Yacon, a root vegetable that resembles a large potato and has an apple-like taste, was largely unknown in China a decade ago. It was only popular in parts of Southern China where it was used in traditional Chinese soups. But in 2016, as Pinduoduo was looking to add more fresh produce for its consumers, yacon stood out as a nutritious and sturdy product that could withstand the wear and tear of delivery.
As soon as yacon was introduced on Pinduoduo, the low-calorie root quickly captured the market and became an online hit. In 2018 alone, consumers across China, especially those in first and second tier cities, made over 4.8 million yacon orders on Pinduoduo. The orders amounted to nearly 18,000 tons of the fruit.
By using the company’s unique recommendation algorithm and its “team purchase” model, the company was able to identify this growing market demand and help farmers meet the demand. However, despite the increased popularity of the fruit, farmers were seeing minimal positive impact on their earnings.
Farmers had limited access to consumers directly and instead had to go through various layers in the supply chain in order for their produce to reach consumers. Farmers were selling yacon to distributors for 0.5 yuan/kg, and these distributors, who have more resources including trucks and warehouses to take the produce to wholesale markets in cities, were reselling the fruit for over 4 yuan/kg. Excluding expenses for logistics and labor, distributors were still making a profit of 1.8 yuan/kg. In 2018, statistics showed that distributors earned 63 million yuan more than farmers by selling on Pinduoduo.
Realizing this, Pinduoduo sought to tackle the root of the issue by introducing Duo Duo Farm in early 2019. The program aims to provide necessary skill sets for farmers to sell directly on Pinduoduo without relying on unnecessary layers of intermediaries in the traditional supply chain. The vision of Duo Duo Farm is to better connect farmers — the first mile — directly with consumers — the last mile.
To help farmers learn how to sell directly on Pinduoduo, the Duo Duo Farm program launched Duo Duo University programs in rural Yunnan to provide week-long training sessions to equip farmers with important skills, including an understanding of e-commerce, finance, business operations and online marketing. The programs provide a simple step-by-step guide on how to sell on the Pinduoduo platform.
Pinduoduo has provided not only capital resources, but also given farmers in-app marketing support and farming suggestions derived from its data insights. The farming suggestions take into account the predicted purchase pattern and demand for their fruits on Pinduoduo and the likely delivery schedule. With more information available, farmers can better plan their planting schedule. They can also form co-ops with neighboring farmers to ensure more control over pricing and earn more from their harvest.
Duo Duo Farm is also helping to attract younger talent back to rural areas. In recent years, many young, educated people in rural China have been leaving their hometowns to find better jobs in the cities. As a result, China is facing social challenges as only the older generations remain in rural communities, and are tasked with looking after grandchildren while their children work in the city.
As demand for fresh produce from these provinces on Pinduoduo grows, more jobs are created, ranging from farming, packaging, delivery and e-commerce store operations. When there are more attractive job opportunities in rural areas that match the paychecks in cities, younger generations are able to return home to make a living.
Given their urban experience, these youths are more tech-savvy and knowledgeable about the benefits of e-commerce, which can help increase the household income, and with successful examples around them, even more rural dwellers are encouraged to give e-commerce a try. As a result of providing these new income opportunities, progress is made in helping to alleviate poverty in rural areas.
Given the success to date, Pinduoduo plans to add another 1,000 Duo Duo Farm projects in eight Chinese provinces over the next five years as part of the platform’s “Internet + Agriculture” initiative launched in 2015 to help alleviate poverty in rural areas. It is designed to facilitate direct sales between small farmers and consumers. Technology is at the heart of the initiative as it enables the platform to make relevant product recommendations to consumers so that scattered demand across space and time can be aggregated. The platform helps to generate large volumes of orders for farmer merchants, reducing the farmer’s costs overall.
In 2018, Pinduoduo supported over 140,000 merchants located in national-level poverty-stricken counties to sell their agricultural produce online, processing over 2.33 billion orders of agricultural products, amounting to 65.3 billion yuan ($9.7 billion). In 2019, we had over 360,000 merchants from national-level poverty-stricken counties selling on Pinduoduo, outpacing the general growth in agricultural produce merchants on the platform. Our GMV for agricultural products reached 136.4 billion yuan ($19.3 billion) in 2019.
This article was updated on Jun 15, 2020 to include the SCMP article mentioning China’s talent gap in rural e-commerce and the latest figures from our 2019 agricultural report.