How Pinduoduo Successfully Gained Market Share Through Social Commerce?

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How Pinduoduo Successfully Gained Market Share Through Social E-Commerce?

By Carol Xiao (Target China)
01 November 2019


In October 2019, the E-commerce platform Pinduoduo’s market value exceeded the Jingdong Mall, successfully became the fourth largest Internet company in China, put it just behind Alibaba, Tencent, and Meituan.

Pinduoduo was founded by Colin Huang in September 2015. Since its inception, the company has been growing at a rapid pace. By 2018, the monthly active users on the Pinduoduo platform had exceeded 200 million. It is now the fastest-growing E-commerce platform in China. Pinduoduo provides its users with a wide range of products, from daily necessities to household appliances. It allows users to participate in group-purchase deals, mainly gains the traffic from social media platforms such as WeChat and QQ. Its operation model is similar to Groupon. However, they are different in the aspect of group-purchase. While Groupon allows you to team up with other users on the platform, Pinduoduo will enable you to share the group-purchase deals with their friends on WeChat. Pinduoduo’s operation model can thus generate fission in its user base and profoundly enhance the conversation rate based on the trust of a friend’s recommendation. This operation model can be categorized as social E-commerce, which is the key factor of its success.

Social E-commerce is the combination of social media and E-commerce; it is the use of social networking platforms in the context of E-commerce. Social E-commerce promotes its products and services through social networking sites, for example, Facebook, Instagram, WeChat, and Weibo.1 The key difference between social e-commerce and traditional e-commerce is that the former can built trust and loyalty with their consumers through the use of social media. Social E-commerce consisted of three models that are commercialised social media platforms, socialised e-commerce, and independent social commerce platforms. Among the three models, Pinduoduo is the representative of the independent social commerce platforms.

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According to Yang Lin, the operation director of Chinese mobile E-commerce platform chuchujie, “the target consumers of Pinduoduo are people who only recently came online and depends on the WeChat as the chief source of information”.2 Pinduoduo has used abundantly of marketing strategies to attract this group of consumers to participate in its “team purchase” model:

  • One of the most salient strategy is that users can invite their friends on WeChat to form a shopping community to get a lower price for the product.2
  • Users can also refer to the products that they intended to buy on Pinduoduo to their friends to reduce the cost.
  • Pinduoduo offers flash coupons and red envelops as incentives for consumers to purchase from time to time.
  • Pinduoduo offers lottery as well, and consumers need to invite enough friends to join within a limited time to activate the lottery. The message is clear — you should not hesitate on the platform; you should buy things now and should ask your friends to join too.3

Overall, Pinduoduo succeeds because it takes advantage of the social aspect of shopping, leveraging the user base of WeChat and QQ, and intensifies the atmosphere of the online shopping process. Social E-Commerce is inarguably the future trend of E-commerce.


1Dollarhide, M (2019). ‘Social Commerce’, from Investopedia.
2Lee, E (2018). ‘The incredible rise of Pinduoduo, Tencent’s most powerful Taobao rival’, from technode.
3Graziani, T (2018). ‘Pinduoduo: a Close Look at the Fastest Growing E-Commerce App in China’, from WALKTHECHAT.

Going Places – The future of China’s advertising and endorsement industry is thriving

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Going Places – The future of China’s advertising and endorsement industry is thriving.

By Wilson (Target China)
27 Oct 2019

The event was organised by the Advertising Endorsement Committee of the China Advertising Association and co-organised by M-CC Beijing, Target China (M-CC Sydney) and AIMan data technology. The topic of this summit forum is “Entertainment empowerment, tribute to the new era of advertising”.

 

It kicked off on the 27th of October 2019 in Nanchang, the venue of the 26th China International Advertising Festival. With the first commercial recognition release of “sunshine endorsement”, and Mr. Huang Xiaoming was invited to be the ambassador of the event.

President Zhang Guohua, China Advertising Association

President Zhang from China Advertising Association (CAA) stated that celebrity plays a prominent role in advertising creativity, branding, marketing effects, awareness-raising and other business practices.

