Pinduoduo hailed as world's largest ecommerce platform
However, IGD has warned that its current business model may not be sustainable over the long term.
Pinduoduo has become the world’s largest ecommerce platform by user numbers, surpassing Alibaba, IGD has reported. The company said it had 788.4 million annual active buyers in 2020, surpassing Alibaba’s 779 million and JD.com’s 471 million.
Pinduoduo’s monthly active users reached 719.9 million in the fourth quarter. Its earnings also surged 146% YoY in Q4 to $4.1b (CNY26.55b).
Following this, it has set its next goal to be "the world’s largest agriculture and grocery platform".
Pinduouo is China’s equivalent of Groupon, IGD said, noting that it is one of many platforms in the country that use group purchasing to attract shoppers with exceedingly low prices.
Its meteoric rise has been attributed to its unique deployment of viral marketing, sharp understanding of shopper pshycology, and capturing a huge customer segment that has been overlooked by other ecommerce players.
However, IGD’s senior retail analyst Jiong-Jiong Yu suspects that its current business model may not be sustainable in the long run, noting that although price might currently be the weapon of choice, it could not work as a long-term strategy.
“As its shoppers (mostly in lower-tier cities) have become increasingly sophisticated and used to online shopping, they would want better products, higher quality, and more inspirational brands. Pinduoduo will need to evolve to keep up with the change and new demand,” Yu said.
On the other hand, IGD noted that the company has already embarked on this journey, and that three years from now, Pinduoduo will become very different to its current form.