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Chinese digital agri-platform shows impressive growth Chinese digital agri-platform shows impressive growth
Pinduoduo, the world’s largest e-commerce platform and China’s second busiest online marketplace, has announced its plans to sell $145 billion worth of agricultural produce... Chinese digital agri-platform shows impressive growth

Pinduoduo, the world’s largest e-commerce platform and China’s second busiest online marketplace, has announced its plans to sell $145 billion worth of agricultural produce in 2025.

The bold claim came shortly after it was announced that Chinese consumers had bought $58 billion worth of agricultural produce online in 2019 – a 27% increase, according to the Chinese Ministry of Commerce.

The platform, founded in 2015, began its journey to startup fame as a business-to-consumer e-commerce platform for fresh produce. In 2017, the group transitioned to its current business model – serving as a digital marketplace – and has enjoyed meteoric growth in the past three years. It is now valued at $114 billion and recognised as one of the globe’s largest unicorns.

Now more valuable than HSBC, the Chinese startup, which finds itself competing with Alibaba and J.D.com, wants to accelerate the digitisation of Chinese agriculture.

According to the research firm, iiMedia, the sector’s sales are still dominated by wet-market and supermarket sales, which account for half and one-third of all produce sales in China respectively.

The firm’s new CEO, Chen Lei, believes the group’s “pin buying” or group-buying approach can help standardise China’s growing practices and bring economies of scale to small farms, which is the country’s main farming method.

Pinduoduo, which has its roots in agricultural production but also trades alcohol, cosmetics, and electronics, cuts out the middleman and creates a more ‘customer-to-manufacturer’ environment which promotes affordability. The platform has more than 600 million users.

Chen Lei told the media that Pinduoduo uses consumer demand to create scale and draws on consumer insights to help farmers maximise quality and yields.

‘Pin’ or group buying aggregates consumer demand, matches consumers with batches of agricultural produce, and bypass several steps by going truly farm-to-table, according to Pinduoduo.

Pinduoduo still counts agricultural goods as its main product, while it has also sought to digitise the sector further by bringing in experts to train and inform farmers about robotics, drones, the internet of things and low-powered data transmission.

Unlike Amazon, Pinduoduo has no warehouse of stock and no logistics fleet of its own. The company makes no commission from sales while it relies heavily on advertising and promotions which account for 90% of its revenue.

Some analysts have questioned whether the five-year-old company can be profitable but Xiaofemg Wang, a Singapore based analyst with Forrester, says that if Pinduoduo can diversify its range by offering premium goods, the company can rebrand itself as a marketplace for premium goods as well. The company has begun offering promotions with global mega-companies like Apple and Tesla.

https://www.theguardian.com/business/2020/aug/22/a-bubble-the-stellar-growth-of-china-e-commerce-upstart-pinduoduo

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