Pinduoduo is a leading e-commerce platform in China that offers a unique shopping experience. Pinduoduo business model allows consumers to participate in group buying, where they can team up with others to get discounts on a wide range of products. With Pinduoduo, you can tap into its vast user base and reach potential customers who are looking for great deals.
Pinduoduo provides various tools and resources to help you set up your online store, manage your inventory, and promote your products.
If you want to sell on Pinduoduo and are looking for an e-commerce Agency/partner to open your store and start operation… You are at the right place. Probably unknown in foreign countries, it’s the new leading Chinese APP for social e-commerce, but also the fastest-growing App in the history of the Chinese internet.
What is Pinduoduo?
Pinduoduo in a couple of words:
- Above 100 billion RMB per year of merchandise sold on the platform 2 years after its launch (while it took 10 years for JD.com to reach that point)
- Today, the average monthly active users were 881.9 million
- Mostly female users, 70.1%, living in 3rd tier cities
- An average order of $6, against $30 on Taobao/Tmall and $60 on JD
Purchasing behavior on the App:
- Most users who made a purchase are between 25 to 40 years old (63.3%)
- Most of the active buyers are also women (67.8%)
- Students represent 19.1% of non-purchasing users against 9.3% of active buyers
Core features of the App:
- Group buying (allow discounted price)
- Free products if you convince enough new users to follow Pinduoduo official account
- Short terms coupons (2 hours) push people to faster their purchasing decision
- Ask friends to bargain. Yes, your friend can help you bargain for a cheaper price
- Red envelopes to reward users for inviting friends (viral marketing)
- Lotteries: pay a small fee (0.01RMB), invite friends, and get a chance to win a product
- Customer service messages are customizable that can be sent 48h after the user followed the account or interacts with it.
- Automatic payment on this Chinese eCommerce platform
How to sell products through Pinduoduo?
Pinduoduo’s success in the Chinese e-commerce landscape is based on the current model used by e-commerce players: social e-commerce. A concept consisting to integrate e-commerce channels into social media platforms and vice versa is creating a sharing community into e-commerce platforms.
Pinduoduo got a C2B model that allows shipping products directly from the manufacturers and therefore eliminates layers of distributors. It doesn’t only reduce the price tag for buyers but also raises the profit of manufacturers. A very effective approach for perishable goods such as agricultural and fresh products.
“The more you are, the better you’ll save money”
A method that allowed to increase in the application’s awareness among Chinese. Plus, they are doing an active promotion campaign and sponsoring many well-known reality shows followed by a large number of Chinese such as “Happy Camp” or “Where is Daddy going?”.
In terms of collaboration, Pinduoduo prefers not very well-known brands over famous brands to erase all the premium stuff coming along with branding. And the costs for advertising/marketing are also lowered through users sharing the products by themselves through social media (they send product information directly to their friends and groups having similar income and consumption habits).
This leads us to a big challenge for foreign companies:
In a country where fake companies and counterfeits jeopardized the trust people have in a business relationship, how to build brand awareness and credibility when the platform business model focuses on low-cost products and big discounts?
As a foreign company, how to proceed?
As an outsider, you’ll still have to gain the trust of Chinese people. Offering discounts and low prices don’t mean that everybody will buy your product. In fact, you’ll still have to convince them that your brand is worth it.
And as Pinduoduo’s business model is mainly focused on Chinese social media, you’ll have to develop your e-reputation. Being a famous brand is not just reserved for high-ended & luxury brands. Remember that Chinese people are always connected. It’s now in their culture to check on brands before buying anything, but also to give a comment or review on the product after buying this one.
Whatever the price of your products, a lack of visibility and a bad reputation can kill your chance of success in China.
China got a close communication system, meaning: no Google, no Facebook, no Instagram, and other Western platforms.
Focus on a good branding strategy
Step 1: Make your company visible
- Create a website in Chinese
Even if more and more people speak English, their mother tongue is still Chinese. Therefore, you have to adapt yourself to the local market and write down everything in Chinese, register your website on a Chinese domain name, and design it following local standards.
