 1 yuan purchase business but failed to win the prize), or that shipments were delayed.

Although Pinduoduo's official person in charge stated that as a start-up e-commerce company, it has a strict and cautious merchant supervision mechanism and a dedicated quality control team to ensure product quality as a double insurance, striving to make consumers feel at ease when buying. In terms of logistics supervision, "Pinduoduo" adopts the method of dedicated merchant logistics docking to ensure that user problems are resolved as soon as possible. However, it can be seen from the comments that Pinduoduo's back-end support capabilities during this period were far from enough to reassure consumers.

Operational strategy at this stage

From its launch in October 2015 to August 2016, Pinduoduo's operations on the user side can be summarized as "zero promotion, zero advertising", mainly because of its novel group-buying model and the use of some popular products to attract new users to the platform. During this stage, their main operations and investments are in the back-end industrial chain, especially in attracting investment and quality control.

In the first half of 2016, relying on the high growth of its own platform and its own high execution capabilities, the Pinduoduo team successfully introduced partners such as NetEase Kaola, Zhou Hei Ya, and Nivea, enriching the platform's product categories and quality. The preliminary list is as follows:

In September 2016, Pinduoduo and Pinhaohuo, both social e-commerce platforms, merged. After the merger, Huang Zheng, the former CEO of Pinhaohuo, served as the chairman and CEO of the new company. As an e-commerce platform incubated internally by a gaming company, Pinduoduo's entire team has great advantages in products and technologies, but is relatively weak in supply chain management. Pinhaohuo focuses on fruit social e-commerce and has achieved profitability. As an e-commerce operating team, it has its own back-end supply chain management genes, and the merger can achieve complementary advantages.

The two parties will carry out in-depth collaboration in areas such as user resources, online operations and marketing promotion . For example, Pinduoduo's selected products will appear in the Pinhaohuo mall, gradually expanding its connotation and extension; and Pinduoduo will also open a quality fresh food channel named Pinhaohuo in its mall, setting a service benchmark to improve the overall quality of Pinduoduo's fresh food category. The biggest motivation for the merger of the two is Huang Zheng himself. He is both the founder of Pinhaohuo and the major shareholder of Pinduoduo. He served as the chairman of Pinduoduo before the merger.

On October 10, 2016, Pinduoduo celebrated its first anniversary, and of course the results were very impressive. The transaction volume on that day exceeded 100 million, successfully completing a small goal. Pinduoduo's anniversary celebration is divided into two phases: October 1st to October 9th is the warm-up phase, which mainly attracts users to participate in the promotion by distributing discount coupons at every hour; October 10th to October 18th is the anniversary promotion phase, with three flash sale products released every hour from 9:00 to 24:00 every day, for a total of 432 flash sales, with two products at less than 50% off in each sale and one product at 0.1 yuan.

In addition to price discounts, Pinduoduo also launched a puzzle prize activity in line with the concept of "group buying". As long as consumers collect five pieces in the "Anniversary Wheel" activity, they can get an iPhone 7.

After the merger, Pinduoduo's quality control has been significantly improved to a higher level through the optimization and adjustment of the back-end supply chain by the Pinhaohuo team. At the same time, the merged Pinduoduo has established its position as a leader in domestic social e-commerce. It also needs to improve its brand image by speaking out in many ways, so that more people will accept and believe in interesting ways of playing such as social e-commerce. At the end of the first phase (October), we began to invest in offline subway and bus stop advertising in Guangzhou.

Easter egg: Why was Guangzhou chosen as the first offline advertising stop? The person in charge of Pinduoduo said that Guangzhou is a very inclusive city that contains different population characteristics of various cities, which is also the reason why it became the first stop for Pinduoduo to place outdoor advertisements.

