Pinduoduo went from zero to 824 million customers in just six years, overtaking the largest incumbent. As the fastest-growing consumer internet company in the world, observers have sought to explain its success.
Some experts explain it by pointing to Pinduoduo’s role in pioneering the “team purchase,” which offered a lower price to consumers if they banded together to buy a product. Pinduoduo’s use of gamification, which made shopping interactive, fun and a shared experience, is often mentioned. Yet another explanation is its ability to offer often unbeatable prices, without compromising on quality, by removing the middlemen standing between manufacturer and consumer.
To hear it from Pinduoduo Chairman and CEO Chen Lei, the secret sauce is the early recognition of the potential of the mobile internet, which “fundamentally transforms the way humans interact with each other.”
Just as the printing press helped power the scientific revolution by disseminating knowledge, and the aeroplane kicked globalization into high gear, the mobile internet is another technological revolution that has catalysed wholesale changes.
"We saw six years ago that mobile is the only way to go, therefore, we are the only major consumer internet company in the world that is mobile only,” said Chen, the chief architect of Pinduoduo’s mobile-only platform. “The benefit of being mobile-only is that we never have to compromise on the user experience, or worry about optimizing a legacy product for mobile. Mobile is the future, we focus only on our users’ mobile experiences, and they love it.”
“One key feature of the mobile revolution is the speed at which it is tearing down the walls between the physical and digital worlds,” said Chen. In turn, numerous opportunities are arising from the shifts in consumer behavior, he said.
One such “wall” that has crumbled is grocery shopping. In China, buying produce and the fresh groceries from traditional wet markets is an entrenched habit that changed with Covid-19. Almost overnight, consumers turned to online avenues to get their food and everyday essentials because shopping at crowded markets became a health hazard.
To fulfil this consumer need, Pinduoduo launched Duo Duo Grocery in August 2020. The next-day pickup service is seeing strong demand from consumers, who now have the chance to buy a wider range of perishables directly from farmers and agri-merchants in the region. Many of the customers who used this self-collect service already shop on Pinduoduo, China’s largest agriculture platform, making Duo Duo Grocery a natural extension and complement to the platform. Beyond creating more business opportunities for the more than 12 million farmers who sell on Pinduoduo, Duo Duo Grocery has catalyzed the creation of millions of jobs throughout the entire supply chain and opened an additional income stream for existing shops that serve as collection points.
To support the company’s goal of becoming the world’s biggest grocer, Pinduoduo is investing to develop an agriculture-focused logistics system that can ensure quality, reduce food waste, and cut down delivery time by stripping out the inefficiencies.
With the increasing level of digitization of logistics, more real-time information is now available to offer insights into various parts of the process of transporting parcels from manufacturer to consumer, according to Chen. It is now possible to develop a more flexible logistics infosystem and agriculture-focused infrastructure that reduces the need for multiple transshipments and enables more point-to-point deliveries. This can be achieved through the use of advanced calculations that take into consideration multiple factors such as the timing of truck deliveries, warehouse location, route planning, he said.
“If you think about it, we have a hub-and-spoke system that was created over the past decade to concentrate parcel flows into centralized hubs, which was the right thing to do 10 years ago because China is just too large a country and the e-commerce order volume was still low,” said Chen. “But what about 10 years from now? The future of logistics should not be burdened by legacy considerations that have already changed.”
Another “wall” that collapsed recently is the notion that one had to stockpile food and other essentials for Lunar New Year. The practice came about because most brick-and-mortar shops are shut through the holiday. In an industry first, Pinduoduo worked with merchants and logistics providers to stay open and dispatch orders during Lunar New Year this year.
Commenting on the move to offer uninterrupted service through Lunar New Year, Chen said that this was in part due to the way the mobile internet has trained consumers to expect on-demand access to goods and services. In this case, it was natural for online retailers to fill the gap left by physical shops.
“Online and offline are just parts of a single world, blended together more and more seamlessly,” Chen said. “Being a mobile-only product in this new age, we are well-placed to benefit from the opportunities thrown up by each behavioral change.”