Yu Bencheng’s family business in Yantai, China, exports more than 1,000 tons of pears annually. So when the export trade ground to a sudden halt in 2019, Yu had the arduous task of selling a year’s worth of pears before they went bad.
They first tried the wholesalers in Harbin and Beijing, but they offered to buy the fruits at a third of the usual price. Faced with financial ruin, Yu decided to sell directly to consumers through Pinduoduo, the largest platform for agricultural produce in China. He soon cleared the stock and the business gained a valuable sales channel.
Merchants are flocking in record numbers to Pinduoduo, attracted by the prospect of selling directly to the 788 million consumers who use the platform to buy everything from fresh groceries to apartments. In 2020, Pinduoduo added more than 200 million active buyers, the most of any marketplace, while the number of active merchants surged to a new high of 8.6 million from 5.1 million the year before , according to its annual 20-F filing.
“Our active buyer base helps attract merchants to our platform, and the scale of our sales volume encourages merchants to offer even more competitive prices and customized products and services to buyers, thus forming a virtuous cycle,” Pinduoduo said in the filing.
Pinduoduo pioneered the “team purchase” model, where buyers are encouraged to share product information and invite their social networks to form a shopping team to enjoy more attractive prices. The company has built its platform to resemble a “virtual bazaar” where buyers browse and explore a full spectrum of products while interacting with one another.
This embedded social element fosters a highly engaged user base and sets Pinduoduo apart from the conventional search-based “inventory index” model, the company said.
Pinduoduo also helps its upstream suppliers to launch their own brands by directing users to discover their value-for-money products, and by giving them guidance on emerging trends and consumer preferences. The company has worked with more than 1,500 suppliers, launched more than 4,000 products and generated over 460 million cumulative orders in the first phase of its “New Brand” program, first launched in December 2018.
Now operating the biggest marketplace in China, Pinduoduo has set its sights on becoming the world’s largest agricultural and grocery platform. In August 2020, the company started Duo Duo Grocery, a next-day grocery pickup service that allows users to order groceries and related products online and collect goods the next day at nearby designated pickup points.
To achieve its goal of bringing fast and affordable groceries to consumers, Pinduoduo is developing a new agriculture-focused logistics infrastructure platform that can reduce food wastage, improve food quality and lower prices.
The company is also actively sourcing for quality products globally and has held campaigns to promote overseas products, from Italian wine to Thai fruits.