Pinduoduo’s operation and promotion logic!

Before, my understanding of Pinduoduo was still at the stage of group buying to gain traffic. I started using Pinduoduo again after it offered me a 1-cent monthly card. It was two months after I opened a store on Pinduoduo that I understood the platform model.

In this article, I would like to share with you my understanding of Pinduoduo after using this platform from different perspectives of both a consumer and a merchant. Everyone is welcome to discuss and correct me.

1. Understanding of the platform

The most core function of a trading platform is to act as an intermediary. How to match the supply and demand of sellers and buyers is always the core problem that the platform needs to solve. The ideal situation is of course that buyers know what they want and can directly find the most suitable products for sellers based on their preferences after entering the platform.

An important indicator for measuring a platform is GMV (gross merchandise volume). If we simply break down the total transaction volume, GMV = platform traffic * conversion rate. It seems that the core of the platform is to increase platform traffic and purchase conversions.

2. Traffic: Gamification and traffic distribution driven by profit

Traffic is crucial for e-commerce platforms. When designing products targeting traffic, we must consider acquisition, distribution, and retention to ensure sustainable and growing traffic.

1. User side

1) Traffic acquisition

Pinduoduo is just like its name, and what impresses people most is its group buying method.

I often receive WeChat messages from relatives and friends asking me to bargain at a low price. From the initial suspicion to the uncontrollable attempts after my relatives and friends received the bargained products, Pinduoduo quickly acquired a large number of users and traffic by relying on WeChat, a social traffic black hole, by attracting people.

Pinduoduo has also implemented this gameplay in every corner of the platform, for example: sharing to get coupons, group buying of products, and more directly bargaining to get red envelopes, directly giving the money originally given to channel promoters to users of C-end promotions.

In addition to the natural growth in traffic that can be brought about by the promotion of C, what is more important is the ability to consolidate C's relationship chain, which will be explained in detail during the conversion.

In these detailed activities, Pinduoduo has optimized each page. For example, when you receive a red envelope, you will be given the largest one every time, and you can bargain down to 99% with just one cut, making people feel that they can get the product immediately. In various lottery activities, basically all draws will win the largest prize.

The annoying thing about various e-commerce marketing activities is that Pinduoduo can make you feel like you are the chosen one and you are so lucky that you have to use the discounts you get quickly.

I believe that many people placed their first order on Pinduoduo under the inspiration of this sense of discount. There are many such small details on each activity page. It is said that Pinduoduo has revised its bargaining activity page more than 15 times.

2) Traffic distribution

The most important issue after obtaining traffic is how to effectively distribute the traffic to various stores. Let’s first take a look at how Duoduo is distributed here, and then we will talk about how to distribute it effectively in detail in the next section when we talk about conversion.

A product is composed of various modules, but the modules do not constitute a product. There are correlations between product modules, and the data relationship between modules constitutes a product.

In Pinduoduo, all modules are developed around the key indicators of the e-commerce platform, allowing users to complete multiple operational indicators by paying a one-time subsidy fee.

Let’s continue to take various gamification operation modules as an example. Game rewards can be obtained by completing product browsing and ordering. The monetary subsidies obtained from game rewards are not directly sent as cash red envelopes, but given to users in the form of no-threshold coupons, which in turn continue to encourage users to place orders on the platform.

In the above designs, Pinduoduo has dispersed the traffic that previous e-commerce platforms relied on search and category shopping guides to various "pan-gamified" traffic distribution centers. More traffic entrances mean that non-head merchants may also have the opportunity to get exposure.

In addition to traffic distribution through gamification operations, coupons are also used by Pinduoduo for targeted traffic distribution. Pinduoduo’s coupons have specific usage scenarios, and some coupons can only be used when placing orders on specific recommended product pages.

Similarly, compared to product exposure in pure shopping scenarios, coupons with time limits can better promote browsing and purchasing. Afraid of missing out on the discount, in order to find a way to use up the coupon, you browse products and come up with some purchasing needs to take advantage of this "bargain."

3) User stickiness

The little tricks on the operation page will make people want to shop once or twice at first. Once people become familiar with this routine, Pinduoduo needs more sticky means to maintain customer stickiness to the platform.

We all know that many online games are addictive. Instant feedback and a strong sense of achievement will continue to reinforce this positive feedback in people's subconscious mind.

Pinduoduo, which started out as a gaming company, has also incorporated many gaming methods into its daily operations, except that it has replaced the in-game experience levels and gold coin rewards with real money and vouchers.

Pinduoduo mainly targets the lower-tier markets. Relatively speaking, its target users have more disposable time, and a lot of time is already consumed in various entertainment activities. If they can make some money through entertainment, although not much, it can at least supplement the family expenses.

