The miraculous rise of Pinduoduo
Founded in 2015, Pinduoduo took two years and ten months to hit Nasdaq, becoming one of the fastest IPOs among Chinese internet firms. Today, Pinduoduo is one of the world's top ten online retailers. It is also one of China's biggest online retailers in terms of the number of active users and market share. The success of Pinduoduo lies in its unique business model, a combination of group buying and social shopping. The platform encourages its users to join team buying to secure a better price and share links for various items with their friends in exchange for coupons.Another key element to Pinduoduo's immense growth was its strategy to target the rural market. While most Tmall users were from bigger cities, Pinduoduo managed to win a large market share in lower-tier cities and villages by offering steep discounts. Home to more than 700 million people, China's lower-tier market has overtaken Tier-1 and tier-2 cities to be the new driver of the country's economy.
Unlike its major competitors, Pinduoduo removed the function of shopping on its website. Instead, users could only browse and purchase the items via its mobile app or a WeChat mini-program. Since more than 85 percent of e-commerce purchases in China were made via mobile devices, the decision seems reasonable. Furthermore, shopping via mini-programs became increasingly popular among Chinese online shoppers. Mini-programs refer to built-in applications which users to use certain apps without downloading or installing them. As of September 2020, Pinduoduo remained the most popular WeChat mini-program.
Pinduoduo’s global ambitions
Encouraged by TikTok and SHEIN's phenomenal global triumph, China's e-commerce giants have been more eager to expand their overseas presence than ever. Launched in 2010, Alibaba’s Aliexpress is currently the largest player in terms of export e-commerce. Nevertheless, with Pinduoduo launching its international retail marketplace Temu in 2022, a head-to-head is hard to avoid.For less than a year on the market, Temu has shown signs of repeating the success of Pinduoduo in China. In March 2023, Temu beat TikTok to be the most downloaded app in the U.S. app store. By May of that year, the global downloads had skyrocketed to 31.77 million, up from only 450 thousand in September 2022.
Even though leveraging China's manufacturing capabilities to offer lower priced products is not new for Chinese e-commerce exporters, Temu's unique affiliate program and social marketing strategy keep it ahead of the pack. With Temu, customers could not only buy affordable products, but also earn cash rewards by referring friends and family.