Pinduoduo has quickly risen to become the third-largest e-commerce player in China behind Alibaba and JD.com. But the two giants are now looking to fend off the challenge from PDD.
Behind that success has been its "social shopping" model that encourages users to share links to items they purchase with friends and participate in group buying.
Each item has a minimum number of buyers required to complete the purchase. If that number is not met within 24 hours, then the group buy is cancelled and those who have already committed money will be refunded. But its revenue is growing faster in percentage terms. In the December quarter, PDD's revenue hit 10.79 billion yuan , an increase of 91%. In the same quarter, Alibaba's revenue was up 38% from last year but it raked in 161.45 billion yuan or $23.19 billion, nearly 15 times as much as PDD.User numbers
. WeChat is a key part of daily life in China and allows people to make payments within the app. So a buyer can access PDD via WeChat and make payments there."Direct buyer traffic to PDD is primarily generated from word of mouth referrals by its existing buyers as well as the effect of its marketing campaigns," Shanghai-based Guotai Junan Securities, said in a report from March.
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