Pinduoduo Product Analysis

Pinduoduo focuses on the sinking market and is famous for its "fighting" and "hundreds of billions of subsidies". The platform stimulates user consumption through methods such as full discounts, flash sales, forwarding, and price bargaining, while promoting fission. This article shares a detailed analysis of Pinduoduo, as well as its breakthrough and development in the sinking market. Let's take a look together.

1. Analysis Objectives

Preliminary research and analysis aims to analyze and study direct or indirect competitive applications in the comprehensive e-commerce industry in order to better guide the positioning direction, functional design and competitive strategy of one's own products.

2. Market Analysis

1. Industry market analysis

The supply and demand connection model is the simplest model of a product. In e-commerce products, we conduct market analysis in the form of people-goods-place, in the hope of finding out the market space on the supply side, demand side and connection side and Pinduoduo's way out.

People - consumers, traffic parties:

According to the CNNIC China Internet Development Statistics Survey, the number of Internet users in my country continues to grow. As of June 2020, the scale of Internet users reached 940 million, and the Internet penetration rate reached 67.0%; the scale of rural Internet users reached 285 million, accounting for 30.4% of the total Internet users - the "human" factor of online shopping has huge potential.

However, among China's huge mobile Internet user base, there are still a large number of users who have not yet engaged in mobile Internet e-commerce for various reasons, mainly users in third-tier and below cities.

As shown in the figure below, in June 2017, the usage rate of mobile online shopping was 66.4%; Pinduoduo targets this type of users, aiming to tap into the consumption potential of the lower-tier markets and promote consumption upgrades among lower-tier users.

Goods - Commodities and services, the providers behind them include merchants, brands and supply chains - suppliers:

In terms of supply chain products and brands, the overall penetration rate has increased and the penetration categories have differentiated. The penetration rates of consumer electronics, home appliances, pet supplies, clothing and footwear are relatively high, and online consumption has become relatively mature; while the penetration rates of consumer goods such as fresh food, packaged food, and soft drinks are relatively low, and there is huge market space.

Since 2015, there has been a trend of "consumption upgrading" of goods and a trend of "consumption stratification" in the e-commerce market. Taking Alibaba, the leading e-commerce company, as an example, from Taobao.com to Taobao Mall, from B2C to C2C, they are all focusing on consumption upgrading. A large number of luxury goods have entered Tmall Mall, bringing about a shift in category consumption from mass to professional. At the same time, based on China's huge population base, multi-dimensional consumption differentiation has emerged, including differences in education level, region, age, income, urban and rural areas, and generations, resulting in "consumption stratification."

As a result, Pinduoduo found the opportunity of "sinking market" on the edge of the mobile Internet market, integrated the low-end merchant resources that were excluded by Taobao and JD.com in the early days, and successfully established a supply chain of mid- and low-end goods for sinking users, completing the storage of goods.

Place - the trading place built by the platform, including trading scenarios and trading services - content providers/service providers.

The market includes e-commerce service platforms such as Taobao and JD.com, and content platforms such as Douyin and Kuaishou.

From the analysis of "people" and "goods", we can find that Pinduoduo's route is to match "low-end product sources" with "downstream users", and the connection between the two requires the connection of "field" to facilitate.

Traditional e-commerce often has two forms of sales stimulation: price stimulation and content guidance:

"Price stimulation" aims to stimulate user consumption through methods such as full-discount, flash sales, and price bargaining. However, this single price stimulation has major drawbacks. From the user's perspective, when users see large price fluctuations, their consumer confidence decreases, the price comparison habit leads to reduced loyalty, and reliance on promotions reduces purchasing power. From the merchant's perspective, the merchant's profit level is insufficient and sales stability is poor. Therefore, it is necessary to increase the attractiveness of their own content to match the changes in price stimulation trends.
"Content guidance", such as Xiaohongshu, guides consumption through content with demand value; from the consumer's perspective, content based on demand value can often influence consumers' decision-making and purchasing logic; from the perspective of the platform (field), the content itself has the attribute of traffic stickiness, which can enrich the scenario and richness of the field.

In addition to price incentives and content guidance, Pinduoduo focuses on "social e-commerce", taking advantage of the large social influence of acquaintances of low-end users to design a group-buying model; at the same time, it uses "low-priced and easy-to-use" products as a driving force to start social fission based on the WeChat relationship chain.

According to the Quest Mobile research report, the typical characteristics of mobile Internet for low-end users are: the need to kill time, price sensitivity, trust in offline physical goods, and strong influence of social interactions with acquaintances (see figure below).

