Entering the Chinese market is not as easy as it might seem. You have to understand it beforehand in order to maximize your potential success. Understanding the e-commerce environment is crucial, you will have to target China’s key platforms, such as Pinduoduo, the number one social e-commerce app. This article will walk you through all the information you need to know about selling on Pinduoduo, as well as how to use the marketing tools available for brands who want to tap into China’s e-commerce craze.
What is Pinduoduo?
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Pinduoduo’s peculiarity is that it was able to create a platform that connects producers, farmers, and distributors with consumers directly through its interactive social e-commerce platform. For the year 2019, almost 600,000 merchants sold farm produce through Pinduoduo. In August 2020, Pinduoduo pledged to sell USD 145 billion worth of farm products each year by 2025.
The platform has launched several unprecedented trends in China, including social commerce, and consumer-to-manufacturer (C2M) that have revolutionized online commerce in China. As of September 30, 2020, Pinduoduo has generated over RMB 1.45 trillion in value in the last twelve months, accounting for 731.3 million active buyers (2019), 643.4 million average monthly active users in the 3rd quarter of 2020.
Is Pinduoduo popular in China ?
Despite the company only operating in China, it has managed to become listed on Nasdaq, where it has reached a market cap of $50 billion.
In fact, Pinduoduo is extremely popular in China as it is amongst the most popular online platforms and the leading e-commerce platform that connects farmers and distributors with consumers in China. Thus, it is the place to be for people who want to buy affordable and fresh products online and receive them within a few hours directly at home. Over the years, it has revolutionized e-commerce by becoming a social commerce platform, as well as a consumer-to-manufacturer (C2M).
Moreover, Pinduoduo’s success over the years was quite phenomenal given the fact that it had to compete with other big players such as Tmall, JD.com, or Taobao.
As we can see from the above graphic, Pinduoduo generated 1.67 trillion yuan in GMV in 2020, according to their latest earnings report.
What is Pinduoduo’s business model?
The platform’s unique selling technique, which evolves around shopping for discounted prices by buying in large quantities, is a sort of Groupon as well as an emphasis on affiliate marketing. This business model simultaneously reduces the price for consumers while creating large orders raising profit for retailers. To benefit from this, people just have to share the link with their friends on WeChat or QQ for example.
According to a 2019 study on Statista, 95.9% of Pinduoduo male users born in the 2000s bought items their friends shared with them, whereas female users were most likely to form groups with their friends to buy things together at a better price.
Therefore, Pinduoduo’s business model was extremely profitable according to women, given them the opportunity to purchase things at a cheaper price, and as a group.
Commonly called the consumer-to-manufacturer (C2M) model, consumers create value for manufacturers and provide merchants with ideas for new product developments. This model is at the base of Pinduoduo’s development and it serves the purpose of supporting merchants by supplying consumer insights, suggestions, and preferences to help them tailor-make products for their targeted customers.
Now if we look at Pinduoduo’s annual revenue between 2017 and 2020, we can see that its main source of revenue was from its online marketing services, which have generated almost 48 billion yuan. It was then followed by its transaction services.
Is Pinduoduo bigger than Alibaba?
Social e-commerce giant Pinduoduo has surpassed Alibaba in terms of active annual users, with 785 million users (2020), overtaking Alibaba’s 779 million. In 2020 Pinduoduo’s revenue spiked 146% as the pandemic kept shoppers at home, making them prone to buying and consuming more than usual.
As of March 2021, Pinduoduo was even the second-most popular free non-game app in China with about 5.8 million downloads, right after WeChat and its 6.88 million downloads. Pinduoduo was in fact more popular than apps like Taobao, or the short-video platform Douyin.
At the time of its launch, Pinduoduo was popular in third- and fourth-tier cities, but the company has since expanded itself to China’s first-tier and second-tier cities while challenging Alibaba and JD.com’s dominance in e-commerce. At the moment Alibaba still remains Pinduoduo’s biggest and stronger competitor, but how long will that last?
