A complete analysis of Pinduoduo’s operating model and methods

Let’s talk about Pinduoduo today.

New Market

In the e-commerce industry, there are three giants: Taobao, JD.com, and Pinduoduo. Second-tier companies include Suning, Haigou Kaola, Xiaohongshu, etc. There are also many small e-commerce platforms.

The phenomenon of a hundred schools of thought contending in an industry can be described by the "bottle and stone" theory (let's call it that for now).

That is, an industry generally has several giants, then some second-tier camps, and then many small players.

It's like putting stones in a bottle. It can only hold a few big stones, then some small stones, then a lot of sand, and even a lot of water.

This is the situation when an industry develops to its mature stage.

If we look at the social field, Tencent is the only dominant player and is a big rock. Weibo, Momo, DingTalk, Maimai, etc. are thriving in their respective fields and are just small pebbles. Many dating apps such as soul, Duoshan, Yinyue, blue, etc. are grains of sand. There are more small-scale applications, such as water. And the whole social sphere is the bottle.

From this theory, we can also see that in order to compete with giants, we can only differentiate, and deeply differentiate.

How to differentiate and go the opposite way from the giants is a good idea.

WeChat is for social networking among acquaintances, and Momo is for social networking among strangers.

WeChat and QQ are used for personal IM, while DingTalk is used for enterprise IM.

WeChat and QQ are used for personal communication, while Maimai is used for workplace communication.

WeChat is a social platform for people to socialize with each other, while Weibo is a social platform for people and content to socialize with each other.

etc.

The same is true for the e-commerce industry. Taobao, JD.com, and Pinduoduo are big rocks.

In fact, there were only two big stones at the beginning, namely Taobao and JD.com. Why could Pinduoduo squeeze in the originally crowded bottle?

Because Pinduoduo changed the rules of the game by replacing bottles with bigger bottles.

Pinduoduo has allowed its users to move into third-, fourth- and fifth-tier cities, expanding its audience and making the pie bigger.

So the big bottle can hold another big stone.

If you want to recreate Pinduoduo, you should not compete with Pinduoduo head-on, but find another way, change the rules of the game, and make the pie bigger.

New Model

The most important reason why Pinduoduo can attract users from third-, fourth- and fifth-tier cities is that its products are cheap and of decent quality.

Why is Pinduoduo able to offer products that are both cheap and of good quality? This starts with the Pinduoduo model.

We know that general commodities need to go through the following links from production to consumers.

DMSBbC (Design, Manufacture, Supply Chain, Business, Consumer).

Taobao is engaged in b2C or C2C, Tmall is engaged in B2C, and JD is engaged in B2C or b2C.

Pinduoduo is engaged in M2C, which means that it cuts out many intermediate links and directly produces products in the factory and then sells them to consumers through the Pinduoduo platform.

By reducing the middlemen, prices can be significantly reduced.

At the same time, Pinduoduo has promoted the group buying method, which allows goods to be sold in bulk and can further reduce prices.

As for Pinduoduo's social gameplay and cash gifting gameplay, they are all operating methods of the M2C model to make M2C operate better.

This chain DMSBbC has many ways to play, both forward and reverse.

Therefore, many of the models we hear and see, such as M2C, S2B, S2C, C2M, C2B, etc., are derived from this chain.

New operating methods

Now that we understand Pinduoduo's model, we can take a look at Pinduoduo's operating methods.

There are countless ways to play Pinduoduo.

And you use it more and more, and you find yourself addicted. Just like a girl who shopped on Taobao too much, she would feel uncomfortable if she didn’t shop there for a day.

However, when summarizing the gameplay of Pinduoduo, we found that Pinduoduo is an in-depth application of the "addiction model" that makes you addicted.

The addiction model was proposed in the book "Addicted". The author summarized the addiction model into four parts: "trigger, action, reward, and investment".

Then let’s sort out the gameplay of Pinduoduo based on this model.

trigger

Triggering refers to reaching out to users for the first time, or reaching out to users again to recall them after they have churned.

Pinduoduo has many ways to play, all of which are aimed at reaching users frequently.

