While Amazon demonstrated a successful business model for e-commerce, Pinduoduo, the second largest e-commerce platform in China, has developed a team-based/social-based buying model.
Pinduoduo's social, team-based buying model (platform layout shown above) has built success upon creating an unconventional, feed-based shopping experience, rather than a search based experience typical of traditional retail and e-tail. It runs under a "'you don’t know what you want but happy to discover'" mantra, in essence, building a feed catered to each individual user in a personalized, virtual bazaar format. This model has drawn millions to the app and has allowed Pinduoduo to grow its user base and revenues at a dazzling pace.
While this model significantly contributed to its user growth and GMV, the negative side cannot be ignored. Its social interaction is mainly sharing a link with existing connections and asking them to do a favor by registering and clicking the link. This is disturbing especially if sent to people that are not in close connection. Current social-based e-commerce was regarded as annoying and unhelpful to get desired discounts.
Therefore, when Pinduoduo enter the U.S. market, it has launched a new brand called Temu. Temu is similar to Amazon where products are displayed to show its quality, which is completely different from Pinduoduo itself. Its business success still remains to be verified, but seems social-based e-commerce would not be a prioritized strategy for Pinduoduo.
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