Pinduoduo's transformation from traditional transaction e-commerce to comprehensive content e-commerce has been going on for a long time; Taobao launched Weitao in 2013, introducing merchants, experts, videos, and live broadcast entrances; JD's first-level "discovery" entrance introduced live broadcast, video and other content entrances, but did not use social as the fundamental entry point; Pinduoduo's "field" innovation laid the foundation for rapid fission, and Pinxiaoquan, which was launched in June 2020, is also an attempt to deepen social e-commerce.

2. User distribution analysis

1) Urban stratification

Pinduoduo targets the lower-tier cities and adopts the strategy of "surrounding the cities from the countryside". It uses social group buying to quickly expand in third-tier and below cities, and attacks the market "within the fifth ring road" with the "10 billion subsidy" project. Its users are mainly from third-tier and below cities, with fewer users in first-tier cities, which is consistent with Pinduoduo's product strategy.

2) Age stratification

The age structure of Pinduoduo's active users is still relatively young, with users aged 18-35 accounting for nearly 70%. As of June 2020, the proportion of users aged 26-35 increased by 2.2% month-on-month, the largest increase. The proportion of users aged 18-25 has declined since September 2019, down 1.6% year-on-year.

The peak proportion of Pinduoduo users aged 46 and above occurred in December 2019, when the proportion of heavy active users was the highest. It then declined and increased by 0.5% year-on-year in June 2020.

3. Market analysis summary

In the wave of "consumption upgrade", Pinduoduo focuses on the "consumption stratification" signal, targeting the sinking users who have not yet entered the online shopping consumer market; with "high cost performance and low price" as the core of the product, it adopts targeted pricing strategy, product strategy, and marketing strategy; through group purchase discounts, secondary distribution, help with bargaining, invitations and assistance, etc., it has rapidly developed the traffic system and relationship chain based on WeChat.

The current user structure is getting younger, and is mainly composed of users in third-tier and lower cities. In line with the strategic goals, users in first- and second-tier cities are showing an upward trend.

3. Product Overview

1. Product introduction logo + name

Pinduoduo’s slogan: “Buy together to get a bargain.”

The logo reflects the product attributes of the comprehensive mall and the group purchasing method, while combining multiple product category pictures to create a "rich and diverse" product structure perception; the overall heart shape expresses the caring perception of "care, thoughtfulness, and peace of mind" to users.

2. Product value and features

value:

Provide consumers with a wide range of cost-effective products, and promote online shopping consumption stratification;
Driving rural regional economy through agricultural production cooperation and live e-commerce;
The online shopping form of group buying based on WeChat social relationships promotes the penetration of online shopping in the sinking market.

feature:

Approach: Hot-selling model of multiple single popular products every day.

Social fission model:

Replacing traditional e-commerce with group buying, the model has low customer acquisition costs, and can transfer advertising and marketing expenses used to obtain traffic to product subsidies, effectively satisfying consumers with the core value of low-priced good products;
Early stage (Pinhaohuo stage): After placing an order under the Pinhaohuo model, you need to invite friends to place an order to enjoy the discount. This model uses the psychology of users who have no clear needs and wants (stupid type) to trigger consumption through recommendations from acquaintances, creates low-priced hot-selling products, and stimulates consumption and fission;
Pinduoduo to date: After Jingxi and Taobao Special Edition were launched, in order to lower the threshold for group buying, users on the platform can enjoy discounted prices by joining the group buying after placing an order, and the products will be shared to Pinxiaoquan by default (launched in June 2020);
Other game modules, such as DuoDuo Ai Elimination, Help Bargaining, and Receive Cash Every Day, guide users to share game or activity links in a gamified experience, achieving the effect of social fission.

Help with bargaining: Some products allow users to purchase for free; users can bargain for products by participating in Pinduoduo activities, inviting friends, etc.; when the price of a product is cut to 0, users can purchase the product for free and attract new users.

/Get cash every day. Users can get cash red envelopes by participating in Pinduoduo activities, inviting friends, etc. When the red envelopes accumulate to 100 yuan, they can withdraw cash;
Pinxiaoquan’s social content relationship chain allows users to post purchases and reviews within Pinxiaoquan, which supports likes, comments, and discovery by nearby people, creating Pinduoduo’s community attributes.
The C2M model directly connects consumers and factories, reconstructs the commodity circulation links, compresses the supply chain, and provides consumers with the most cost-effective products.

3. Product History

In September 2015, Pinduoduo was officially launched.