Summary of the stage

This phase was a period of accumulation of strength for Pinduoduo. Through a series of internal reorganizations and external cooperation, it initially established the image of a leading social e-commerce brand in China. In just one year, Pinduoduo's monthly GMV has surpassed Vipshop, becoming the third largest comprehensive e-commerce brand after Taobao and JD.com. Vipshop took nearly eight years to achieve this achievement. It can be said that Pinduoduo has overtaken others by leveraging the WeChat dividend and successfully squeezed into the top three domestic e-commerce companies.

2. The first wave of growth (December 2016-October 2017)

After the first phase of accumulation, Pinduoduo ushered in its real period of explosive growth. After more than a year since the merger, Pinduoduo has vigorously rectified its back-end supply chain management capabilities, strengthened internal anti-corruption efforts, and established a tough platform reward and punishment mechanism. Through a series of operations, Pinduoduo has begun to move forward in great strides.

The main user groups at this stage: women who need to shop across the entire network.

The core user needs at this stage: Buy the required items at a high cost-effectiveness.

Pinduoduo’s business needs at this stage: more users and platform transaction volume.

Product main iteration version & iteration logic analysis:

Most of the product iterations during this period were centered around operations, such as expanding new product category channels on the homepage (electrical appliance city, home furnishings, mobile phone recharge, etc.); dividing 100 million red envelopes equally among the 12 zodiac signs at the end of the year; and having a dating festival for goddesses, etc.

In addition to operational support, most of the work is focused on optimizing the experience in areas such as logistics, customer service, and search. We found two special moves, let's take a look at them.

In version V3.19.0, Pinduoduo supports recording a voice message when starting a group to increase the success rate of group buying. As an important means of implementing Pinduoduo's social e-commerce, Pinduoduo has been stimulating users to share and form groups through various channels. In historical versions, it even supported incentives for group leaders to get free orders for certain products after forming a group. Stimulating sharing is only a means, not an end. The end is to make deals.

So, why does Pinduoduo use voice to increase the success rate of group buying? We speculate as follows:

Everyone has a limited number of close friends, and they will not continue to shop frequently. To successfully form a group, you need to attract more ordinary friends.

Simply sharing a link will have a low success rate for ordinary friends who are not very close to you, and may even cause harassment;

Compared with text, voice can convey more information and is more friendly.

Another discovery is that Pinduoduo has downgraded the weight level of overseas shopping. Pinduoduo has launched its overseas shopping business for more than a year. The entire team has placed high hopes on overseas shopping and even joined forces with NetEase Kaola to make up for the shortcomings of its own supply chain. The overseas shopping business has always provided a first-level entrance, but in the V3.37 version iteration, overseas shopping was downgraded from a first-level entrance to a channel on the homepage. It can be inferred that Pinduoduo's existing users are not ideal in driving the overseas shopping business.

User Reviews

During this stage, the overall preference of users in comments was greatly improved in terms of item damage and quality. Among the more than 20,000 product reviews from January 1, 2017 to September 30, 2017, the ratio of positive to negative comments was 15:1, which means that 7 out of 8 people gave Pinduoduo positive reviews.

Moreover, Pinduoduo's slogan of "Buy together, cheaper" promoted through multiple channels has also produced good results. Friends are not necessarily limited to chatting on WeChat, but can also group buy items together, further unleashing the power of social shopping.

At the same time, the control of the back-end supply chain has also begun to show results, with significant improvements in inventory management and delivery speed. Under Pinduoduo's "training", merchants have become aware of Pinduoduo's various ways of playing, and understand that they must comply with the platform's rules and strengthen their internal corporate skills in order to go further on Pinduoduo's platform.

Operational strategy at this stage

In May, Pinduoduo once again invested heavily in subway and bus advertisements in parts of Beijing, and simultaneously launched the "brainwashing hit song" - "Pinduoduo". Pinduoduo's hit song was adapted from "I Miss You So Much". Anyone who has heard it once will have the feeling of "magic music lingering in the ears" and hum it every day. Although it cannot be sung by everyone in the streets and alleys like a pop song, people always hum it involuntarily when they are mopping the floor at home or walking on the road. With the light notes, the whole person becomes much happier. This reminds people of the Melatonin advertisement that has brainwashed hundreds of millions of compatriots across the country for more than ten years. The difference is that Pinduoduo uses the entertainment nature of music to allow the public to automatically brainwash anytime and anywhere. It can be said that Pinduoduo has taken the adaptation of advertising music to a new level.