 

With the development of society, the communication value and star effect of advertising spokespersons are highlighted. As a national industry organisation, CAA provides systematic and perfect services and guidance with the purpose of serving the development of the industry, safeguarding legitimate rights and interests, and advocating industry self-discipline.

 

Secretary General – Zhang Zhipeng, Advertising Endorsement Committee of CAA

Mr. Zhang Zhipeng announced the selection criteria for the 2018-2019 “Sunshine Spokesperson” image ambassador, and after voting by the big data company and the judging panel, Mr. Huang Xiaoming finally stood out and became final winner.

 

Huang Xiaoming said: “I like the word ‘sunshine’ because our lives are sometimes full of fog, but only sunshine can wash away the fog. As an actor and public figures, we have an obligation to take on more social responsibility. We will spread more excellent public service commercials that touch the hearts of people, so that we can input more positive energy and bring more sunshine to the society.”

Zhang Guohua issued a certificate to “Sunshine Spokesman” ambassador Huang Xiaoming.

President of AIMan Beijing – Cao Yongshou

Mr. Cao Yongshou presented the “Top 10 Trends of Star Spokespersons in 2019”, with the following core ideas: more international brands are gradually using Chinese as spokespersons, brands are cooperating with spokespersons more frequently, more closely and more internationally, the birth of new idols poses new challenges to brands’ marketing and creates new business opportunities, and refined management and optimisation of spokespersons are the key to success. This maximises the effectiveness of the endorsement.

Wang Shaoxi, Legal Counsel from Nestle China

The legal counsel, Wang Shaoxi from Nestle China believes that advertising spokesperson marketing plays a pivotal role in the healthy development of a brand. The goal of both advertisers and spokespersons is the same, and how to achieve win-win and healthy development depends on how to choose the artist and advertiser.

Sabrina Pang, Head of Business Operations at Sina Entertainment

As a marketing model on the internet, micro-blog marketing for celebrities have its own characteristics of the “star effect” in the advertising process. Ms. Pang Suer, head of Business Operations at Sina Entertainment said: “Microblogging Stars, Growth and Win-Win” that microblogging and micro-endorsement products are a path for brands to follow their fans and help celebrities and brands to build a common brand image in the future.

Kaoyuan, Managing Director of M-CC

Ms. Kaoyuan explained how entertainment marketing can occupy the C-suite in the new landscape of Generation Z marketing. She said that artist attributes are becoming more prevalent and marketing is becoming more integrated. With the rise of new idols, fans are willing to pay more money and energy for endorsements, instead of the traditional “idol” fans. For brands, stars and fans of the brand to do mutual resources to break the power of cooperation, in order to achieve a real win-win situation.

Wang Dong, Deputy General Manager of Cheerwin Group

Wang Dong led many integrated marketing projects such as “I am a singer” and “Libai Health and Happiness Project”, said that in the situation where consumers have aesthetic fatigue with advertisements one after another and the product, terminal and advertising battles are fiercely fought. It is necessary to find marketing points that consumers are interested in and express them in the form of humour in order to open the market and then win the market if we want our brand to spread to the target consumers quickly.

Zhang Zhipeng, Xu Weibing, Huang Xiaoming, Qiao Xue, Wei Hong, Cao Yongshou, Wu He and Kevin Wang

In recent years, the entertainment market has strongly empowered the advertising ecology, and more and more brand owners prefer win-win cooperation in entertainment marketing. In the round-table salon themed “Advertising Ecology, Entertainment Empowerment”, Zhang Zhipeng of the Advertising Spokesperson Committee of China Advertising Association, Xu Weibing, founder of Shanghai Tao Xi Digital Media, Huang Xiaoming, ambassador of “Sunshine Spokesperson” and China Advertising Association Advertising Spokesperson Qiao Xue, Executive Committee Member of the Committee, Wei Hong, Director of Alibaba Group’s Social Good Department, Cao Yongshou, President of Aimedia, Wu He, Senior Director of Sina Weibo, and Kevin, Head of the Australian Base of China Advertising Association’s Advertising Spokesperson Committee, had an in-depth discussion on the public welfare trend of advertising spokespersons in the new era and how the spokesperson industry can develop in a healthy and orderly manner.