In July 2016, Pinduoduo's user base exceeded 100 million, and it received US$110 million in Series B financing led by IDG Capital, Tencent, and Gaorong Capital.

In September 2016, Pinduoduo and Pinhaohuo announced their merger.

On July 26, 2018, Pinduoduo officially entered the U.S. capital market with an issue price of US$19 and a market value of US$24 billion.

In October 2018, Gome Electrical Appliances and Pinduoduo started cooperation, with the former providing electrical appliance product management business to Pinduoduo.

On October 25, 2019, Pinduoduo's stock price was US$39.96, up 12.56%, and its market value increased to US$46.4 billion, surpassing JD.com.

As of March 11, 2020, as of the end of 2019, Pinduoduo's number of active buyers reached 585.2 million, a net increase of 48.9 million in a single quarter, and a net increase of 167 million over the same period last year. In the third and fourth quarters of 2019, the number of active buyers on Pinduoduo increased by 102 million, and the coverage rate of users across the entire network is still accelerating.

On March 15, 2020, Pinduoduo released the "Annual Report on Consumer Rights Protection (2019)".

Product entry method: hot-selling model of multiple single hot-selling products every day.

Background of traffic entry: In the early days of the sinking market, a large number of WeChat users deposited cash through red envelopes. Pinduoduo carried out viral marketing through the "sharing + group buying" model, and used the acquaintance recommendation effect to open up the sinking market.

4. Product data performance

1) Revenue and product data performance

On November 12, 2020, Pinduoduo released its third-quarter 2020 financial report showing that Pinduoduo achieved revenue of 14.2098 billion yuan in Q3, a year-on-year increase of 89%; under non-U.S. generally accepted accounting principles (NON-GAAP), Pinduoduo's net profit was 466.4 million yuan, which was the first time Pinduoduo achieved quarterly profit two years after its listing.

The financial report shows that in the third quarter, the average monthly active users of Pinduoduo APP reached 643.4 million, an increase of 74.6 million in a single quarter. An increase of 50% over the same period last year.

Recently, Goldman Sachs cited a report from data agency Quest Mobile, saying that the total user time of Pinduoduo App in the third quarter reached 531 billion minutes, a year-on-year increase of 101%; in the third quarter, the usage time of Pinduoduo users accounted for 41% of the total user time of all e-commerce service platforms in China , a significant increase of 7 percentage points from 34% in the second quarter.

2) Market share

By the end of June 2020, Pinduoduo's penetration rate had reached 50.29%, ranking seventh in the entire network, and its daily active users ranked sixth. It ranked second in both its primary industry (mobile shopping) and secondary industry (comprehensive mall), second only to Taobao.

The number of new active users of Pinduoduo is growing rapidly, with the number of daily new users, daily active users, and monthly active users increasing by 17 times, 31.9 times, and 21.7 times respectively in Q2 2020 compared with Q1 2017. This shows that Pinduoduo's products have huge development potential, a large user base, and are in a stage of rapid growth.

4. Competitive Product Analysis

1. Competitive product selection

While domestic consumer e-commerce companies are committed to consumption upgrades, Pinduoduo's consumer stratification strategy targets the lower-end market and focuses on China's largest consumer class - ordinary people who have been ignored by traditional e-commerce companies.

From its launch in September 2015 to its listing on the Nasdaq on July 26, 2018, Pinduoduo took only three years to go public quickly. Since June 2019, it has gradually expanded to the "inside the Fifth Ring Road" through "10 billion subsidies"; since then, Taobao and JD.com have also begun to enter the market to compete for the sinking market. In September 2019, JD.com launched the group buying e-commerce App Jingxi and occupied the first-level entrance of "Shopping" on the WeChat Discovery page; Taobao restarted Juhuasuan and launched the Taobao Special Edition on March 26, 2020, becoming the world's first shopping app with the C2M model as its core supply.

Combined with the e-commerce classification definition of iResearch, Taobao (including Taobao Special Edition and Juhuasuan) and JD.com (including Jingxi), which also target the lower-tier markets, are selected as Pinduoduo’s main competitors.

2. Comparison of competing businesses

B2C For example, JD.com integrates its own self-operated business, which is equivalent to B (merchants, manufacturers) 2C (consumers):

C2C For example, Taobao’s model for a large number of individual sellers is C (seller) 2C (buyer), and the identities can be switched.

The model for brand entry (B) is B2C/C2M Taobao Special Edition, Pinduoduo, NetEase Yanxuan, and Xiaomi Youpin.