The 6.18 event (JD.com’s birthday, first initiated and used by JD.com) is the first large-scale sales event held by Pinduoduo in the new year. The event began to warm up on June 7 and officially started on June 12. 100 million red envelopes were distributed in the APP. In order to get the red envelopes, you need to find 2 extra friends to help you get them. A detail worth noting is that the page displays the division of the red envelopes in real time, which makes everyone believe that they can really get the red envelopes, but on the other hand, they feel anxious and quickly invite friends to share the red envelopes, which creates motivation for invitations.

In July, Pinduoduo further increased its advertising investment in film and television and variety shows. From "Go Fighting", "Legend of the Ancient Sword" to "The Voice of China", Pinduoduo became one of their largest sponsors this year, whether it was variety shows or dramas. It is reported that Pinduoduo spent 100 million yuan on the special sponsorship rights of "Extreme Challenge" alone. Pinduoduo sponsors the most popular variety shows and film and television programs. On the one hand, it increases product awareness, stimulates users to maintain rapid growth, and further penetrates first- and second-tier users. On the other hand, Pinduoduo is also trying to build a brand and establish itself as a trustworthy large platform.

Pinduoduo's monthly GMV during this period has exceeded 10 billion. This figure was just over 2 billion at the beginning of the year. It has increased by 5 times in more than half a year, which is astonishing.

Summary of the stage

This stage is very important for Pinduoduo, and it also directly pushed Pinduoduo to the forefront. Pinduoduo CEO Huang Zheng said frankly that this entrepreneurial journey is completely different from the previous ones and he is being pushed forward this time. As a serial entrepreneur , Huang Zheng has great respect for Singapore's Lee Kuan Yew. He tried to integrate social communication and e-commerce execution, and tried to build a small Singapore between the two.

3. Rapid growth period (October 2017 to present)

Pinduoduo is popular. It has become an existence that cannot be ignored, stimulating the nerves of every e-commerce person. After all, traffic represents money and represents another opportunity to turn things around. All of a sudden, all kinds of Pinduoduo store training institutions appeared on the market. They all used to work for Taobao. It can be said that the number of Taobao store owners is provided by these institutions to a certain extent. Taobao's prosperity is inseparable from them. Now, they voted with their feet, but this time, they chose Pinduoduo.

The main user group in this stage: people who shop online.

The core user needs at this stage: buy, buy, buy. I can buy whatever I want at a low price.

Pinduoduo’s business needs at this stage: establish a positive brand image.

Product main iteration version & iteration logic analysis:

This period is relatively short, with fewer product iteration versions. The product has gradually entered a stable stage and started to enter the stage of data-refined operations. Therefore, the overall idea of ​​iteration is to provide ammunition for the operation side.

Pinduoduo borrowed the idea of ​​collecting five blessings and sharing red envelopes, and evolved a new way of playing - group buying card collection. In essence, it is a point incentive and coupon distribution system. Users can obtain different group purchase cards by completing information, initiating group purchases, requesting from friends, participating in group purchases, and leaving shopping comments. The combination of group purchase cards can be exchanged for coupons for shopping.

Users can enter the group-buying card collection hall on their personal center page. Group-buying cards are currently divided into two categories: "behavior cards" and "category cards", which actually correspond to the points mall and coupons of classic Internet products. They do not change the essence but only the way of playing. As for the effect, it is not yet known. However, the author believes that it is very difficult to fully operate this incentive system because the threshold is high and the incentives are not direct enough. Users face too many unknown factors and will therefore largely give up participating.