 

This summit forum released the list of “Sunshine Spokesperson Commercial Recognition” for the first time and launched the group of “Sunshine Spokespersons” with commercial value in the year of 2018-2019. The list is based on industry big data, and provides a fair and impartial assessment of the advertising spokespersons’ commercial value from four dimensions: heat index, reputation index, work index, and endorsement index, which provides an objective assessment basis for enterprises and brands when choosing entertainment and business cooperation and star advertising endorsement in the early stage.

How to bring million dollars in just one day on Chinese e-commerce platforms?

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How to bring million dollars in just one day on Chinese e-commerce platforms?

Register Now


Interested in the Chinese market? Unfamiliar with the unique consumer culture and consumer behavior that has developed in China? Don’t have Chinese marketing knowledge and experience? However, you still can bring million dollars in just one day on Chinese e-commerce platforms.

Do you know the new innovative business models in China such as “Social E-commerce,” “Live Stream and Short Video,” “New Retail,” “VR Shopping” etc.?

How to use these new business models to improve the effectiveness of marketing communication in China? Who are your potential customers in China? How to set up your customised marketing strategy through the social media platform in China? What are the Cross-Border E-Commerce models? What is KOL marketing, how to get product exposure through KOLs and Celebrities?

We are glad to share our experience and case study to help Australia brands create a “Hot Sale Item” in China.

We hope our workshop will interpret these subjects from different angles and inspire all of us who want to improve marketing effectiveness in the Chinese market. We will introduce new ways to help Australian brands produce and distribute creative content emerged to meet the needs of different consumer segments in China and help you export products to China successfully and make your business more profitable.

Our workshop will invite Guohua Zhang, the Chair Man of China Advertising Association to introduce China new advertising policy and law, which will help you understand the complexities that come with exporting products to China. We also invite Target China partner iQiyi, the largest video streaming platform in China with 500 million monthly active users to introduce new ways to increase brand exposure on these video streaming platforms.

  1.  Opening Speech ( 14:00 – 14:20 ) – Guohua Zhang

Title: The Chair Man of China Advertising Association, Former Director of Advertising Department, Ministry of Commerce of China and International Advertising Association (IAA) Vice President

  1. Australia Cross Border Business on Social Commerce in China – What, Why and How? ( 14:25 – 15:30)

Speaker: Target China

  1. Workshop Q&A Discussion ( 15:35 – 16:00)

Speaker: Target China & Guests

  1. Special Guest: Online Advertising exposure via iQiyi platform

Guest: Representative from iQiyi

iQiyi (Chinese: 爱奇艺), formerly Qiyi (Chinese: 奇艺), is an online video platform based in Beijing, China launched on April 22, 2010. iQiyi is currently one of the largest online video sites in the world, with nearly 6 billion hours spent on its service each month, and over 500 million monthly active users. On March 29, 2018, the company issued its IPO (initial public offering) in the U.S. and raised $2.25 billion.

  1. Afternoon Tea

If you have any inquiries, please contact Target China staff:

Bo Pang

Account Manager

Email: bo.p@targetchina.com.au

Jane Li

General Manager

Email: jane.l@targetchina.com.au

UNDERSTANDING CHINESE CONSUMERS

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UNDERSTANDING CHINESE CONSUMERS

By Emma Li and Richard Johnson
10 Dec 2018


Understanding the way Chinese consumers think and act is clearly important in developing market strategies for China, but this is a very broad topic that needs to be approached gradually, from different angles. An article published by the Boston Consulting Group, ‘The Chinese consumer’s online journey from discovery to purchase,’¹ demonstrates differences in e-commerce in China, ‘where customers like to spend time in a discovery-driven online world of energetic chaos where shopping is an adventure.’ Just as in the West, marketplaces such as Alibaba’s Taobao use a consumer’s searches or buying history to offer product suggestions, but they also capture social interaction and location data, and they use analytics, artificial intelligence, and personalisation.

