Source: https://techcrunch.com/2018/07/26/the-incredible-rise-of-pinduoduo/
Like Alibaba’s Taobao, Pingduoduo is an e-commerce platform that offers a wide range of products, from groceries to home appliances. Pinduoduo’s twist lies in its combination of social components into the traditional online shopping process, which the company describes as the “team purchase” model. The model has brought the company an enormous competitive advantage in lower its user acquisition cost. Both pricing and social features in Pingduoduo is worth some study when we look into effective digital marketing.
First, Pingduoduo leverages social networks for its product marketing. By sharing Pingduoduo’s product in social media like WeChat, users can invite their contacts to form a shopping team to get a lower price for their purchase. Combined with other incentives e.g., cash, coupon, and lottery, Pingduoduos soon became a viral sensation.
Second, pricing features are deployed to pass low prices to its targeted audience, mainly women from lower-tiered cities. The company’s bulk-selling model easily creates huge orders for the sellers and leaves them more room to cut prices. With enough demand collected from its massive user base, Pingduoduo’s C2B model allows it to ship directly from the manufacturers eliminates layers of distributors, not only reduces the price tag for buyers but also raises the profit of manufacturers.
Finally, the design of Pingduoduo’s mobile platform allows the audience to focus on fewer bestsellers. This design helped to facilitate its bulk-selling. Unlike Alibaba’s Taobao, Pingduoduo is more similar to a news feed and gives more exposure to a single product and easy to create viral items.
However, Pingduoduo is facing the problem of user retention now. The declining retention rate is a big challenge, implying a slowing-down GMV. Pingduoduo may face difficulty premiumize its identity due to its user demographics and brand image.
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