Pinduoduo’s Business Model makes Farm to Table the Norm, rather than the Exception

Driven by its core mission to improve the lives of farmers and enhance

 (photo credit: INGIMAGE)
(photo credit: INGIMAGE)
Driven by its core mission to improve the lives of farmers and enhance the quality of rural economies, among many others, Pinduoduo hopes to change China’s agricultural landscape through what it knows best — e-commerce and technology
For many decades now, the uncertainty of meeting enough demand for agricultural products is a pervading problem that continues to loom over farmers from different generations in China. The number of demands dictates and affects the price of a specific product, making farmers’ livelihoods entirely dependent on their customers and other sales channels.
Historically, both wholesalers and distributors have captured a greater proportion of the value in the supply chain for their role in matching supply with demand. These suppliers offer a bigger edge and leverage over smallholder farmers, who comprise most of China’s farming industry.
This lack of transparency and pricing power limits the ability of farmers to reinvest in their farms, while also limiting their economic advantage in society and dimming the attractiveness of the profession.
But with the rise of e-commerce and a fast-growing percentage of internet penetration, and the help of Pinduoduo, the world’s largest interactive e-commerce platform and China’s second-largest online marketplace, this industry-wide problem may soon become a thing of the past.
The Pinduoduo Advantage
As one of the world’s largest internet companies and a highly popular e-commerce juggernaut in China, Pinduoduo has applied its innovative pin model of aggregating demand through team purchases to make it possible for more farmers to tap into the online market for agricultural produce.
Moreover, this pioneering business model allows the platform’s base of over 600 million users to lower product prices by buying as a group or a team — making it one of the country’ top e-commerce sites for both buyers and sellers.
It’s a phenomenal feat and a fitting milestone for a company that originally started selling fruits and fresh produce. Today, Pinduoduo carries the status as the largest online marketplace for agricultural products in China, putting it at the forefront of the country’s agricultural economic advancement.
Doing Away with Unnecessary Intermediaries
Pinduoduo’s selling model allows farmers to offer prices that are lower than what consumers are used to paying at retail, while still netting a significantly higher profit that they would by selling their products through traditional distributors and suppliers. This is a win for many rural-based farmers with an existing limited number of available sales channels and customer base.
The e-commerce platform also actively pushes these agricultural products on the relevant users’ — both previous and prospective customers — recommendation feeds, allowing buyers to discover fresh, new and affordable agricultural produce. With the site’s unique team purchase model, buyers can not only lower down product prices but also drive more volume and visibility to the farmers and their products. This is also especially useful for selling produce that is in oversupply or products that have a short shelf life in quality and freshness.
By breaking down the artificial barriers that separate farmers and consumers through interactive e-commerce and economic digitalization, Pinduoduo is able to bring the two groups closer than ever before, especially in providing farmers with an ever-growing base of new and regular customers on the platform.
Higher Incomes and Revenues for Farmers
Aside from reducing cannibalization and providing fair play for different produce suppliers in the market, farmers also gain additional benefit on the site by having more distribution capabilities to a wider market.
This means consumers across a wider economic and social spectrum can have more access to these agricultural products resulting in bigger incomes or revenues for farmers. In turn, farmers can now have greater financial freedom and additional flexibility to plan and invest in new technologies and equipment to increase their supply chain and improve product quality.
Store listings by farmers from impoverished regions are also regularly featured on Duo Duo Orchard, an interactive mini game on the site played by 60 million daily active users. The fruits given out through the game are also sourced from these impoverished regions, promoting the idea and advocacy of supporting local farmers for users through their shopping and entertainment activity on the site.
Job Creation and New Career Opportunities
Aside from simply benefiting farmers by shifting their distribution channels from offline to online, the e-commerce platform’s business model and efforts have also given way for job creations and new career opportunities in rural areas and communities.
By enabling farmers to become entrepreneurs and take greater control over their sales, new jobs are being created. For instance, a range of agriculture-based new logistics and new industry infrastructure, including packaging, warehousing, and shipping, has sprung up to keep up with the influx of demand from consumers through the Pinduoduo platform.
Additionally, in rural areas in Central and West China, small, efficient, and flexible village-level packaging and warehousing sites have also emerged, creating more jobs and income for more workers.
Championing the Future of Agriculture and E-commerce
With all of these site-wide features and e-commerce innovations, Pinduoduo hopes to create more experiences and opportunities that can bring the best of the digital economy to farmers in China, improving the way they live and empowering them to be their own entrepreneurs.