Unlike Alibaba or Tencent e-commerce platforms, Pinduoduo is targeting low income families in Tier-2 and Tier-3 China cities.
The Shanghai based startup has reached within 2 years as much audience as 114 millions consumers, approx 75% of well established JD.com (number 2 in online sales after Taobao & Tmall ecosystem).
Alibaba addressed this population through its rural Taobao initiative, however they can’t cope with Pinduoduo (PDD) techniques of using social networks to leverage its sales. Similar to Groupon group buying mechanism, PDD entice clients to share on WeChat when they make a good deal to enjoy even further rebates when their friends buy in. They tapped in the roughly 400 millions consumers reserve of China that are scarcely buying online. 25% of retail will be online in China in 2020. No Dior perfume on PDD marketplace but Zhihu brand toilet paper straight from factory. No distributor commission the main advantage of buying through PDD.
With Tencent financial backup PDD is now valued at over 15B$ and has reach monthly sales of 1.6B$, a fourth fold increase YoY. However tough competition, inconsistent products quality and bad monetizing of its audience remain big challenges for PDD. Yearly amount spend by user is only of 50$ on PDD whereas its 500$ on JD.com & 1300$ on Alibaba’s marketplaces.