Rather than go to an online store, consumers in China discover new brands and products ‘through an array of digital channels and content’ in China’s integrated digital platforms. If they see something they like, they can buy it straight away through embedded purchase links: discovery goes straight to purchase. For example, on WeChat cybercelebrities promote brands by posting messages to their network, messages that embody a payment button.

While physical retail is less developed in China than in the West, e-commerce is more advanced. Alibaba is experimenting with virtual reality in its Buy+ events. Alibaba has also carried out an integrated online-offline arrangement where a customer ordering items could have them shipped to a physical store in a matter of hours. Shoppers in stores could scan a QR code to have an items shipped to their home. Wumart, a leading grocery retailer has launched a mobile wallet for customers to use to simplify checkout payments in it stores, which is integrated with each customer’s online account. The speed of change is impressive.

‘The Chinese consumer market presents a huge opportunity for companies marketing consumer goods and services,’ Emma Li wrote in her blog dated 9 April 2018. ‘Levels of consumption are being raised by growing numbers of upper middle class and affluent families and omni-channel e-commerce.’

Much as in developed countries, the younger generation in China—aged 18 to 35—have a great appetite for consumer goods. China’s younger generation are becoming more knowledgeable consumers with more specific demands.

Chinese consumers are more and more purchasing not only products but services, including experiences like tourism for example. This is a pattern not only in Tier 1 cities like Beijing, Shanghai and Chongqing, but in Tier 2 and 3 cities, and such megatrends imply changes in shopping behaviours and preferences among distinct consumer segments. Consumers are acquiring preferences for a more diverse range products and services.

Ms Li goes on to offer some pointed advice to foreign companies who want to capture benefits from the Chinese consumer market: A company should relate growth trends to specific changes in Chinese consumer lifestyles, tastes and expenditure patterns. This means focusing on consumer psychology, consumer segmentation, brand structure and marketing strategies.

The catch is however that the consumer segments are becoming more differentiated because of demographic and behavioural changes. A foreign company needs a breakdown of segments so that it can identify optimal targets. It is important for your company to invest time and effort to understand the needs and wants of each target segment. Emma Li puts this very plainly: ‘If you have not identified more segments in China than you pinpointed a year or so ago, your strategies are almost certainly behind. The market is changing rapidly. Your consumer segments need to be updated at least every 12 to 24 months.’ Emma Li offers definite advice:

“As consumer segmentation becomes more precise, brand structure and strategy need to follow suit. Rather than offering a limited variety of products on the basis of being merely acceptable to more segments, you need to understand the increasingly diverse preferences of emerging consumer groups and sub-segments. You then need to review your brand structure and strategy to gauge how well your products meet those needs.”

To return to our theme of understanding the Chinese consumer, in many ways, rapid change is characteristic of China today. Social media are a fundamental part of contemporary life. ‘Platforms like WeChat and Weibo are critical to China’s Internet celebrity economy, in which most major luxury brands participate.’ Key opinion leaders (KOL) may also influence brand awareness and ultimately purchase decisions. It follows that marketing strategies need to be well informed about consumer attitudes.


¹Biggs, C., Chande, A., Chen, L., Matthews, E., Mercier, P., Wang, A., & Zou, L.  The new retail: Lessons from China for the West, The Chinese consumer’s online journey from discovery to purchase.  The Boston Consulting Group, Alibaba, 1-6.

ONE-STOP SHOP FOR THE CHINESE MARKET

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ONE-STOP SHOP FOR THE CHINESE MARKET

By Crystal Chang(Target China)
14 May 2018


The theme of a 9 May workshop held by Target China revolved around strategies for Australian businesses to enter the Chinese market and run their operations successfully in that market. There were three speakers: Ben Zhang, Jane Li and Frank Chen.

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Ben Zhang is Chief Executive Officer of M-CC, which is one of the largest talent agencies in China. M-CC is Target China’s exclusive strategic partner in China.  Mr Zhang spoke on how to use ‘the celebrity phenomenon’ to open up the Chinese market, Explaining that mainstream consumers in China—especially the younger generation—are readily influenced by preferences by celebrities, Mr Zhang said it makes sense  to focus on the image and popular appeal of the celebrity in China.

