Live Shopping Features On Social Media And Interview With Chinese Social Commerce Tycoon

• These features create new monetization paths for businesses and creators through selling products, providing another way to participate in the Passion Economy. Because brand sponsorships were mainly accessible to creators with large followings, the addition of e-commerce functionality should lower the barrier to earning income from the platform.
• As I’ve previously discussed, the importance of individual brands diminish on aggregator e-commerce platforms. It’s challenging to build a strong brand on Amazon because Amazon itself is the brand that consumers trust, and brands become secondary to signals like reviews and sort order. The antidote for brands is to leverage platforms that allow for accentuation of uniqueness and to build an emotional connection with consumers. For many brands, Facebook and Instagram already represent the discovery/storytelling piece of the e-commerce stack—and can enable brands to maintain more pricing power and resist commoditization.
• Facebook Shops and Instagram Shops represent a model of e-commerce that more closely aligns with consumers' natural shopping behavior, combining serendipitous discovery and social inspiration.
• Commercial activity is already happening on the platform, and these features are a more user-friendly way to support it. Today, the comments under many creators’ posts are peppered with commerce-related questions like, “Where is that dress from?” and users are left with the onus of finding the products elsewhere.

Interview with Ada Yang, International Corporate Affairs, Pinduoduo

• The Passion Economy is broader than what one might think, and encompasses all types of work where the worker/service/product isn’t just viewed as interchangeable and commoditized. I was surprised to learn that nearly 15% of Pinduoduo’s GMV comes from agricultural products (which I had never thought of as being part of the Passion Economy!). Farmers on PDD are livestreaming while tending to their crops, building relationships with customers who care about where their food comes from, and earning a living by selling to a broader audience of customers beyond their vicinity.
• By removing intermediaries and cutting out middlemen, creators can benefit from higher earnings and consumers can enjoy lower prices. Ada shares lots of great examples of creators leveraging the platform to build a brand and earn a living through e-commerce.
• While Facebook & IG Shops are long-awaited and much-needed, they only begin to scratch the surface for innovation in e-commerce. As we graduate beyond the intent-driven model of e-commerce—marked by table-like grids of products, filters, and search bars, there are opportunities to create new experiences that promote the sense of serendipity and fun of shopping in the real world. Indeed, as Ada points out below, Pinduoduo considers itself part e-commerce platform, part entertainment app, and part social network, meeting multi-faceted user needs through different features.

Like most businesses in China, Pinduoduo faced challenges during the peak of the COVID-19 outbreak earlier this year. We stepped up efforts to help the entire ecosystem of users, merchants, and our business partners. For instance, we helped factories that faced a hit to their export businesses to customize their products to sell to Chinese consumers. In February, we launched a “Help the Farmers” section on Pinduoduo to allow consumers to buy fresh produce directly from farmers in poverty-stricken areas.

Since May, we’ve recovered to pre-COVID levels with 65M average daily orders, up from an average of 50M in mid-March.

Facebook’s latest foray into social e-commerce bears resemblance to what Pinduoduo has been pioneering in China. We are at the beginning of a mega trend in e-commerce where we leave behind the legacy model of “search, pay, and leave” and move toward a more interactive, social recommendations-based model, such as what Pinduoduo has pioneered. At Pinduoduo, we’ve designed the online shopping experience to mimic the offline experience of browsing, getting recommendations and feedback from friends, and interacting with shop staff.

I think with the introduction of Facebook and Instagram Shops, you will see a more direct example of how a recommendation model can be integrated with e-commerce.

We have found that consumers like to know the stories and people behind the product. This appreciation for the work that goes into the making of a product often translates into higher sales. We believe in not just providing a platform for people to make a living, but also help them to build their own brands via connecting them to our 600M+ users.

We’re big on putting creators and makers in front of the camera and connecting them with consumers directly, rather than spotlighting influencers who have little connection to the products they’re hawking.

For example, a university undergraduate whose family has been in the tea business for generations was able to share that knowledge with Pinduoduo’s users through a livestream. He was able to build a following in the app and recently broke 1M RMB ($141K USD) in monthly sales, and in the process helped his family business undergo a digital transformation.

