PDD’s Legendary Development
Pinduoduo Inc. was founded by Huang Zheng. Huang Zheng’s entrepreneurial direction is a process of learning, accumulation, and iteration. It is not achieved overnight, and gradually leads to greater success. From 2015 to 2020, in just a few years, Pinduoduo(PDD) has grown from a small platform to an e-commerce platform with the largest number of users in China. PDD is one of the most popular e-commerce platforms in China, with around 900 million users. It is known for its consolidating business model, which allows people to save money by grouping friends together to buy the same items in bulk. Not only that, Temu, a new online shopping platform launched by PDD, has quickly become the most downloaded app in the United States, even surpassing Walmart and others.
1. The Legendary Development of Pinduoduo
When Huang Zheng was a child, his grades were very good. Both his undergraduate and graduate majors were computer science. After graduation, Huang Zheng worked at Google headquarters from 2004 to 2006, and worked in Google China from 2006 to 2007. After that, Huang Zheng stood at the counter in Gome and Suning. He saw that channels are changing, chain stores have more and more voice, and brand owners’ profits are getting thinner and thinner. This ecological environment is not good for brand owners. Huang Zheng thought of e-commerce and put it into action.
In 2015, Huang Zheng founded Pinhaohuo, an e-commerce company based on social networks. The category that he focused was fresh food. In September 2015, they launched the platform-based Pinduoduo. As the name suggests, the platform allows users to place orders with sellers or manufacturers through group buying to obtain discounts. This is an Internet company that grew up in Shanghai. Pinduoduo started as a retail platform for agricultural products, deeply cultivated agriculture, created a new model of retailing agricultural products featuring Pinduoduo, and gradually developed into a full-category comprehensive e-commerce platform featuring agricultural and sideline products. Large-scale pure mobile e-commerce platform. A year later, Pinhaohuo and Pinduoduo announced their merger.
In July 2016, Pinduoduo completed a US$110 million Series B round of financing. On July 26, 2018, less than three years after its establishment, Pinduoduo officially entered the US capital market with an issue price of US$19 and a market value of US$24 billion. As of the end of 2020, the number of active sellers on Pinduoduo reached 788.4 million, a year-on-year increase of 35% from 585.2 million at the end of the previous year. And it has become the e-commerce platform with the largest number of users in China, even surpassing Ali and JD.com.
2. Internationalization of Pinduoduo
Shopping site Temu has seen a sharp rise in popularity in the US since it launched in last September. The fast-growing momentum of the e-commerce platform, which sells ultra-cheap goods made in China, has made Shanghai-based parent company PDD the latest Chinese company to succeed in the U.S. market. The new platform, Temu, has quickly become the most downloaded app in the US. Analysts said Temu had surpassed similar online apps Amazon, Walmart and Target in November last year.
Temu, the Boston-based online retailer, is the same company as China’s Pinduoduo. From household items to clothing to electronics, the products sold cover almost all categories. The name Temu means team up, price down. Meaning, it’s cheaper to put together. In February, Temu’s 30-second ad debuted at the Super Bowl, appearing twice during the hot slot. The ad immediately led to an increase in Temu’s downloads and daily active users. Temu’s downloads surged 45% that day from the previous day, and daily active users jumped about 20%. Temu’s downloads continued to grow in February, becoming the most downloaded app in the US within a few days. Since its launch last September, the Temu app has been downloaded 24 million times and has more than 11 million monthly active users. On the app store in the US region, Temu’s score reached 4.7 points.
Temu offers factory-to-consumer cheap goods. Like PDD, Temu encourages users to share the app with friends in exchange for free products. From the perspective of business model, the difference between Temu and the previous domestic cross-border e-commerce platforms in China is that it chose a self-operated model from the beginning. So, Temu is responsible for product pricing, marketing, customer acquisition, delivery and others. As a supplier, merchants only need to prepare and deliver goods to warehouses. The platform ultimately earns the price difference between purchase and sale, and bears the costs of customer acquisition and delivery. Not only effectively control the price, but also guarantee the user experience.
In terms of logistics and distribution, based on the half a year since Temu went online, the current logistics provided is domestic delivery in China and international delivery combined transport mode. So, after the Chinese sellers have concentrated the goods in Temu’s warehouse, Temu will arrange the international logistics and the US transportation. According to Amazon’s cross-border e-commerce and SHEIN’s experience, when Temu’s order volume and data accumulate to a certain level, overseas warehouses will be established locally. The products can be put into the warehouse in proportion according to the corresponding data in advance, and then the delivery time can be shortened by at least 3-5 days. If this is the case, Temu will become a platform with low prices, timely delivery, and direct discounts for recommending friends to download.