1.1 Why Should you sell on Pinduoduo?
- The app is close to 800 million users
- Merchants fees are a lot more manageable than other competitors
- Low entry requirements (you can contact us for more information about this)
- Pinduoduo benefits from extremely interesting and profitable paternships (ex: Tencent’s Wechat)
- Many marketing tools for merchants – such as affialiate marketing tools
- People trust this app, especially when it comes to fresh products as it is direcltly linked to productors
- On Pinduoduo, consumers can discover and purchase products from a wide range of sellers
- Users are able to easily share what they have browsed or purchased with their friends directly on the platform
- They’re also offered an opportunity to join teams within 24 hours that enables them benefit from lower prices, and then receive the products directly at home
1.2 Who are Pinduoduo’s Users ?
A few years ago, Pinduoduo was extremely disparate in terms of the ratio of female/male users, as it had more than 70% of female users.
However, over the years, we can see that this gap is less important, with Pinduoduo having now 48% of male users and 52% of female users.
According to this Statista, approximately 36.7% of Pinduoduo’s users were from the fourth and lower-tier cities in China. On the other hand, 16.8% were from Tier 2 cities, and only 7.5% were from Tier 1 cities, which shows that on average, the majority of users are from rural areas, with a lower cost of living. Moreover, 37% don’t have a college degree.
Now in terms of age group, approximately 35.7% of Pinduoduo’s users were between 36 and 45 years old, followed by 46 years old and older. It means that at the moment, Pinduoduo is mostly used by older people, but in the years to come, the company wishes to attract the younger population as well thanks to popular tools for example, such as social media, KOLs (influencers), and live streaming.
1.3 What type of products are bought on Pinduoduo ?
- F&b: Snacks, Fruits, Dairy, Nuts
- Women Fashion
- Kitchen appliances
- Maternity Goods
Note: Pinduoduo is China’s #1 online grocery shopping app.
1.4 Who sells on Pinduoduo ?
Farmers from all over China have the possibility to sell their items on Pinduoduo’s. Independent sellers can also register their store on the platform.
The platform is also home to international brands such as Apple, Adidas, Lays, and so on, as well as local brands such as Huawei, Midea, and many Chinese snacks brands you’ve probably never heard of.
2. How to join Pinduoduo as a Merchant ?
Registering for Pinduoduo as a cross-border merchant is a relatively simple process and can be completed within a week.
Of course, if you want to gain time and be sure to have your Pinduoduo account, you can contact us and our experts will do their best to explain the whole process in detail, and then create and help you manage the account.
Here’s a breakdown of what’s involved to sell on Pinduoduo:
- 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
- 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 – $7,600, depending on your industry.
Then, submit your application and wait for approval
You should hear back quickly and be asked to sign a contract. Work through this with your legal representative, sign it, and you’re ready to go.
Check out Pinduoduo’s YouTube video on how to sign up as a foreign merchant for more information.
2.1 What qualifications brands need to meet in order to sell on Pinduoduo ?
There are no specific requirements apart from being a legitimately registered company. If you don’t have a Chinese business license you can sell on Pinduoduo Global ( cross-border B2C) or partner with a Chinese entity that is allowed to import foreign goods.
Take into account that Pinduoduo does not have a warehouse and merchants have to take care of customs clearance and logistics. If you want more information about this, you can contact us here.
2.2 How to open a Store on Pinduoduo
- Log into the website (Only available in Chinese at the moment, we have native experts who can help you)
- Start the registration process
- Choose the type of store you want
- Fill in the qualification information
- Fill in the store information
- Wait for the platform aprouval
- Sign the contract with the platform
- Congratulations, your store is now open on Pinduoduo !
2.3 How do we help you register a store on Pinduoduo?
We not only set up your Pinduoduo store to answer the Chinese code of e-commerce but also create an intuitive menu for efficient management. Pinduoduo is the perfect place to share and advertise your items but also share interesting content about your company and products. We support your content strategy and define your strategic positioning.
2.4 How much does it cost to sell on Pinduoduo?
The biggest fee you’ll encounter on Pinduoduo is the Deposit which ranges between 1700$ to 7600$ depending on the categories of products you are selling.
The only other fees you’ll pay are transaction fees that amount to 0.6% of each sale you make.
3. You need branding to be a successful Seller on Pinduoduo
Pinduoduo has a large range of marketing tools to help merchants raise their 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.
3.1 Pinduoduo Marketing tools
3.1.1 Paid Ads
One of the best ways to drive sales to your Pinduoduo store is by using paid ads targeted towards your customers. 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.