Another merchant, a demobilized soldier, was similarly able to help boost his family’s business through Pinduoduo by connecting with users through a livestream and explaining how to choose high-end jewelry. Artisans in Shandong province show how they go about crafting woks, shaping the kitchenware by hand with a mallet.

We’re continually launching new features to engage merchants and consumers. Duo Duo Live was launched in late 2019 and gives the stage to creators to showcase their work. Any content creator has the chance to broadcast their skills, from agricultural professors delivering online classes, to farmers on the latest growing techniques, to vineyard owners providing online wine appreciation classes.

Farmers are seldom seen or heard but have found their voice on Pinduoduo, which has become China’s largest agricultural e-commerce platform. Agricultural sales represent nearly 15% of total GMV on the platform.

In mid-April, potato farmers in Shandong province hosted a livestreaming session, welcoming more than 600,000 users to visit their farms, virtually. Users saw in real-time how farmers dug up potatoes and could purchase them through the platform. It’s akin to the direct connection and relationship you might build with producers at a farmers’ market, but because of Pinduoduo’s digital platform, customers can purchase from merchants all over the country and enable them to become much bigger businesses.

To date, Pinduoduo has held more than 100 livestreaming sessions in conjunction with more than 20 provinces in China to help local regions showcase their farm produce. The webcasts, many of which are helmed by farmers, have helped sell more than 350,000 metric tons of produce directly to consumers, By reducing the layers of intermediaries and their associated costs, Pinduoduo has helped raise farmers’ incomes while allowing users to enjoy lower prices and fresher produce. 

Pinduoduo’s interactive e-commerce / social commerce model is designed to more closely mimic how people interact, exchange feedback, and share recommendations when they shop in real life.

Much of legacy e-commerce is based on the conventional search-based, transactional model. But this is increasingly not how most people prefer to shop, either online or offline. Aside from certain shopping use cases that are truly intent-based (e.g. you are out of toilet paper or pasta and need to replenish) much of shopping in the physical world is actually quite serendipitous. Imagine spotting a nice dress while passing by a shop window or telling a friend about a bargain. Pinduoduo integrates the social aspects of shopping, the interactivity of the process between friends and between shopper and sales assistant, into the user experience.

We have features like Duo Duo Orchard which inject fun into the shopping experience. It’s a game within the app where users can tend to virtual fruit trees and be rewarded with a free box of fruit from Pinduoduo once their virtual tree is fully grown. As of March 2020, 60M daily active users logged on to play the game.

Pinduoduo is a co-mingled space between the virtual world and the physical world, where users can find the best value-for-money goods. Given that we have more than 600M users and 5M merchants interacting in this space, it’s less useful to put a label on it and say that we are one or the other.

Perhaps the best way to understand it is that we are here today precisely because we have created a space that meets the different and evolving needs of our community, whether that’s social interaction, commerce, or entertainment.

There are several aspects to the development and innovation of China’s e-commerce industry that differ from other regions of the world:

1. Many of China’s internet users skipped the desktop internet era and went straight to mobile. With close to 900M people having access to the internet via mobile devices, this has created an important base condition for the proliferation of mobile e-commerce.

2. Mobile payments: China never really had a credit card culture and for most mobile users, cashless transactions took place via smartphone. WeChat Pay and AliPay, the two leading payment apps, together account for 93.3% market share for mobile payments.

3. The logistics industry is well-established, having developed alongside the e-commerce industry. Thanks to the e-commerce boom in China, particularly in the past decade, the logistics and express delivery market is speedy, reliable, and cost-efficient.

4. As the global manufacturing base for much of the world, China has earned the nickname as the “factory to the world.” This manufacturing capacity has provided the e-commerce industry with a wide selection of cost-efficient products that draw in consumers.

We very much believe in the proverb, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” 

Pinduoduo has launched various initiatives to empower our merchants and help them not only gain knowledge and skills, but also to leverage technology to improve their business efficiency. We launched Duo Duo University to help merchants, including farmers, learn how to sell directly on Pinduoduo and to train them in the basics of e-commerce, finance, business operations, and online marketing. 

Pinduoduo also provides consumer insights to merchants to help them better develop and price their products, plan their inventory, and schedule deliveries. This results in more sales and better products for users.