Customized demands are proposed by C (demand side), and the platform integrates OEM factories/hatches its own brands (supply side). Pinduoduo's C2M model is actually an upgrade of the C2B model, from consumers directly accessing merchants to consumers directly accessing factories (manufacturing), so the main model should still be C2B/C2M.

3. Data performance

1) Monthly Top Applications

According to the October monthly Top Apps list of iResearch Qianfan, the MAU of WeChat, a national IM app, is 990 million, and the MAU of Taobao exceeds 820 million. This is inseparable from the good content ecology and rich product categories created by Taobao, which have truly established the user experience of "shopping on Taobao"; in the field of mobile shopping, Pinduoduo's MAU exceeds 590 million, far exceeding JD.com; also as an e-commerce platform that has been deeply cultivating the sinking market, Taobao Special Edition has an MAU of 50.62 million, while Jingxi, which uses the group-buying model, has only 6.04 million.

2) Overall ranking of mobile applications in all categories

3) Mobile shopping category mobile application rankings

4) Comprehensive shopping mall app penetration analysis

According to the Aurora data analysis report, in the comprehensive shopping mall app penetration rate ranking in December 2019, Taobao, Pinduoduo and JD.com ranked the top three, with Pinduoduo far ahead of JD.com with a high penetration rate of 46.1%. In terms of year-on-year growth in penetration rate, Pinduoduo had the largest growth rate of 16.8%. Taobao still grew by 7.7% based on its original huge user base, and JD.com's penetration rate increased by 5.5%.

5) Market monopoly analysis

According to Aurora Data, as of June 2020, Pinduoduo's market share was 11.59%, which is related to Pinduoduo's unique positioning in the third-tier and below markets.

According to the proportion of my country's social structure, the ratio of white-collar workers to blue-collar workers is 1:10. JD.com is famous for its quality and logistics, and its user groups are mostly white-collar workers in first- and second-tier cities. Therefore, JD.com's market share is relatively low.

As the largest shopping app, Taobao has a market share of 13.03%, but this figure is being continuously competed for by Pinduoduo; Pinduoduo has the highest user overlap with Taobao, and a very small user overlap with JD.com.

5. Product Analysis

1. Product positioning

Pinduoduo is a comprehensive e-commerce mall that provides gamified shopping experience and cost-effective products. Its main models include social fission of "group buying" and "bargaining assistance", gamified experience represented by "Duoduo Ranch" and "Duoduo Orchard" to enhance stickiness, and C2M model represented by "agricultural product origin brand" and "factory manufacturing brand".

C2M (Customer To Manufacturer) enables direct connection between users and factories, drives the supply side with consumer demand, solves the problem of overcapacity, and at the same time encourages manufacturers to carry out production and sales in a targeted manner.

2. Product function analysis

Product function structure: The product function structure diagram of Pinduoduo is as follows, which is mainly divided into three business modules: e-commerce business, game/social business and basic general modules.

Product function overview:

Discount system: limited-time flash sales, clearance sales, 9.9 yuan special sales, 10 billion yuan in subsidies, money-saving monthly cards, etc.

Shopping decisions: group buying, limited-time discounts, free shipping on all items, personalized recommendations, live streaming, multiple rankings, etc.

Gamified experience: Duoduo Orchard, Duoduo Love Elimination, Guard Cash, Duoduo Make Big Money, Duoduo Ranch, etc.

Social sharing: low-price subsidies through preferential systems such as small circles and bargaining for free. Pinduoduo’s low-price subsidy module includes limited-time flash sales, clearance sales, 9-yuan 9-pack special sales, and 10 billion subsidy modules.

Among them, limited-time flash sales, clearance sales, and 9.9 yuan for a pack special sale are located in the King Kong area of the homepage, and the 10 billion yuan subsidy is located in a separate module on the homepage; after entering the corresponding module, users can choose to purchase products at a discounted price without completing other steps; the limited-time flash sale module has five first-level pages, namely limited-time flash sales, group sales for 10,000 people, super flash sales, furniture brands, and flash sale preview page; at the same time, the limited-time flash sale page has three categories: group sales for 10,000 people, today's must-buy, and featured flash sales.

The limited-time flash sale module does not have a search function, which is intended to encourage users to spend time browsing the event page. From a product perspective, there are three reasons for this design:

The product categories on this type of event page are limited, and if the search function is designed, there may be no search results;

Through price concession strategies, we can increase users’ product views and stay time on the event page, increase product exposure, and promote purchase conversions.