3.1.2 Affiliate Marketing
When buying things from Pingduoduo, shoppers are presented with two price options: a standard price and a discount price. In order for users to unlock heavily discounted prices, they have to form teams of at least two buyers. This created an incentive for shoppers to share deals with others. Shoppers are encouraged to persuade their friends to join their purchases via social media platforms, WeChat, QQ (the two biggest chatting applications under Tencent, similar to WhatsApp and Skype), and QR code scanning in order to get the discounted prices through the team purchasing.
3.1.3 Pinduoduo Livestreaming
An amazing way to promote your store and take advantage of the current booming trend of social media in China is to use KOLs to promote your products on your behalf. They’ll make a live streaming video, talk some about your items in detail and recommend it to their fan base.
3.2 Build a Strong eReputation for your brand
3.2.1 Baidu SEO
As the most popular search engine in China by far, Baidu simply is a step you can’t skip in China. However, increasing your website’s ranking on Baidu requires a slightly different way of thinking about Search Engine Optimization (SEO) compared to what you might be used to with Google. Considered as the “Chinese Google”, Baidu is the most popular Chinese Search Engine and stands as the 5th most consulted website in the world.
As of 2021, it represents 72.9% of the Chinese market share. In comparison, only 4% of internet researches is done with Google in China.
To succeed in China, you will need to increase your visibility by ranking on Baidu. After creating your Chinese website, you will have to focus on Baidu to increase your visibility and e-reputation.
To develop your visibility on Baidu, you can use different marketing solutions such as:
- Pay Per Click (PPC)
- Search Engine Marketing (SEM)
- Search Engine Optimization (SEO): you will need to create qualitative content, shareable information, use keywords to increase your online presence on Baidu, etc.
- Learn more Baidu: Baidu SEO & Baidu SEM
3.2.2 Social Media
There were around 674 million social media users in China in 2019, this makes China the world’s largest social media market, with people increasingly depending on such platforms to look for a place to share their opinions, ask for product recommendations, and connect with others. Global brands looking to build their presence in the Chinese market need to keep a close eye on what’s happening with these platforms. For example, it is crucial to have an official account on the most popular social media platforms such as WeChat and Weibo, but you can also take advantage of other apps such as Xiaohongshu or Douyin.
Using KOL as part of your marketing strategy in China is essential if you want to quickly attract consumers as well as to develop your visibility. In fact, KOLs can be considered professionals in the social media sphere. They know how to distinguish themselves, promoting and selling products, presenting clearly the advantages of your products. Their success is mainly due to the fact that they interact directly with their audience (during live streaming for example) and they know how to engage a target audience.
To sum up, you should sell on Pinduoduo because…
Pinduoduo, the unique, the one, a newcomer that decided to make its own path among the biggest e-commerce platforms in China. The app has been able to become a viral sensation in China over the years, thanks to its steep discounts up to 90% off on everyday items and food with the condition that users share Pinduoduo’s product information online, inviting enough friends through WeChat or QQ for example.
Starting out as a startup and reaching today $57 billion USD, Pinduoduo and its 585 million active buyer base generated over $145 Billion USD Gross merchandise volume in 2020.
Today, Pinduoduo is one of the leading Chinese e-commerce platforms reaching 2nd place as the largest one and therefore surpassing JD. Based on social e-commerce and group buying deals, the platform answered the needs of its client about social engagement while reproducing offline buying experience through community building, product recommendation, and team purchase. It’s fun, interactive, rewarding, personalized and people love it.
With all the information above, you understand why selling on Pinduoduo is unavoidable when entering the Chinese market.
Contact us to disuss your project in China, we would be happy to help you !
As we have seen all along with this article, China has become the market to conquer for brands who want to expand their activities worldwide. However, as you probably already know, the Chinese market is completely different from what most companies are accustomed to, and e-commerce has a predominant place in China’s society, especially since the Covid-19 outbreak. As a foreign company entering the Chinese marketplace, it is important to get familiarized with all its subtleties and peculiarities. Our experts can help help you choose which will best suit your needs as well as create and manage your marketing and advertising campaigns to increase your ROI.
If you have any questions about Pinduoduo, e-commerce platforms in China, or if you need other information, do not hesitate to reach out to us here, and we will contact you within 24 hours.