Social commerce in China will net close to $400 billion in sales by next year and will account for around one-fifth of all online sales in China by 2023.
At the very center of that growth is Pinduoduo, China’s third-biggest e-commerce site and the country’s largest social commerce platform.
But what is Pinduoduo, exactly?
And how can international businesses use it to their advantage?
In this article, we’ll answer those questions and more as we break down the ins and outs of Pinduoduo marketing.
First up: what is Pinduoduo?
Launched in 2015, Pinduoduo is a social e-commerce app that’s based on “team buying,” where customers can use social media to build a “shopping team” to get a better price on a product. The bigger the shopping team, the bigger the discount.
Pinduoduo users can also earn free shipping, free products, and other rewards by playing games and entering competitions — all of which are geared toward encouraging customer referrals and social sharing.
And that’s the main unique selling point of Pinduoduo: It’s designed to incentivize customers to share products via social media and, in turn, increase sales for the brands that sell on the platform. The team purchase model also leads to lower customer acquisition costs on the platform.
Pinduoduo is now the third-largest e commerce platform behind Alibaba and JD.com in China.
Who uses Pinduoduo?
As of 2020, Pinduoduo has over 640 million monthly active users, making it the fastest growing e-commerce site in China.
Of those users, 65% are from lower-tier cities in China (an important marketing category), 70% are female, 63% are between 25-40 years old, and 42% don’t have a college degree.
And what products do they buy?
Pinduoduo Inc. has grown to become the biggest online marketplace for agricultural products in China. Through the company’s platform, they work with over 16 million growers and the rural communities to helping them participate in and benefit from the fast-growing digital economy.
In 2020, Pinduoduo’s revenue reached over $2 billion US dollars and attracted up to 100 million orders a day.
The product categories responsible for this growth were:
- Fresh agricultural produce
- Household items
Fresh produce, in particular, is very popular on Pinduoduo. In fact, Pinduoduo is China’s largest online grocer and generates almost $20 billion a year from agricultural products alone.
100% of Pinduoduo’s revenue comes from “online marketplace services.” This refers to the commissions from the sales on the platform and paid advertising by companies on the platform.
How does Pinduoduo actually work?
At first glance, Pinduoduo might seem a little confusing. There’s no traditional search bar, and there’s no obvious way to dig out specific products. But once you understand the customer journey on Pinduoduo, it’s easier to understand how the app actually works.
First, a user will open up Pinduoduo and likely notice a product that’s caught their eye, thanks to a highly intelligent algorithm that personalizes each user’s feed.
Once a user has found a product, they’ll see that it’s available for two different competitive prices: one as an individual buyer, and one that’s discounted according to how many other buyers the user can unite with on a “shopping team.”
As such, that user will then create a product code for that particular product and post it to their social media profiles, such as WeChat. Their friends and followers can then join them to form a team, which will unlock a discounted price for each buyer.
Besides, this creates a viral e-commerce process where new team members join and encourage their friends to join them until the maximum discount is achieved. Each buyer is then able to purchase the product for often up to 90% less than the usual retail price.
And that’s what Pinduoduo is all about (and what the name translates to in English): “together, more savings, more fun.”
It provides an interactive shopping experience that keeps the buyers engaged.
But Pinduoduo isn’t just about team buying.
Other features include:
- Free products for getting users to follow Pinduoduo official accounts
- Short term coupons to encourage flash purchasing
- Red cash envelopes to reward users for inviting friends to Pinduoduo
- Lotteries, where users can win products for a very small fee
- Leaderboards to track the most rewarded users on the platform
In short, Pinduoduo presents a new take on e-commerce — one that’s interactive, driven by social media, and far more experiential than its competitors.
Selling on Pinduoduo vs JD.com — what’s the difference between the two?
JD.com is arguably Pinduoduo’s biggest competitor. It’s the second-largest online retailer in China, and sells a similar range of products. Pinduoduo, however, has achieved higher growth in five years than JD.com did in over a decade.
Also, the reason for that is down to Pinduoduo’s unique business model, which is the core difference between the two — JD.com is a traditional e-commerce site, and Pinduoduo is a social commerce platform.
