Pinduoduo deepens digital transformation for agriculture as record number of buyers and merchants flock to platform

Pinduoduo deepens digital transformation for agriculture as record number of buyers and merchants flock to platform

Staff Writer
Staff Writer
Pinduoduo Content Team
May 2, 2021

Pinduoduo Inc., China’s largest agricultural platform, is deepening its efforts to transform the way food is grown, transported and sold by connecting millions of farmers directly to consumers.

Since its establishment in 2015, Pinduoduo has focused on agriculture and has connected more than 12 million farmers directly to its users, which numbered 788.4 million users as of the end of last year. Last year, Pinduoduo recorded more than 270 billion yuan ($42 billion) in agriculture-related GMV, up from 136 billion yuan in 2019.

Pinduoduo has been able to aggregate demand and generate large volumes of orders for farmers by making recommendations to consumers based on the company’s understanding of their shopping preferences, the Nasdaq-listed company said in its annual 20-F filing covering the 2020 financial year. By facilitating direct sales by small-scale farmers to consumers, Pinduoduo helps the growers to reduce their dependence on distributors and increase their earnings, which can be reinvested in the farms and technology to improve productivity. Consumers benefit from fresher and safer produce at lower prices.

“This market we created for fresh produce will also enable the logistics companies to optimize their procedures for delivering fresh produce and reduce spoilage during the delivery process, resulting in savings along the supply chain,” the company said in the filing.

Pinduoduo has gone from zero to almost 800 million customers in just six years, making it one of the fastest-growing consumer internet companies in the world. Merchants are flocking in record numbers to Pinduoduo, attracted by the prospect of selling directly to the wide pool of buyers who use the platform to purchase everything from fresh groceries to apartments.

In 2020, Pinduoduo added more than 200 million active buyers, the most of any marketplace, while the number of active merchants surged to a new high of 8.6 million from 5.1 million the year before, according to the filing.

“Our active buyer base helps attract merchants to our platform, and the scale of our sales volume encourages merchants to offer even more competitive prices and customized products and services to buyers, thus forming a virtuous cycle,” the company said.

Pinduoduo has described its model as “Costco + Disney”, in reference to the combination of value-for-money offerings and entertainment. It is unique among other large internet companies to make digitizing the agriculture industry a core, strategic priority.

Read: Duo Duo Grocery brings farm-to-table benefits to Chinese consumers

In August 2020, Pinduoduo introduced Duo Duo Grocery, its next-day pickup service, to help local farmers sell directly to local consumers. Orders placed before 11 p.m. are fulfilled by local farms and dropped off at designated collection points by 4 p.m. the following day, providing consumers a more economical option to premium same-day delivery services.

To support its goal of becoming the world’s biggest grocer, Pinduoduo is investing to build an agriculture-focused logistics infrastructure that can ensure quality, reduce food waste, and cut down delivery time. Reducing food spoilage is also in line with its commitment to combat climate change, as global food loss accounts for about 8% of total greenhouse gas emissions.

Read: Pinduoduo files to patent cold-chain logistics system

In its 20-F filing, Pinduoduo also described its efforts to develop human capital in agriculture, a key to increasing the adoption of technology in the industry.

Under its “Internet + Agriculture” strategy, Pinduoduo coached farmers on setting up stores online, provided them with access to end demand, and helped them to increase their household income. By training young men and women from rural areas to become e-commerce savvy “New Farmers”, many of them became champions for digital inclusion, often catalyzing a multiplier effect and wealth creation for their local communities.

Read: Pinduoduo betters farmer livelihoods and revitalizes the rural economy

Pinduoduo’s efforts in combating poverty through digital inclusion were recognized by China’s central government in February 2021, where it was one of three technology companies commended for their outstanding contributions to China’s poverty alleviation drive. Pinduoduo will deepen its efforts to promote digital inclusion of rural communities in 2021.

To promote the adoption of technology in the agriculture and food system, the company is actively evaluating global investment opportunities in areas including alternative proteins, food safety and precision farming.

Last year, Pinduoduo co-organized a Smart Agriculture Competition in which technology teams competed against expert growers in a strawberry-growing competition, with the aim of testing the applicability of advanced technology to traditional agriculture.

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