User Reviews

Through a large amount of marketing stimulation, Pinduoduo has achieved rapid growth in both user base and transaction volume, with outstanding performance. According to reliable sources, Pinduoduo's GMV reached 40 billion in January 2018 alone, and its annual target is to reach 500 billion. At the current growth rate, there is a high probability that the target will be achieved.

Under the threat of low prices on the platform and social group buying, Taobao and JD users have fled to Pinduoduo. Of course, low cost is the main factor for them to choose Pinduoduo.

At the same time, complaints are still heard. Problems such as poor quality, untimely service, and failure to receive goods still plague Pinduoduo. Even if they are mentally prepared, the oncoming problems are constantly criticizing the Pinduoduo team for keeping moving forward.

In addition, when sorting out the comments on Pinduoduo, we found a very interesting phenomenon. The Pinduoduo team may have used a third party to brush the reviews. There are a large number of abnormal reviews with "template content 0X" on the App Store. However, the strange thing is that they are not brushed positive reviews, but a large number of brushed neutral reviews. If it is true, please ask the Pinduoduo team to correct their attitude and focus on back-end control. After all, you have spent a lot of marketing expenses, and the thousands of negative reviews you received are counterproductive to you.

Operational strategy at this stage

A series of events during this stage became the driving force behind Pinduoduo's rise, such as the anniversary celebration in October; the Double 11 National Carnival in November; the Double 12 Carnival in December; the year-end clearance; the spending at the beginning of the year, etc.

On Pinduoduo's first anniversary in 2016, its daily sales exceeded 100 million. In the past year alone, Pinduoduo's user base has doubled. Although the daily sales volume for the second anniversary has not been found, judging from the overall growth of the platform, I personally speculate that it will exceed 300 million.

November is a festival for national carnival, and its influence has already spread beyond the borders to the international level. As a new e-commerce platform, Pinduoduo naturally would not miss it. This year, it still used the most brutal method and madly distributed 500 million red envelopes. On Double Eleven day, people competed with each other in terms of hand speed, and red envelopes were distributed crazily at 10:11, 12:11, 16:11, 18:11, and 21:11.

Right after the beginning of 2018, Pinduoduo launched a new round of investment in variety show advertising. On January 14, the fourth season of Oriental TV's Happy Comedian, exclusively sponsored by Pinduoduo, was officially launched. Happy Comedian is deeply loved by the majority of users for its unique variety show humor. It is rumored that the exclusive sponsorship fee for the third season of Happy Comedian is 250 million yuan. The outside world speculates that the cost of Pinduoduo's exclusive sponsorship this time will be between 300 and 400 million yuan.

However, this advertising campaign aroused strong resentment among the audience, because Pinduoduo advertisements were inserted too many times during the program, disrupting the audience's mood for enjoying the program. In a serious and funny program, most of the audience are here to find joy. Inserting advertisements at a point when the program is about to reach a climax will cause irreversible damage to the audience's hearts, especially in a serious and funny program. It is understandable from a business perspective, but unacceptable from a human perspective.

In addition to the above conventional operating methods, Pinduoduo also released the "2017 Pinduoduo Consumer Rights Protection Annual Report" on February 1. In the past year, Pinduoduo has proactively removed 10.7 million suspected infringing products from its shelves, blocked 40 million infringing links throughout the year, and kept 95% of counterfeit merchants out. At the same time, a 150 million consumer protection fund was established to help consumers deal with after-sales disputes and protect their rights and claims.

In terms of targeted agricultural support, Pinduoduo achieved remarkable results in 2017. On February 6, at the 2017 "China Time" annual economic news review and awards ceremony jointly organized by China Economic Net and the Center for Forecasting Science Research of the Chinese Academy of Sciences, Pinduoduo won the "Poverty Alleviation Excellence Award" for its achievements in helping farmers get out of poverty through targeted poverty alleviation.