For international businesses looking to sell in China, here’s a quick summary of Pinduoduo vs. JD.com:
|JD Worldwide (JD.com’s cross-border platform)||Pinduoduo Global (PDD’s cross-border section)|
|Legal entity||Outside China||Outside China|
|Bank account||USD bank account||Home country|
|Registration||Registered in any country||Registered in any country|
|Warehouse||Outside China or partner warehouse in China||Outside China or in China(PDD has no warehouses)|
|Users||Approx. 335 million annual active users |
80% aged 18-45, 65% degree-educated, 68% male, 32% female
|Approx. 460 million monthly users |
63.3% aged 25-40, 42.4% not degree-educated, 70% female
|Costs||Deposit: $15,000 |
Annual fee: $1,000
Commission: 2-8% based on order value.
Annual fee: $0
Transaction service fee: 0.6%
|Best for||Beauty products, infant and mom products, health supplements||Groceries, fashion, household items, electronics|
|USP||Cross border e-commerce(big brands)||Cross border social commerce (smaller brands)|
Check out our guide on selling on JD Worldwide to learn more about Pinduoduo’s closest competitor.
How to use Pinduoduo in English
Unfortunately, the Pinduoduo app isn’t available in English. There’s no option to translate the app into English, either. You can, however, visit the Pinduoduo English site to learn more about the platform and how it works.
Feel free to get in touch with us if you have any questions about Pinduoduo — we’ll be more than happy to help.
How to register as a foreign merchant on Pinduoduo
Registering for Pinduoduo as a cross-border merchant is a relatively simple process and can be completed within a week.
Here’s a breakdown of what’s involved:
First, go to Pinduoduo’s merchant sign-up page
Visit this page to sign-up as a cross-border merchant.
Then, create your account and verify it with a passcode sent to your mobile number.
Next, log into your account and start the merchant sign-up process
First, you’ll need to select what store type your business is: a flagship store, department flagship store, exclusive seller or an authorized seller.
You’ll then need to fill in the qualification information. To do that, you’ll need to provide the following documentation:
- Overseas proof of business registration (such as a business license)
- ID of legal representative (passport, driver’s license)
- ID of store manager
- Distribution/logistics documentation (proof of warehouse partners, etc.)
- Brand qualification documentation (trademarks, authorization letters)
You’ll also need to pay a refundable deposit between $1,500 – $7,600, depending on your industry.
Then, submit your application and wait for approval
You should hear back quickly and be asked to sign a contract. Work through this with your legal representative, sign it, and you’re ready-to-go.
Check out Pinduoduo’s YouTube video on how to sign up as a foreign merchant for more information.
How to generate sales on Pinduoduo
Once your Pinduoduo store is up-and-running, here’s how to build a Pinduoduo marketing strategy that delivers….
Build a presence on Chinese social media
With Chinese social media business accounts, you’ll be able to promote your Pinduoduo products to users who are actively using social media. This means that they’ll be more likely to form a shopping team for your product via social media, which could increase your sales.
Find out more about China’s biggest social media channels here.
Create a Chinese website
A Chinese website will prove to Chinese consumers that your brand can be trusted, which will increase the likelihood of attracting shopping teams to your products. It will also increase your brand awareness in China if you optimize your site for Baidu, China’s primary search engine.
Read our guides on how to create a Chinese website and Baidu SEO to find out more.
Sell the right kinds of products
Pinduoduo is a unique platform, and not every product performs as well as the rest. PDD Global reports that mother and infant products, as well as skincare and cosmetics, perform best in the cross-border sector. You should consider selling these for maximum success.
Take advantage of Pinduoduo’s marketing features
Pinduoduo has a wide range of marketing features that aim to help merchants increase sales. Pinduoduo live-streaming, for example, is a great way to interact with consumers and encourage them to form a shopping team for your products — especially if you team up with a KOL (Key Opinion Leader).
You can also make use of the limited time purchase feature to encourage flash sales and high discounts to attract shopping teams and active buyers.
Advertise your Pinduoduo products and store
One of the best ways to drive sales to your Pinduoduo store is with paid ads targeted at your ideal customer. Putting ads on Chinese social media channels will ensure that you’re reaching customers who are likely to share your products to secure big discounts and, in turn, further increase your sales.
Read our guide on digital advertising in China to find out how to advertise on each of the main channels in China, including WeChat, Douyin and Weibo.
You should also advertise on Pinduoduo itself, which offers a wide range of high-converting banner ads that you can target at specific users based on your needs.
How AdChina.io can help you with marketing in China
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More awareness, more social sharing, and more sales on channels like Pinduoduo.
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