Would you buy from an online shop if your order will take a month to arrive?
But what if I told you the prices are 10 to 100 times lower and the quality is just as good or even better than what you get at your local shops?
That is what Pinduoduo is like in Singapore. I recently discovered Pinduoduo at my sister’s recommendation. I just couldn’t believe how cheap the products were.
To give you an example, a packet of 30 dental floss sticks costs about $5 at my local supermarket. For $2.25, I can get 1,000 pieces on Pinduoduo. That is about 1/74th of the price. You might be trained to ask: How is the quality? If you choose the right ones, the quality is about the same or even better. And it is the same for toilet rolls, clothes, and bicycles! I dare not buy electronics yet, though.
I wanted to understand what’s going on. I pulled up Gemini and dug in. The main reason is they aggregate millions of orders for factories so that the factories can drastically lower their average cost. When the factories scale up their production, they can produce each item at a much lower cost because the production cost is spread over many more items. They then pass those savings to the customers to rank higher in the Pinduoduo app. There are also other factors such as cutting out middlemen and using sea, rather than air, shipping.
Pinduoduo’s unconventional approach fascinated me. Most ecommerce companies are competing to deliver faster and faster, with some even promising same-day delivery. Slow delivery is a failure. Pinduoduo chose to compete differently. Because the prices are so low, shoppers are willing to wait or even adjust their purchasing behavior to match that. Waiting a month for my online purchases used to be unthinkable. But if it is that cheap, I will wait (begrudgingly). If I am buying daily essentials, I will order a month in advance.
Sometimes, we get so fixated on competing on the same standard vector as other businesses that we forget about other vectors. Pinduoduo gave me a good reminder.
Originally published at: https://alfredlua.com/field-notes/pinduoduo