From 0-725 million users: Growth levers used by Pinduoduo
A case study on growth hacks used by Chinese social-eCommerce startup Pinduoduo
ℹ️About
Pinduoduo ("group buy more,) is a group deal app that allows users to find a variety of discounted products.
However, the only way to redeem discounts is to share them on social media with friends.
The company was founded by Colin Huang, a former Google employee in September 2015. The team only needed one year to reach $160 million in annual sales. By March 2018, it had become one of the popular e-commerce apps in china.
So far, 630 million+ buyers had purchased from Pinduoduo. The app had 488 million MAUs, with most buyers using WeChat to access its services.
🙍🏻♀️Target Audience
Pinduoduo's primary audience consists of adults who are unfamiliar with online shopping. To address this issue for users, the App makes use of the convenience of WeChat Pay payment.
Only 7.6% of users come from Tier-1 cities, while the rest 65% comes from Tier-3 & beyond.
The company targets price-sensitive users (majorly females), who makes frequent purchases for the whole family.
Citizens in China's lower-tier cities have a lot of free time. A large portion of that time is spent playing mobile games, and many of WeChat's early Mini Programs were games. It explains why the PDD focuses on them.
👀 How does it work?
PDD model is simple: Buy everyday items and receive discounts of up to 90% by completing in-app actions or inviting friends to buy the same items.
For each item, merchants decide on two prices :
For individual purchase
And one for team purchase.
If the user opts for a team purchase, he/she either initiate a team purchase or join an existing team purchase.
Once the user initiates a team purchase, he /she may use social platforms such as WeChat to encourage friends to join their team. Else they have to wait for other buyers to join the purchase.
To have the order confirmed, a team must be formed within 24 hours. After a team is formed, the purchase is confirmed and the product is shipped within 48 hours.
📢Go to market
PPD initially grew through group chats on the WeChat platform (a.k.aFacebook of China).
They began by purchasing boxes of fruit from a local Hangzhou fruit market and spent a few hundred dollars on ads on an official Hangzhou WeChat Account.
You may ask why PDD launched in the fruit & vegetable category?
Because competition in perishable items was limited.
And fruits and vegetables are high frequency good, giving users a reason to come back often.
PDD early users were 80% female, with the majority of their household purchasing decisions influenced by them.
🚀Growth hacks
First and foremost, PDD has growth inbuilt in its product. One of their core features is offering deep discounts as long as users invite people to join a group.
When new users open the Pinduoduo app, they receive a red packet which can be claimed after sharing it to a group chat.
Group chat is useful for distributing information to weaker connections with similar interests but not yet connected as friends.
Enabling growth via We chat
PDD users also post deals on Moments, a newsfeed feature reserved for strong, intimate connections.
WeChat users spend an average of over 1.5 hours per day in the app, and around 61% of them interact with Moments every time they open the app.
This results in a significant amount of exposure to PDD content that has been shared.
WeChat's mini-program is another feature that has aided in user acquisition.
The concept is simple: it is built within WeChat, where users have the same experience as in the app.
PDD is integrated with the Wechat payment platform (inside the mini-program), reducing purchase friction as users don't need to download an additional app.
Daily offers (and surprises :))
Deals on the PDD platform changes every day. The app featured colourful photos, and discounts were hidden throughout.
A wheel to spin for daily discounts for sharing invite links with friends, free products in exchange for reviews, and rewards for daily check-ins drives retention & revenue.
Some discounts were only valid for two hours which results in quick participation and impulse purchases.
Exciting games
In 2018, PDD launched Duo Duo Orchard, a game where users could grow virtual trees.
Players need to complete a variety of missions to earn water droplets for their trees. Missions include shopping on the PDD platform, sharing products, and inviting friends to join Pinduoduo.
Players can also check on their friends' trees. Either helping them water or "steal" their water droplets.
The faster the trees grew, the more purchases and time spent in-app increases.
When the trees get matured, the player receives a box of fruit delivered to their household,
Lottery feature
Another virality hack used by PDD was introducing a lottery feature.
Users need to pay a small entry fee (0.01 RMB) to participate in a lottery. For the lottery to be active, they must also invite enough friends to participate within a certain time frame.
Users can win the product for as little as 0.01 RMB if they get enough friends to join.
If the minimum entry fee is not reached, the lottery is cancelled. The registration fee is returned to all those who do not win and a coupon is given to them to be used on Pinduoduo.
This helped PDD to advertise itself without high marketing investments.
Boosting app downloads
PDD sends a prompt message to users who enter the bargaining page for the first time, saying "Downloading the App can be further reduced by 10 yuan."
If the user is dissatisfied, Pinduoduo will send more powerful preferential information later in the user's journey such as ***"You can save another 30 yuan by downloading the App.***"
Furthermore, PPD has channelled traffic by collaborating with mobile phone manufacturers using the Pinduoduo App as pre-installed.
Rewarding daily check-ins
The daily check-in feature encourages users to use PDD daily by rewarding them with redeemable points each time they log in.
These rewards accumulate over time. The user must reach a certain minimum value to cash out in the form of a no minimum spend voucher (i.e., 30 RMB).
Driving referral through a card programme
PDD card programme encourages users to share the product with their friends while saving money through vouchers/special discounts.
The three most popular cards are:
Free Pass Card: Users enjoy a “team purchase discount” without having to join a team. Users can access this card after making two purchases on the PDD platform.
Black Brand Card: Reward users to leave reviews on the platform by offering a discount on branded products in exchange. users can access this card once they post 2 - 4 reviews on the website/app.
Brand Card: Promotes PDD branded products, which Users can access after purchasing the app.
📌Key Takeaways
Identify specific behaviours & provide utility to your users.
Try multiple tactics to drive referrals. Users generally make their purchasing decisions on reviews and recommendations from their trusted peers.
Products that help users save/earn money can easily persuade users to do what is asked. Ask: What is the core human desire is being solved by the product/service?
Make your product highly personalized. Use information such as a user’s friends list, their favourite categories & interests to generates customized recommendations.
Use gamification, and rewards as positive reinforcements to improve retention.
Reduce friction by making it easier for users to find, order and pay for your product.
Optimize for CLV *customer lifetime value" than for CAC. Be comfortable taking short-term losses for long term gains.
That’s all from my side today, Let me know what you think in the comments :)
Until next time, stay safe!
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