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Jane Li, Target China General Manager, noted comment by Australian businesses interested in the Chinese market that they find access very difficult, partly because they do not have the specific business resources needed. Contemporary sales channels in China also need to be clearly understood, Ms Li explained. There are three major sales channels in China:  shopping in person at retail outlets; online shopping/e-commerce; and offline shopping through distributors.  She pointed to advantages and disadvantages of each channel for Chinese consumers, and also for foreign businesses looking to find a place in the retail industry.

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Frank Chen, Target China Senior Business Consultant, spoke about ways to find a reliable partner or distributor in China. It is important not to rush into offers for introductions to the Chinese market. It is important to work slowly. With Target China, Mr Chen showed how an Australian firm can be placed in contact with knowledgeable people in China who are aware of the positive value of the firm’s product and who are able to establish mutual trust with a Chinese firm.

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Participants in the workshop expressed keen interest in the presentations. A number of participants asked Chen about the right and wrong way to establish a presence in China. Several people stressed the importance of a business workshop such as this which not only discusses general trade atmosphere and policies but goes straight to the issues that concern them. Target China provided valuable background on the differences between the Australian market and the Chinese market today.

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The Chinese market is so vast that many Australian brands are inevitably drawn to it. However many small to medium businesses are frustrated because they are not entirely clear on Chinese sales channels and consumer buying habits. That it why businesses are coming to Target China, which taps into Chinese social media: Wechat  with one billion users worldwide; and Weibo with 430 million users.

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        • Target China is experienced in company registration in China as well as online store registration on Chinese e-commerce platforms like Tmall, Taobao, JD.com, and Red Book.
        • Target China’s strategic co-operation relationship with M-CC in China extends to relations with many of China’s most popular celebrities including Fan Bingbing, Luyi, Hujun, and Yuan Yongyi (Anita Yuan).
        • Target China takes advantage of all these resources to achieve definite commercial success for Australian clients.

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At Target China, 99 York Street, Sydney on 9 May: from left, Frank Chen, Senior Business Consultant; Jane Li, General Manager; Alex Yang, Sales Manager; Kevin Wang, Director; Ben Zhang, M-CC CEO; Yuan Gao, M-CC General Manager; Wanying Zhang; Minnie; Eva Guo.

THE IPHONE AND THE SELFIE IN THE CHINESE SMARTPHONE MARKET

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THE IPHONE AND THE SELFIE IN THE CHINESE SMARTPHONE MARKET

By Cyril (Target China)
20 April 2018


As the leader in China’s smartphone market, Apple brings in large profits. But although it has the largest smartphone market share in China, Apple’s market share is in decline. Research indicates that more and more Chinese customers see Chinese brands as alternatives to iPhone. Several Chinese brands have even surpassed Samsung, once the iPhone’s strongest competitor.

Apple’s main competitive advantages are the iPhone’s independent IOS system, its complete iCloud service and the effective applications. The weakness that lets the Chinese brands gradually increase their market share is the iPhone’s poor camera performance, especially the selfie function. Chinese customer surveys show negative feedback on the iPhone camera, with reports that many customers use software or apps to fix or edit iPhone photos. Chinese brands Vivo, Huawei and Oppo for example have poured resources into enhancing their camera functions, especially for selfies. Their gains in competitive position are of course at the expense of the iPhone.

Since the end of last year, Apple has launched a series of iPhone promotion activities. In one CBD shopping centre promotion, celebrities were asked to take an ‘authentic’ selfie that was not edited or adjusted. Unfortunately for Apple, there was a definite level of negative feedback from ths promotion event. To see a Chinese cultural and social trend brought out by the promotion, it appears that consumers are insisting on a selfie photo that is not only authentic but brings out the esthetic qualities of the subject’s face. Consumers demand beauty as well as realism.

Quite simply, the iPhone camera, especially for selfies, does not perform as well as its competitors in the Chinese market.