<YeYe Three Kingdoms mobile game developed in the early days of Xunmeng>

In the game, you can get props or coins by sharing, browsing, and purchasing pages. These tasks correspond to several key indicators of the platform - attracting new users, traffic distribution, and transactions. These tasks run throughout each game, with a consistent framework, and new games can be quickly created by making slight changes to the gameplay.

The scenario where users browse products at the game entrance is different from that of browsing on other e-commerce platforms. The users here are motivated to complete game tasks, which is more purposeful than ordinary browsing, making it easier for users to place orders.

There were several users who purchased the wrong products and refused to refund and place a new order. Upon inquiry, we learned that it was in order to complete the shopping task within a specified time.

2. Merchant side

On the merchant side, merchants need to place scene advertisements to obtain Pinduoduo's scene traffic entrances scattered in various places. The basic logic is similar to Taobao's Diamond Exhibition. Merchants bid to obtain display resources, but the difference is that Pinduoduo returns the merchants’ advertising revenue directly to consumers in the form of monetary rewards.

3. Conversion: Accurate recommendations and automated operation guidance powered by social data

With traffic, products can be exposed, but the final transaction still depends on whether the products can impress customers or whether the marketing activities are attractive enough to customers.

Exposure, understanding, comparison and transaction according to the customer's ordering process will affect the conversion rate at each step. The corresponding merchant title, main picture, details, etc. can greatly affect the conversion, so we will not elaborate on them. We will only explain the factors that the platform can influence.

1. Exposure

It is relatively easy to display recommendations when users have a clear purchasing purpose. The platform can already give good recommendations based on keywords and preferences when browsing products.

But for users who don’t have a clear purchasing purpose, how do we make recommendations to them? Both content e-commerce and short video e-commerce are expanding this user group, but how do you recommend e-commerce platforms that are still sales platforms as their main attribute?

This reflects the social attributes of Pinduoduo. Through group buying, bargaining, and sharing, Pinduoduo not only gains traffic, but also indirectly obtains the user's relationship chain and even the strength of the relationship chain (normally, the closer the relationship chain is with people who often help you bargain and group buy with you).

In this way, when there is no clear purchasing intention, we can recommend you the products that your friends frequently buy to improve conversion. When you have a purchasing goal, it is easier to succeed by counting the purchasing preferences of your friends and recommending similar products to you.

In order to consolidate and expand the relationship chain, Pinduoduo also added Pinxiaoquan at the entrance of the homepage, and stimulated purchases from users who do not have clear purchasing targets through mutual recommendations among friends. This part involves user privacy. Pinduoduo cunningly guides users to open Pinyouquan and checks the default option to sync to Pinyouquan after each purchase.

2. Understand the comparison

Understand and compare that in addition to the detail page, the product reviews have the greatest impact on conversions. In addition to having no bad reviews and only displaying negative reviews, Pinduoduo also introduced expert insights to avoid the problem of merchants having difficulty in conversion due to the lack of reviews in the early stages.

3. Transaction facilitation

The user already has the intention to buy, and the best promotional activities can have the final say. Pinduoduo’s promotion methods are relatively simple, including coupons, discounts for multiple items, and limited time and quantity. Based on Pinduoduo's principle of offering low prices, Pinduoduo will calculate the lowest transaction price of products in a recent period of time as a restriction condition for subsequent activities.

For example, in the coupon settings in the picture below, the minimum transaction price must not be lower than 5 yuan. This can guide merchants to configure reasonable coupon amounts to increase transaction conversions.

In addition, there are many places in Pinduoduo promotion that require manual operation. By setting goals and options (some are even recommended by the system), the system can improve the promotion effect through data accumulation and algorithms. For example: intelligent mapping, OCPX bidding.

IV. Summary and Thoughts

Through research on the platform transaction side and the merchant side, we have gained new insights into how Pinduoduo can break through the e-commerce field, which is considered to be a red ocean.

Starting from the shopping behavior itself, discovering the pain points in the process, optimizing efficiency, thinking about the essence of the platform, and systematically building the platform are the reasons for success. It is impossible or unsustainable to make fundamental changes based on only one point. Of course, it is also one-sided to judge a product from only one point.

Huang Zheng defines the future of Pinduoduo as follows:

"In the future, Pinduoduo will become a new space where the virtual space on the Internet and the real world merge. Users can buy ideal products at the most cost-effective prices and gain happiness in the process. In this space, the supply chains at both ends are compressed, mass customization is realized on a large scale, and the unnecessary loss of social resources continues to decrease. If we use traditional companies as an analogy, this space should be a combination of 'Costco + Disney'. It not only provides super high cost-effectiveness, but also integrates entertainment into every link."

After the novelty wore off, I gradually became tired of Pinduoduo's games and its gameplay that was copied by major e-commerce platforms, but I still couldn't resist the temptation of Pinduoduo's low prices. So apart from low prices and social interaction, are there any new models that will subvert Pinduoduo? The cycle of disruption and being disrupted may be the permanent constant.

Author: Navel Orange

Source: nowqicheng