Pinduoduo: China’s hottest online shopping startup
(Updated 27th July, 2018.)
It’s one of China’s most popular shopping sites, but you might not have heard of until now. Tencent-backed Pinduoduo -- where users can buy a wide range of things from pants to fruits to smartphones -- debuted this week on Nasdaq to much fanfare, raising more than US$1.6 billion to become this year’s fourth largest IPO in the US.
Pinduoduo is what a company would look like if Amazon, Groupon and Facebook had a baby... in China.
The name Pinduoduo means “shop more together” in Chinese. The idea is to turn online shopping into a social experience. But it’s more sophisticated than just showing off what you’ve bought to your friends -- being social actually delivers better prices.
Here’s how it works: You message your friends about an item you like. If they want it too, they can join in a group purchase to get a discount. The items are then delivered individually to each of you. Everyone is happy.
Using the app reminds me a lot of going to a wet market in China: It’s noisy, it’s crowded and you’re trying your best to get a bargain. Say you tap on an image of a down jacket. It sells for 95 yuan (US$15) if you buy it on your own, or 55.9 yuan (US$8.8) if you buy it with someone else. Why would you pay more?
While you’re deciding whether to spend your hard-earned money (possibly for something you didn’t even think about buying in the first place), Pinduoduo isn’t going to leave anything to chance. Just like any eager market vendor, Pinduoduo will try to remind you what a great deal you're getting by bombarding you with a stream of pop-up messages, showing users who have just successfully found people for a group purchase.
You can share information about a product on social apps like WeChat or QQ, inviting friends and families to join along a purchase. But if none of them are taking the bait, don’t despair. Scroll down and you can also see in real-time a list of users who are trying to find a buying partner. You can join one of them by clicking “buy together”. Alternatively, you can make a purchase on your own first and message your friends later to join in for a group deal.
The idea of combining social with online shopping isn’t new. For instance, Instagram’s “shoppable photos” let users tap on products tagged in a post to get to an online store. But Pinduoduo is different in that it adds a huge incentive with discounts.
Pinduoduo’s filing to the US Securities and Exchange Commission says that as of March, its platform had reached 295 million active customers and more than 1 million merchants. By the end of last year Pinduoduo was China’s third most popular shopping app, according to Chinese data analytics firm Jiguang -- trailing only behind Tencent-backed JD.com and Alibaba’s Taobao.
(Abacus is a unit of the South China Morning Post, which is owned by Alibaba.)
Even though it’s still a relatively new kid in the block, Pinduoduo believes it is the future of online shopping. The app is particularly popular among users in their 30s living in so-called third-tier cities, which are usually less wealthy than their peers like Shanghai and Beijing.
“Our team are probably 20 years behind Alibaba, but I believe we might have a chance to build a different Alibaba,” wrote Pinduoduo founder and former Google engineer Colin Huang in 2016. “If you look at the entire e-commerce market, its form is changing dramatically. The success model for Alibaba today is not necessarily the success model for tomorrow.”