"Under its “Internet + Agriculture” strategy, Pinduoduo coached farmers on setting up stores online, provided them with access to end demand, and helped them to increase their household income. Pinduoduo wants to bring farmers to the digital age: (i) it trains farmers so that they can learn how to have a digital presence and to sell their products online, (ii) it cuts the intermediaries between farmers and consumers through its demand aggregation platform and (iii) it contributes to modernizing farms operations and distribution. Pinduoduo has a broader strategic initiative called "Internet + Agriculture" - of which Duo Duo Grocery is only one pillar. It provides customers with local products and reduces the delivery time from 3-4 days to less than 24h. As you can see, it's extremely hard to make the unit economics work because profit margins are low, logistics costs are high and marketing costs can rise quite quickly.ĭuo Duo Grocery is a natural extension of PinDuoDuo's traditional offering for food products. Equal Ocean compared the unit economics between online grocery delivery and this Duo Duo Grocery model. When you do the maths, it's a model that can be sustainable for online grocery. It pushes community members to bring their friends to the platform and to incentivize them to make orders. With Duo Duo Grocery, orders are accepted only if a pick-up point reach a certain critical mass in terms of order size. Pinduoduo's core strength has always been to aggregate demand on its platform and to leverage it thanks to social dynamics. Strong social dynamics reduce customer acquisition costs, increase conversion rate and purchasing frequency. In this model, products are delivered to a pick up point and consumers are doing the last mile by picking up their orders. Last mile logistics represent up to 30% of the total logistic cost for an order. As a result, at the same time, consumers get cheaper prices and farmers higher margins. In this model, farmers are listing their products directly on Pinduoduo and consumers can order them on the Pinduoduo app. Online grocery retail is massively intermediated with retailers and wholesalers. You are cutting intermediaries between farmers and consumers. This model solves many issues associated with traditional online grocery delivery. Part I - Detailing the Duo Duo Grocery's Model What does it take to replicate the model in the West? In this article, I’ll cover the following topics:Įxplaining how this model is integrated into the broader Pinduoduo's ecosystem and is an example of the broader community group buying in China I won't be surprised if entrepreneurs in the West start launching startups inspired by Duo Duo Grocery and the broader Chinese community group buying space. ![]() In August 2020, in the middle of the covid crisis, Pinduoduo launched a new grocery business called Duo Duo Grocery that is now available in more than 300 Chinese cities. I will look at Pinduoduo’s new grocery model and the broader community group buying trend in China. You can reach out at will start with a Chinese trend in the grocery category. I want to talk to anyone who has spent some time in this same rabbit hole. I will also dig into trends like community group buying, consumer to manufacturer, super-apps, live-streaming, social commerce, etc. I will dig into companies like Grab, Tencent, Pinduoduo or Meituan. I’ll share my learnings with you along the way. ![]() I’ve decided to dedicate a significant part of my summer to learn as much as I can on consumer tech giants in Asia to validate or refute my intuition. ![]() I have the feeling that Europe and the United States are lagging behind when it comes to consumer innovations compared to Asia.
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