The People's Daily's official Weibo account once published a post titled "Sad! A 70-year-old man sold 320 kilograms of fallen pears for 10 yuan on Weibo. It is heartbreaking to see that Grandpa Zheng, a 74-year-old fruit farmer in Gan County, Shaanxi, sold 320 kilograms of fallen pears for only 10 yuan. Although they sold more than 300 kilograms of pears, they still have 30,000 kilograms, and these pears are only a small part of the large number of pears in the village that are difficult to sell. These fruits, which have been offered as "tribute pears" since the Tang Dynasty, now weigh heavily on the hearts of fruit farmers like a weight. Grandpa Zheng was seriously ill and his wife was also thin and haggard. The person in charge of the Pinduoduo online store immediately announced that he would purchase all 15,000 kilograms of pears from Grandpa Zheng's family.

In addition, the author sorted out a series of agricultural support events of Pinduoduo in 2017 as follows:

January 2017, assistance operation to solve unsold Yellow River beach dates in Shanxi. More than 700,000 orders were sold, and 2,000 tons of beach dates were sold out in three months, generating revenue of more than 12 million yuan.

February 2017: Protecting “Grandma’s Taste” Wolfberry. Thousands of kilograms of wolfberries can be sold every month, with sales of nearly 100,000 yuan.

March 2017 Xinjiang Hami Melon “Taste Hunter” project. Hami melons alone sold for 1.5 million yuan on Pinduoduo.

April 2017 "Nuclear" you together with Huayin walnut project. 15,000 kilograms were sold on the first day of the launch, and the sales of more than 500,000 kilograms of walnuts in the village are no longer a problem. The average income per acre of walnuts can be increased by more than 1,000 yuan.

In May 2017, the new farmer support program helped sell Hubei sweet potatoes. More than 200 tons of sweet potatoes were sold in a month, helping more than 320 growers solve sales problems, with each household generating an average income of more than 3,000 yuan, and providing a new channel for increasing income for more than a dozen poor farmers.

June 2017 Shandong Radish Charity Poverty Alleviation Project. The radish harvest was good but sales were poor, and a large number of high-quality radishes rotted in the fields. In just one week, 200,000 kilograms were sold, generating revenue of 400,000 yuan.

July 2017, Meishan Navel Orange Charity Group of 1,000 People. Provide more than 50,000 yuan of production funds to local poor fruit farmers.

August 2017 Hainan mangoes help farmers with love. He underwrote all the mangoes in the village at a price higher than the market price.

September 2017: Sichuan Ya'an kiwifruit aid project. The “Ya’an Mengding Mountain Red Heart Kiwi Fruit Group Buying” campaign was launched, with 3,000 orders sold per day.

October 2017: Guilin persimmon cake project to help farmers and alleviate poverty. 200 tons of persimmon cakes were sold out, benefiting more than 50 farmers and 7 poor households.

November 2017 Henan Garlic Poverty Alleviation Plan. The garlic sold 1 million kilograms in 5 days after it was put online, solving the sales problems of 3,000 farmers and turning their worries into joy.

December 2017 Shaanxi potato targeted assistance project. In more than a month, 150 tons of potatoes were sold out, increasing the per capita income of poor villagers by more than 1,000 yuan.

In 2017, thanks to the efforts of Pinduoduo's 300 million users, more than 900 million orders were placed to help farmers, with more than 2 million orders per day, adding up to 1.83 million tons, increasing farmers' income by more than 10 billion yuan. If it were transported by train, at least 30,000 carriages would be needed, enough to stretch from Beijing to Shanghai. Pinduoduo's efforts and achievements in supporting agriculture and alleviating poverty are obvious. From this perspective, Pinduoduo deserves the applause and praise it deserves.

Summary of the stage

The key to Pinduoduo's rapid acquisition of users is social interaction and low prices - it stimulates users to actively share and group buy through very low-priced products and spread the word on WeChat. Even now, Pinduoduo's average customer spending is around 30 yuan, a state that Pinduoduo has achieved step by step over the past two years. This year, it is obvious that Pinduoduo is eager to improve its brand and change its image.

