China Price-for-value Social Retail Platform "Pinduoduo" Listed on the Nastaq, Caused a National Discussion
Pinduoduo with 30 billion US dollars of market value after being listed in the US Nastaq, more than the total market value of 13 listed chinese companies in 2017.
On July 26, 2018, the social e-commerce platform “Pin Duo Duo” officially landed on the NASDAQ. On the opening day, the market value exceeded 30 billion US dollars. In 3 years, 300 million users, more than 200 billion GMV, became the Internet company with the highest market value in Shanghai.
Pinduoduo, boosted by 20-fold oversubscription and high market valuation, confirmed on July 26 to set the IPO price at $19 per ADS. The price hits the top of expected IPO price range, and will allow Pinduoduo to raise around $1.6 billion. The very positive feedback from Pinduoduo’s pre-IPO could have allowed it to raise the IPO price to $22.8 per ADS.
In 2017, the total market value of 13 listed companies in China's home building materials sector was less than 170 billion yuan, far less than the market value of Pinduoduo.
Relying on Tencent's WeChat traffic, Pinduoduo can spread in the circle of friends, targets the Chinese third- and fourth-tier cities consumers who may not know Taobao, Tmall or Jingdong, but they all do have the wechat. Plus, Pinduoduo used a low price strategy to attract a large number of users below the third- and fourth-tier cities, and fully digested this part of the "demographic dividend", accumulating more than 300 million users in less than three years.
Pinduoduo's business model is an online group buying model that buys a certain item at a group purchase price. For example, a piece of clothing is priced at 58 yuan, and it can be purchased by a group of 39 yuan. The user can send the branded product link to the friend, and if the group is unsuccessful, it will be returned. We have seen a lot of people in the circle of friends, each WeChat group has a link with a lot of group purchases, and achieved a fission through social networks.
A Chinese retiree, in her 60s, buys in Pinduoduo plateform a dress for $5 and a pair of shoes—“real leather,” she says—for just $4. She uses WeChat’s mobile wallet to pay for the items. The prices are low because Pinduoduo’s products are often sold by the factories that manufacture them. The marketplace has been accused of hosting unauthorized merchants and fake brands, which has caused a war of words by chinese internet users.
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