Thread by @ruima

Here's a summary of how a famous Chinese "product philosopher" (entrepreneur, lecturer) Ms. LIANG Ning thinks about Pinduoduo $PDD. It's from 2018 but I think it mostly stands. At the very least, it gives proper context.

Here we go 👇👇👇

1/ Most ppl in China are not very rich. After Taobao got rid of a lot of counterfeit (see Jan. 2015 drama w Mofcom, June action, and JD closed down Paipai for same reason). Where are the suppliers of lowend goods supposed to go? The customers are still there.

2/ At least as of 2018, user graphs show that $PDD demographics pretty identical to $VIPS. A bit more rural than Taobao. But obviously they weren't the only ones to see the opp, since we already know the much older $VIPS also did, so what made the difference?

3/ A few things. One is group buying. But wait, weren't there 1000 Groupon clones in China? Yes. But not by 2016. By then, Alibaba killed everyone w Juhuasuan (for physical goods). (Meituan was services.) But JHS was eventually put under Tmall (high end), left low end wide open.

4/ OK dude but then didn't most ppl see this vacuum? Well, even if they did, the recently scarred VCs from the 1000 Groupon war would've been like hell no, let's focus on consumption upgrade. But PDD had ongoing gaming biz & deep pocketed angels. Fantastic lucky timing.

5/ Influx of rural users, esp 3rd-6th tier cities. This was an ongoing process but mostly complete by 2017/8. Again good timing. Infrastructure, users all there by this time. Mobile payments? Check. Logistics? Check. And of course, 1Bn users on WeChat. Check.

6/ High frequency goods. PDD's most popular category was food. Taobao's is clothing / general household. JD's is electronics. High frequency beats low frequency. (I don't think in everything, but certainly in acquiring users, hah.)

7/ Gamified experience. Log in every day and get coupons / cash! This is diff from Taobao's feed giving you recs on what to buy, bc you gotta be kinda wanting to buy. PDD makes it a literal game. It's perfect for users who "don't know what to buy, have no intent even."

8/ How do u convert this grp? They have no intent. They don't know what they're looking for. You make it time based! Limited! Act now or miss this deal forever! More gamification. You present them w action. 93% of Taobao / JD users search bc they have intent. Only 45% of PDD do.

9/ Also leverage social network. Top reason for folks to buy on PDD: can group buy w friends & rec to each other. Again, a typical "I don't know what to buy" user. It's a different customer profile from Taobao JD. It's more like the folks who play games. (Colin also said this.)

10/ But PDD also makes the buying & selling experience super easy. There are no shopping carts on PDD. You also don't need to actually form a group. You pay the group discount price first & the group is formed for you. (I almost don't think this should be called group buy ...)

11/ It's equally easy to sell. Liang made a shop in 3 minutes & had her friend buy her item. The mantra is "sell an item & we'll gift you a shop." Marketing on PDD is also much easier than Taobao. So lots of factories can sell directly. Again, item more important than brand.

12/ She ends by saying that even tho $PDD at the time was mostly known for its shoddy counterfeits it would eventually transcend that as ppl's spending power improve. I think we've already seen this happen as some good brands go on platform.

13/ I'd probably include a few more points (frankly that I learned from talking to insiders) ie C2M that helped, but I do think just like the huge vacuum in market left by Taobao / JD + influx of new rural users who only know how to use WeChat is usually underappreciated. /end