The clearance sale has two secondary tabs: selection, mall brands, women's wear, sports, underwear, women's shoes, mother and baby, home textiles, men's wear, luggage, and men's shoes. The 9.9 yuan special sale has two secondary tabs: food, department stores, women's wear, men's wear, mother and baby, books and stationery, medical health, sports and outdoor. Compared with the clearance sale, most of the products are bulk department stores and the prices are low.

Both designs create a user experience of shopping in a cloud bazaar, which is in line with the consumption habits of users in the sinking market; the 10 billion subsidies module has a 10 billion subsidies banner, a must-buy list, an Apple subsidy zone, a digital subsidy day, and information flow of subsidized products by category, and a floating window of subsidized best prices; subsidized best-price products require invitations to purchase, and compared with the 10 billion subsidies, products that can be directly purchased through group buying have greater discounts. This design of sharing and enjoying low-price purchases is similar to the Taobao store's sharing friends to enjoy coupons; but since Pinduoduo's purchase logic is to place an order for a single product information, the subsequent purchase steps can be completed directly after the sharing conditions are met, and users have a stronger sense of it.

Cash check-in:

Cash sign-in is located in the King Kong area of the homepage. When you open the "Notification" function for the first time or without permission, you will be reminded when you enter the interface. After it is turned on, a notification will be sent around 9 o'clock every night to remind users to open the app to sign in.

The cash sign-in sub-module includes inviting friends to help collect cash, sign in, place orders, browse pages to get cat food, and other sub-modules such as the lucky cat; different users can choose to participate in the activity category to meet the needs of different user groups.

From a product perspective, cash sign-in encourages users to open the app every day by giving them cash for signing in and rewards for consecutive sign-ins, thereby improving retention rates, cultivating user habits, and enhancing user stickiness.

Money-saving monthly card:

The money-saving monthly card is located in the King Kong area of the homepage. After entering for the first time, you can open the monthly card turntable to draw the monthly card price. The monthly card activation page is set up to develop discounts, ask everyone, daily coupons, free order privileges, etc.

When you scroll down the page to browse the monthly card details or other people's reviews, the monthly card activation entrance will pop up at the bottom, saving users operation steps and guiding users to activate.

Exit the money-saving monthly card activation page, and a pop-up message will appear to activate a monthly card at a super low price to retain users again and reduce user churn rate. At the same time, the super low-priced monthly card includes coupons that need to be claimed on daily visits to improve user stickiness.

Shopping Decisions

Group buying model and free shipping for all items: Unlike traditional online shopping e-commerce platforms, Pinduoduo does not have a shopping cart function, and all purchases are single purchases. In the early stages of the group buying model, users initiate group buying and need to invite other friends and relatives to join the group before they can complete the shopping. With the help of the group buying model, Pinduoduo quickly gained a large number of users through social fission in the early stages.

However, attracting new customers is not the goal. The core of e-commerce is to facilitate the completion of transactions. To this end, Pinduoduo uses advantages such as free shipping, low-priced goods, and simple payment procedures to lower the decision-making threshold for users when purchasing, facilitate the first transaction, and improve user retention.

Today, Pinduoduo's group buying model has evolved into joining others' group buying on the platform/initiating group buying and having platform users join. The threshold for group buying has been lowered, prompting more users to complete transactions. Group buying is currently more like a marketing tool, attracting users through pricing strategies and being able to obtain more cost-effective products.

The shopping cart design of traditional e-commerce imitates the concept of physical shopping carts in shopping malls and supermarkets, but a large number of people in fifth-tier cities and below have not formed a concrete concept of physical shopping carts, and the user cognition threshold is high; the group buying model adopted by Pinduoduo has a low transaction amount per transaction, a simple payment process, and no need to group orders or get discounts when the purchase amount is reached. This shortens the user's decision-making time, reduces decision-making costs, stimulates impulse consumption, and facilitates consumer conversion.

Limited Time Offer:

When users open Pinduoduo, they have a certain chance of obtaining platform coupons, which include a countdown limit on the usage time, creating a sense of urgency. At the same time, the design of coupons can lower the user's consumption threshold, encourage new users to complete their first transaction, win back lost users to consume again, and improve retention and repurchase rates.

Personalized recommendation information flow:

Both the home page and category navigation page have information flow recommendations. Based on user data such as different users' search records, product browsing records, purchase records, store type preferences, etc., weights are assigned to products through an algorithm, presenting product recommendations that are tailored to each individual.