Invite your friends to bargain via WeChat and take home products for free. Trigger your WeChat friends.

After initiating a group purchase, invite your friends to join in. The group purchase price is much lower than buying directly. Trigger your WeChat friends again.

Invite friends to play in the game to get rewards or extend your life. Continue to trigger your WeChat friends.

If your friend has not been active for a few days, you will get a reward if you invite him back. Accurately trigger your friends.

There are also endless push and SMS triggers with sophisticated strategies.

action

Action: After users come in, let them take action. Doing tasks, browsing, placing orders, sharing, and posting orders are all actions.

Newbies can receive a 100 yuan red envelope by completing some tasks. Stimulate users to complete tasks through benefits.

Recommend related products based on your browsing habits. Allow users to browse and place orders based on their unmet needs.

Various rankings, such as categories, positive reviews, friends’ purchases, netizens’ purchases, etc. Stimulate users to place orders through rankings.

No need to fight for chance, one person can form a group. Every time you confirm receipt twice, you will get a chance to avoid ordering. Lower the user purchase threshold and stimulate old users to purchase.

Limited time and limited quantity sale. The countdown stimulates you to buy.

award

Rewards refer to timely rewards given to users after they complete certain operations, so that their actions give feedback and make them feel good.

Rewards are divided into material benefits and spiritual rewards.

Material benefits, including points, coupons, flash sales, cash back, lucky draws, etc.

Spiritual rewards, including medals, ranks, certifications, etc.

Pinduoduo has made perfect use of rewards, and every action you take will be stimulated by rewards.

Of the material benefits and spiritual rewards listed above, only certification is not available on Pinduoduo.

Investment

Invest, constantly stimulate users to invest, invest time, and invest money. Because of the large investment and the sunk costs that have already been incurred, it is indispensable.

Play games, earn points and rewards. Why are games addictive? In addition to incentives and level-passing mechanisms, there is also the cost of time and energy that makes you reluctant to give up easily, otherwise it will become a sunk cost.

Become a monthly member and pay the monetary cost. Whatever course is easiest to learn, it must be a paid one. Even if the value of free stuff is much higher than paid stuff, you have no motivation to learn it.

Invite your friends to bargain and take the product home for free. If you don't invite a certain number of friends, you can't bargain it down to 0. However, you have already invited a lot of friends and paid the cost. So you grit your teeth and send to a few more groups.

Basically, every activity uses these four parts of the "addiction model".

This is the “trigger-action-reward-investment” addiction model. After completing one addiction model, it will move on to the next addiction model. Spiral upward.

In my opinion, Pinduoduo is not a social e-commerce, but a gaming e-commerce. Each activity uses gaming thinking to make users unable to stop.

Many people around me say that Pinduoduo is too low-end and they never use it. That’s because you are not the target user or have not yet become a user.

I like shopping on Pinduoduo now.

Activity risk control

Behind Pinduoduo's many ways to play, each activity has a set of rules.

Therefore, the event risk control strategy is an important part of the event. If things go wrong, tens or even hundreds of millions of dollars will be fleeced.

What you need to know is that as long as there are rules, they will be exploited by the wool party. As long as there is a loophole, it will be taken advantage of by the wool party. You never know how powerful the freeloaders are.

As for why you haven't been fleeced yet, it's mainly because the input-output ratio is not cost-effective.

Just like no system is completely secure, hackers will always find a way to attack you. It’s just that the attack threshold is too high and the cost is too high, so the income is not enough to cover the expenses. Or maybe attacking you won't gain much, so just give up. What we need to do is to raise the threshold for attack.

I remember that at the beginning of this year, Pinduoduo had a coupon loophole: "Get a 100 yuan discount coupon, which can be used when you spend 100 yuan or more.

This resulted in a loss of tens of millions in just a few hours early in the morning.

Everyone was busy and having fun in the group early in the morning. The virtual goods that were finally recharged seem to have not been recovered, and the physical goods will not be shipped.

Such things often happen on other platforms.

Therefore, behind Pinduoduo's operations, there is a very powerful, rigorous, and extremely cautious operational risk control strategy team.

Author: Product Notes

Source: Product Notes