- Open a social media account
It corresponds to Chinese Twitter. Very popular in China, if you intend to target a large audience and engage with your customers, Weibo is a must-do. Very interesting platform to develop the KOL strategy as well.
Step 2: Develop your brand image in China
Even if you get cheap products, nobody will buy from you or cooperate with you if don’t seem to be a reliable brand. A platform such as Pinduoduo, Tmall, or JD.com receives thousands of demands a day from companies interested in distributing their products in their stores.
So, consider that you’ll face strong competition just to get access to these platforms.
To get their attention, you’ll have to show your sexy side and attract them. You’ll have to build a strong fan base in China, be present everywhere on social media, to get articles talking about you…
If you want to play in the big leagues, you’ll have to pretend to be a big boy.
Here’s how to build your online reputation:
WeChat is the Chinese Facebook? A messenger APP and one of the most popular social media channels in the world, which gets two main features for users such as:
- WeChat moment: system allowing people to share content (messages, pictures, videos) and personal feedback.
- Wechat groups: to communicate solutions to their problems and therefore recommend brands or products.
Not very efficient for direct advertisement but is a super tool for community management and building engagement. Keep in mind that Pinduoduo users are sharing a lot of products through WeChat to get these famous group discounts… You definitely need it.
- Open an official account
- Create an e-brochures
- Community management
- Engage with your followers
- Use mini-programs
Douyin is the video King in China. Extremely famous among young and middle-aged generations, it’s the perfect app to create content and share it with a very large audience. Very intuitive, it’s an amazing app for KOL strategy. Douyin is the Top entertainment mobile APP in China.
It’s the Chinese Google. And they use it a LOT. Consider that Chinese people don’t trust corporate communication. Instead, they check information about brands or companies directly on Baidu. For them, buyers’ comments or reviews will be more reliable than anything you could say. And before buying your product, be sure they’ll control your reputation online and compare your brand with other brands offering similar products.
Here’s how to optimize your reputation on Baidu:
- Use Baidu Zhidao & Zhihu: a good way to deliver information.
- Create a page on Baidu Baike: it’s a kind of Chinese Wikipedia. And they trust it a lot here.
- Forums: it’s important to develop your online presence. The more people talk about you, the better.
- PR: if you’re a good quality brand, there should be articles about you. If not, it means you’re not worth it.
- Comments/reviews: Chinese people are always giving a comment or review about what they bought. And you’ll need plenty of positive comments to convince Chinese people that they could distribute or buy your product.
NB: SEO is Different from PPC. SEO is organic results SEA/PPC is paid traffic;
How to distribute your products through Pinduoduo?
As Pinduoduo is an online platform, you’ll need to determine how will ship your product to your future clients. And you can choose between two main models here:
Cross Border system
It’s basically the importation of goods through sellers from foreign countries. And the good part of this model is that you can use a bond warehouse. Which will definitely lower your investment when starting your activity. Cross-border eCommerce is an excellent alternative for a brand to distribute its goods in China without registering there.
Developing your company in China
Whether you plan to establish a new factory in China or simply open a commercial office to shorten delivery time and make your operations easier, you can develop a Wholly Owned Foreign Enterprise (W.O.F.E). Very effective and gives you 100% control of your operation in China, it also allows you to get your own warehouse in China.
By choosing this model, you’ll get a Chinese business license (allowing you to sell products on every Chinese e-commerce online platform) and all the required certifications.
Once you’ll know how you will operate, you can register to Pinduoduo:
- Login the website
- Start the registration process
- Choose a type of store
- Fill in the qualification information
- Fill in the store information
- Wait for the platform review
- Sign contract
- Start selling
How much does it cost?
You’ll just have to pay a deposit entrance fee from 10,000RMB to 50,000RMB according to your industry category. Deposit is mainly used to pay back unsatisfied clients. And if there is no problem with your products, you’ll get your deposit back.
Pinduoduo takes no commission at all on your product sales. However, there is a 0.6% service fee for the payment function supplier.