Gamified experience:

Pinduoduo's products include a variety of gamification experiences, including Duoduo Orchard, Duoduo Ranch, and Cash Guard . Various games are aimed at different user groups, and users can freely choose the type, frequency, and depth of participation.

Duoduo Orchard and Duoduo Ranch:

Duoduo Orchard and Duoduo Ranch are gaming experiences where you can participate in and check in through in-product modules to get physical rewards of fruit/milk.

There are two main ways to play. You can enter on time to open the lucky bag, or complete tasks (such as inviting friends to help, browsing products/venues/live broadcasts/videos, sharing, and group buying) to receive water drops/feed, and plant fruit trees/sheep and small animals. After reaching a certain level, you can exchange them for real items.

There are three main values of this type of game:

Increase user usage time through gaming experience. Mobile products are exclusive, so user usage time is an important indicator.
By exchanging physical goods for game experience, user stickiness can be enhanced, which can help consolidate users;
Through in-game tasks, traffic can be directed to other product modules to increase product exposure, page views, and transaction volume.

Social Interaction:

Pin Xiaoquan creates the community attributes of Pinduoduo, which is similar to Taobao's Weitao. There is a first-level entrance to Pin Xiaoquan on the homepage. The Pin Xiaoquan page has four second-level TABs: friend Q&A, one-click album creation, magic camera, and more ways to play (friend chorus, recording). All participants in related interactions will be synchronized to Pin Xiaoquan.

Currently, the community atmosphere of Pinxiaoquan is poor, with only a few posts of purchasing/usage experiences actively shared by users. Most of them are group buying information that is automatically shared to Pinxiaoquan after purchasing products on Pinduoduo. Sharing product information will bring about purchases from friends, increase product exposure and transactions, but the content atmosphere of Pinxiaoquan is not good, and it is not easy to guide users to continue watching.

From the perspective of functional gameplay, Pinxiaoquan has many and diverse functions. The friend question-and-answer module involves multiple categories such as brain teasers, governance, fun tests, truth or doubt, voting, etc. The functions of one-click album and magic camera are more like forcibly moving the short video function and album sharing to the community environment of a comprehensive e-commerce platform. It is considered that the users of Pinxiaoquan function may be housewives in fourth-tier and below cities, who have a long free time every day and are tired of "shopping" among Pinduoduo's products, so they shoot a few videos/make albums for social sharing.

Bargain and get it for free:

The bargaining module for free goods allows users to bargain for expected goods through social sharing, inviting users , etc., in order to obtain the right to get free goods. When a user initiates sharing, as the number of sharers increases, the support value of a single user decreases. By taking advantage of the user's loss aversion psychology, the user is encouraged to continue sharing and inviting friends in order to achieve the goal, thus achieving the effect of social fission.

VI. Conclusion

1. Analysis of advantages and disadvantages

1) Advantages

New brand plan , supply and demand reform drives cost reduction and efficiency improvement: by reforming the supply and demand structure to lower costs, thereby achieving low prices across the entire network, the C2M model achieves cost reduction and efficiency improvement in production and manufacturing.

The target users and product positioning are clear : taking the third-tier and below cities as the entry point, the consumption potential of the sinking market is explored. The characteristics of this part of the target users are that they focus on low prices and can sacrifice some experience for low prices.

Relying on the fission growth of WeChat social chain, low-cost customer acquisition : The early e-commerce model was people looking for goods, which was suitable for users with clear needs and requirements. The needs of this group of people have been met by apps such as Taobao and JD.com. The next step to tap into consumption potential is to let goods find people, such as the "shopping on Taobao" experience that Taobao is committed to creating; Pinduoduo uses gamified social and group buying methods, and uses recommendations from acquaintances to attract low-cost traffic.

2) Disadvantages (pain points)

Insufficient product categories on the supply side : Currently, Pinduoduo still does not have many mid-to-high-end brands. The reason is the suppression of leading products. Platforms such as Taobao and JD.com have declared to merchants that they can only choose between Pinduoduo and themselves; therefore, Pinduoduo currently lacks product categories, which is a very serious problem for its future development.

The repurchase rate is high but the average order value is low : This is caused by two reasons. First, the lack of mid-to-high-end brands due to insufficient categories on the supply side. Second, the low average order value of consumer goods due to insufficient user trust makes it difficult to convert high-average-order products.

Increased customer acquisition costs : Pinduoduo hopes to attract more high-quality users with digital and trendy shoe needs through 3C brands and trendy shoes in the "10 billion subsidies" and transform the quality control stereotype brought about by Pinduoduo's low-end supply chain, but the resulting subsidy costs remain high.