When Liu Xingjia decided to quit his job with an annual salary of 200,000 yuan and go home to grow grains in the county-level city of Ningxiang in Hunan Province, his family and friends thought he made an impulsive and ridiculous decision.
“Your parents put everything they had into raising you, so you could leave this place and settle down in a big city,” they said. “Now you chose to come home to be a farmer?”
Liu was confident, because the nutritious purple rice he grew on his 400-acre farmland is popular in urban markets where there is huge demand for healthy agricultural produce. Yet, the market failed him with extremely low sales, making Liu lose 200,000 yuan in the first year, around two-thirds of his previous savings.
As Liu got frustrated about his failure, his partners who had dabbled in the e-commerce industry joined hands and pivoted their business out of purple rice into packaged condiments for a local side dish called “Waipo Cai”, in English “Grandma’s Dish”. The move helped them boost sales on China’s largest e-commerce platform, Alibaba’s Taobao.
“E-commerce was no longer a new concept since we now had a partner on board with expertise,” Liu said. “We opened an online store on Taobao Marketplace to sell the condiments, so our products sold out quickly in 2017.”
Liu is one of the increasing number of farmers and merchants who are eyeing e-commerce platforms to promote their products, while China’s e-commerce giant Alibaba and the fast-growing group-buying platform Pinduoduo are starting to target this group of sellers instead of big-city consumer brands.
The push was largely a gamble for Liu since e-commerce for rural merchants had existed before but didn’t truly take off until this year. In 2019, Taobao’s goal was to attract only 1,000 farmers to its platform. The COVID-19 lockdown provided a necessary catalyst to boost the e-commerce industry for rural merchants and farmers who were desperate to find new sales channels. Right now Taobao has over 50,000 rural live-streamers, and is now aiming to add at least 200,000 within the year.
Although Liu saw a boost to his business’ growth, he was not happy as the sales were not “high enough” to make his family satisfied. He then set his eyes on another e-commerce platform, Pinduoduo, which specializes in the interactions between merchants and buyers. The platform had been developing a business model to help farmers sell produce online.
“We were hearing stories from many small entrepreneurs about the support they received from Pinduoduo and their unexpected success,” Liu said. “After we launched our products there in spring 2018, our business got an unexpected growth through a social media promotion by the platform, followed by a massive volume of orders and partnerships kicking in.”
In less than two years, Liu’s “Grandma’s Dish” became one of the best selling packaged condiments on Pinduoduo, selling more than 300,000 pieces in six months after he joined the platform. Liu’s company generated a total revenue of 3.7 million yuan.
Apart from getting farmers and rural merchants online, Shanghai-based Pinduoduo has also helped them go live to promote their businesses. Through the rural poverty alleviation initiative “Duo Duo Farms” and the company’s COVID-19 response program “Help the Farmers”, Pinduoduo makes use of the power of livestreaming to connect manufacturers and consumers directly. The group purchase model can help drive cheaper prices for consumers while also generating higher returns for farmers, who can now sell directly to consumers across the country and cut out all the intermediaries.
According to the company, “Help the Farmers” initiative has helped 180,000 farmers in nearly 400 agricultural areas who received a total of 27.5 million orders from February 10 to March 18, an equivalent of 120,000 metric tons of agricultural produce.
SEE ALSO: Pinduoduo Posts Revenue Growth in Q1, Shows Support for Small Merchants During COVID-19
Unlike the traditional e-commerce model which is mainly search-based, Pinduoduo is highly personalized and focused on users’ interactive and social shopping experience, which means that users receive recommendations based on their friends’ preferences and their favorite categories. That’s how the Team Purchase model works as buyers benefit from lower prices by inviting friends to buy together in bulk, while sellers benefit from the increasing demand.
As e-commerce giants compete for loyal customers in urban cities with the assistance from consumer brands and key-opinion-leaders (KOLs), Pinduoduo focuses on sourcing fresh produce from rural farmers to build an initial user base. The merchants are encouraged to connect with buyers directly and promote the products without partnering with KOLs to increase the sales. Liu and his “Grandma’s Dish” team have fought against all odds to succeed on e-commerce platforms, bringing the fruits of agriculture e-commerce to their village.
“It gives me great pleasure to provide the locals with employment, insurance and a 3,000-yuan salary each month,” Liu said. “Their well-being is what sparked my interest in going home. When I look back, I am proud that I believed in my dream, which allows me to enjoy my new 1000 sq-meter house in my hometown.”