Pinduoduo Uses E-Commerce to Transform Smallholder Agricultural Economics

Villagers in Hengshan Village in Guangxi, China, have seen their average annual incomes surge by 30 times in recent years, thanks to e-commerce platforms like Pinduoduo.

Before the rise of e-commerce, there was little demand for the duck eggs that the village produces, and monthly incomes hovered at around 500 yuan. That changed after some villagers decided to set up shop on Pinduoduo.

With more than 880 million consumers and a mission to promote agricultural digitization, Pinduoduo regularly organizes online events and campaigns to highlight and showcase agricultural specialties from across China. By directly connecting buyers and sellers through its platform, Pinduoduo delivers cost savings to consumers and higher incomes for farmers by bypassing middlemen.

(Source: Pinduoduo)

Hengshan Village is just one of many rural communities across China that have benefited from embracing agricultural e-commerce and taking part in the digital economy. From lychee farmers in Guangdong to cherry growers in Shandong, millions of agricultural producers are tasting the fruits of digitization for the first time.

Founded in 2015, Pinduoduo operates a digital platform connecting millions of farmers and consumers and has devoted itself to using technology to bring positive change to the age-old agricultural sector. The company’s “Tech for Agri” approach is centered on increasing market accessibility, improving digital inclusion and literacy, and fostering innovation as key enablers for agricultural modernization.

Pinduoduo is the first major internet company to use its e-commerce platform to improve the efficiency of moving agricultural products from rural areas to cities. By providing farmers with direct access to buyers, Pinduoduo has given agricultural producers a viable alternative to selling to wholesalers for the very first time.

The company has estimated it was able to reduce distribution costs by 40%, by cutting the number of intermediaries between farm and table. To date, more than 16 million farmers have connected to the digital economy through Pinduoduo.

SEE ALSO: Pinduoduo R&D Spending Hits Record in 1Q in Innovation Push

“Technology will unlock the full potential of agriculture and allow the sector to reap the benefits of the digital economy,” said Chen Lei, Chairman and CEO of Pinduoduo. “At Pinduoduo, we champion ‘Tech for Agri’ and promote the use of technology for agriculture.”

The direct connections between farmers and consumers have benefits beyond an increase in sales. Farmers are gaining direct feedback from consumers about their products with the help of e-commerce. The consumers also benefit from the increased transparency and can interact with the farmers through the platform.

The benefits extend beyond economics. The boom in e-commerce business in Hengshan Village has created new jobs from packing to logistics. The attractive wages and job prospects have attracted many young migrant workers to return home from the big cities to be back with their families.