To resume, if you plan to sell products on Pinduoduo you’ll need:
- Build up strong visibility and e-reputation
- Establish an effective delivery system
- Register to the Chinese platform
Impact of Key Opinion Leaders
KOLs, or Key Opinion Leaders, can have a significant impact on brands selling on Pinduoduo.
KOLs on Pinduoduo are influential individuals who have a large following and are trusted by their audience. They have the ability to sway consumer opinions and drive sales through their recommendations and reviews. When KOLs endorse a brand or product on Pinduoduo, it can greatly increase brand visibility, credibility, and ultimately, sales.
Many brands leverage KOL partnerships on Pinduoduo to promote their products. KOLs often create engaging content, such as product reviews, unboxing videos, or live-streaming sessions, to showcase and recommend the brand’s products to their followers. This can lead to increased exposure, higher conversion rates, and improved brand reputation.
For example, L’Oréal partnered with a popular KOL on Pinduoduo to promote their beauty products to a wider audience. The KOL created engaging content, such as makeup tutorials and product reviews, to showcase L’Oréal’s offerings and attract potential customers. This collaboration helped L’Oréal to tap into Pinduoduo’s user base and increase brand awareness and sales.
It’s important for brands to carefully select KOLs that align with their target audience and brand image. Collaborating with KOLs who have a genuine interest in the brand’s products and a loyal following can yield better results. Additionally, brands should also consider the authenticity and transparency of the KOLs they work with, as these factors can impact consumer trust.
MUJI, a Japanese retail company known for its minimalist products, partnered with Pinduoduo in 2020 to tap into the platform’s vast user base and boost its online sales in China. Pinduoduo provided MUJI with a platform to reach a wider audience and offered various promotional activities to attract customers.
The collaboration allowed MUJI to leverage Pinduoduo’s social commerce features, such as team purchases and sharing discounts. This approach aligned well with Pinduoduo’s business model, as it encourages users to invite friends and family to join group purchases, thereby increasing sales and lowering prices for everyone involved.
By joining forces with Pinduoduo, MUJI was able to reach a younger demographic and expand its customer base in China. The partnership helped MUJI increase its online sales and gain valuable insights into consumer preferences and behavior through Pinduoduo’s data analytics.
This case study highlights the benefits of collaboration between traditional brands like MUJI and innovative e-commerce platforms like Pinduoduo. It demonstrates how brands can leverage the unique features and user base of platforms like Pinduoduo to expand their reach and boost sales in the Chinese market.
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Selling on Pinduoduo can be a profitable venture for businesses. Pinduoduo is one of the largest e-commerce platforms in China, known for its group-buying model and competitive prices. It offers a wide range of products and attracts a large customer base, especially in lower-tier cities.
Selling on Pinduoduo can be beneficial due to its low entry barriers, allowing small and medium-sized businesses to participate. The platform also provides various marketing tools and promotional activities to help sellers increase their visibility and attract more customers.
However, it is important to note that selling on Pinduoduo may come with certain challenges. The competition can be fierce, and sellers need to constantly optimize their listings and pricing strategies to stay competitive. Additionally, communication with customers may be limited, as Pinduoduo primarily acts as an intermediary between buyers and sellers.
Overall, Pinduoduo can be a valuable platform for businesses looking to expand their reach in the Chinese market. It is crucial to thoroughly research and understand the platform’s policies, fees, and customer expectations before getting started.
We are a China-based marketing agency offering cost-effective solutions to foreign brands interested in tapping into the Chinese eCommerce market. Our team of Chinese and foreign experts has the experience and know-how needed to succeed in this lucrative, yet complicated market.
Gentlemen Marketing Agency offers many digital marketing and e-commerce solutions, such as web design, e-commerce and social media marketing strategies, localization, market research, KOL marketing, and more.
Don’t hesitate to leave us a comment or contact us, so that we can schedule a free consultation with one of our experts, that will learn about your brand and present you the best solutions for your China market strategy.