On the other hand, Pinduoduo has grown to this day relying on the closed-loop traffic within the WeChat ecosystem . The two e-commerce giants, Taobao and JD.com, have been unable to implement effective crackdowns and defenses, and various measures are more like scratching the surface. Under the premise of overall domestic consumption upgrading, Taobao and JD.com are constantly improving the quality of platform goods and enriching product categories. They may try to suppress Pinduoduo's development in the mid-to-high-end direction and let it maintain a low-end image.

04Article Summary

According to Aurora Big Data , 70% of Pinduoduo's users are women, 65% are from third- and fourth-tier cities, and only 7.56% are from first-tier cities, which is in sharp contrast to JD.com. This group of users are extremely sensitive to prices and are willing to forward information about “low-price group buying” in their circle of friends for a discount of a few dollars (data from 2017).

Most of these users live in another world in China, and they are also a group that is in urgent need of consumption upgrades. Pinduoduo uses a dimensionality reduction approach to instantly take over city and county-level street shops, providing more and higher-quality goods and services to people in third- and fourth-tier cities. In the traditional offline commodity circulation process, multi-layer channels continue to increase prices. The same commodity is sold at a much higher price in offline stores in third- and fourth-tier cities or rural areas. The group buying service provided by Pinduoduo allows them to enjoy the benefits of the Internet and purchase more cost-effective goods.

Someone has done some calculations. WeChat’s monthly active users just exceeded 1 billion last week, and Taobao’s active users were 540 million, so Pinduoduo’s users had at least 450 million. But we all know that Pinduoduo's future form in China is not as optimistic as it is now. As the traffic pool of Alibaba Group, Taobao will never allow third parties to get involved. In 2018, it has established "Dangduo" to suppress Pinduoduo, and will use various methods to attack Pinduoduo. It has released Taobao special price version and Pinduoduo directly compete with Pinduoduo at the beginning of the year.

As a comprehensive platform, Taobao spent nearly ten years to grow up with the first generation of online shoppers, and various complaints and disputes have occurred. Pinduoduo is very similar to Taobao around 2005. The platform product quality is poor, merchants falsely shipped, refusal to refund, poor after-sales service, etc. These problems are still the reasons why most first- and second-tier people are unwilling to accept Pinduoduo. In order to solve the above problems, Taobao took 10 years. Pinduoduo is not over 3 years old so far, and Pinduoduo still has a long way to go.

Is it necessary to walk the path that Taobao has taken? I don’t know, but I think I will go a little less. In the past 20 years of e-commerce development in China, it has cultivated a large number of outstanding talents. Pinduoduo is also trying hard to expand and absorb talents from all walks of life. It is said that it will expand to more than 1,000 people this year. In addition, it is rumored that each team member was given a 6-month year-end bonus in 2017. Coupled with the gradual improvement of basic logistics facilities, these are great benefits for Pinduoduo.

The voice of Pinduoduo has never stopped since October 2016, and the entire team is also moving forward under great pressure. This group of people are constantly burning their youth. They should be proud of their efforts. Here I hope to praise them with a little space. They are all children who wander in a foreign land. You are different. You have printed Pinduoduo on the 2017 Internet list with warm hands, and ranked among the top.

above. The analysis of the development of Pinduoduo products has come to an end for the time being. Pinduoduo's "success" cannot be copied. Even more than 70% of people who read the article will think that Pinduoduo's glory is only short-lived and cannot be called success. 2018 will be its heyday and its starting point of weakness. In the long run, it would be great if Pinduoduo can stand at the top three domestic e-commerce companies. Well, my opinion is that it can steadily occupy fifth place in 2020, which is a victory for Pinduoduo.

The author of this article @Product Daguan is compiled and published by (Qinggua Media). Please indicate the author's information and source when reprinting!

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