Consumer Leading Brand Series Research Insights [3]: The Carnival and Challenges of Pinduoduo's Double 11, A Story of a Supply Chain Revolution

This year's Double 11, Pinduoduo is not only the protagonist of a shopping extravaganza but also the pioneer of supply chain reform. Let's step into this vibrant world and explore how Pinduoduo is subverting the traditional supply chain, reconfiguring the e-commerce ecosystem, and at the same time facing the dual challenges of price wars and brand trust.

A Fairy Tale-like Supply Chain Revolution

Imagine a scene: The first ray of sunlight in the morning spills on the vast and boundless land, and farmers are busily picking the freshest fruits and vegetables, and all of this will be delivered to thousands of households' dining tables within just a few hours. This is the miracle that Pinduoduo brings to us - "Farmland Cloud Group Buying".

Directly Connecting Farmers and Consumers

Through "Farmland Cloud Group Buying" and "Duoduo Grocery Shopping", Pinduoduo has completely overturned the traditional supply chain system. The traditional supply chain model usually involves multiple middlemen, which not only increases costs but also prolongs the logistics time, making it difficult to ensure the freshness and quality of agricultural products. Instead, Pinduoduo adopts a more direct approach - directly connecting farmers and consumers. This approach not only simplifies the circulation process, reduces costs, but also significantly improves efficiency, and most importantly, ensures the freshness and quality of agricultural products.

For example, Xiao Wang in Shandong is a fruit farmer. Previously, he needed to go through multiple layers of middlemen to sell his apples, not only was the price suppressed very low, but the freshness of the apples was also difficult to guarantee. Now, Xiao Wang directly sells apples to consumers across the country through "Farmland Cloud Group Buying", not only has the price increased, but the freshness of the apples has also been guaranteed. This change has brought earth-shaking changes to Xiao Wang's life, his income has increased, and his life has become better.

The Support of Big Data and AI

Behind this supply chain revolution is the strong support of big data and AI technologies. Pinduoduo uses advanced data analysis technology to accurately analyze user needs and predict which agricultural products will be popular in the market. Based on these data, Pinduoduo can guide farmers to carry out scientific and reasonable planting and picking, avoiding resource waste caused by blind production.

For instance, by analyzing historical sales data, consumer behavior data, etc., Pinduoduo can predict that the apple demand in a certain area will change, and thus notify farmers in advance to increase or decrease the picking quantity. This precise prediction not only increases the sales of agricultural products but also reduces waste and realizes the rational use of resources.

Efficient Logistics System

In addition to data support, Pinduoduo has also established an efficient logistics system to ensure that every agricultural product can be delivered to consumers in the shortest time and in the best condition. The cold chain logistics system includes multiple links such as temperature control, packaging technology, and transportation management to ensure that agricultural products will not deteriorate during transportation.

Suppose, Ms. Zhang living in Shenzhen bought a box of fresh mangoes from Yunnan on Pinduoduo in the morning and could receive it in the afternoon. Through fast and efficient logistics methods such as air transportation and cold chain, a rapid response mechanism from the field to the dining table is realized, which not only meets consumers' demand for fresh food but also brings tangible benefits to farmers.

Figure 1: Disassembly of Pinduoduo's Retail Business Model in 2024

The Carnival and Challenges of Double 11

However, in this seemingly perfect world, Pinduoduo is facing unprecedented challenges. The arrival of Double 11 means that the smoke of price wars is everywhere. E-commerce giants such as Alibaba and JD.com have launched various preferential strategies, trying to occupy a favorable position in this annual grand promotion. For Pinduoduo, how to maintain a price advantage in the fierce competition while maintaining the brand image and user trust has become an urgent problem to be solved.

The Pressure of Price Competition

Price wars are the highlight of every Double 11, and major e-commerce platforms will launch various preferential activities to attract consumers to place orders. For Pinduoduo, maintaining price competitiveness is an important means to attract users. Pinduoduo needs to find a balance in the price competition, which can attract consumers without harming its own interests.

For example, Pinduoduo's "10 Billion Subsidy" activity launched every year provides substantial subsidies for some popular products, attracting a large number of users. At the same time, Pinduoduo also conducts various low-price activities such as "Limited-time Flash Sale" and "11.11 Promotion Subsidy" to maintain Pinduoduo's consistent low-price strategy.

The Test of Brand Trust

Although in the past few years, Pinduoduo has experienced a transformation from "emphasizing marketing" to "emphasizing R & D", gradually promoting high-quality development, and accelerating the pace of internationalization. Especially with the help of the "10 Billion Subsidy" project, Pinduoduo has successfully attracted the settlement of a number of well-known brands, significantly improving the brand image and user trust of the platform. However, the huge order volume during Double 11 may still bring huge pressure to Pinduoduo's after-sales service, which also brings a considerable test to the platform and the settled brands.

*Figure 2: Changes in Pinduoduo's Retail Business Development Strategy in the Past Three Years

The Future of Pinduoduo: The Dual Challenges of Innovation and Trust

From this perspective, Pinduoduo not only needs to continue to work hard on technological innovation but also needs to make brand trust and service quality the preferred reasons for users. Imagine that in the future, Pinduoduo can be a more intelligent shopping platform. Through big data and AI technology, every user can enjoy personalized recommendations and services, as if there is a thoughtful shopping consultant accompanying them at any time.

In terms of brand building, Pinduoduo also needs to attract the settlement of more high-end brands, including not only international big brands but also more high-quality domestic products. Through joint marketing activities and brand story sharing, users can feel the unique charm of each brand. At the same time, it can also improve the user's shopping experience and trust through rich user interaction. For example, set up a "Genuine Product Appreciation Area", invite experts and influencers to conduct live broadcasts to help users better understand the authenticity and quality of the products, so that users can shop more at ease.

Disclaimer:

The data in the article are all from publicly available data. We have taken reasonable measures to ensure the reliability and accuracy of the information. However, due to the limitations of the data source itself, there may be certain errors or deviations. And the views, conclusions, and suggestions in this article are for reference only and do not represent any specific investment advice or decision basis, nor do they represent any position of SMZDM Technology Group. Any third-party names, brands, or products mentioned in the article are for illustration purposes only and do not constitute an endorsement or recommendation of them.