Bite-size Case Study

Pinduoduo: hybrid value propositions

Published on September 30, 2022 Originally recorded 2022   4 min
The following diagram is a visualization of popular and emerging brands in China's e-marketplace displayed by their core offerings, be it their services, products, content, or social community-directed propositions. Providers within the e-market space are active in delivering value and specific solution clusters, ranging from online booking services, e-commerce platforms, payment gateways, crowdsourcing, and content curation propositions. By offering such integrated solutions, firms move up the value chain, hence, differentiating themselves from their competitors. What this means is that hybrid value propositions are more difficult to imitate as the service aspect is less visible, leaving a sustainable, competitive advantage, and customizable and integrated solutions. As new multi-sided business models unique to user needs and goals emerge, the ultimate measure is whether a company succeeds in combining assets to create value to its target entity, including itself, and thus crack the value innovation code. I will now provide an example case study to illustrate such a multi-sided business model approach
exemplifying the diversity of value-creating products services bundled propositions. Here's a case study which illustrates the scale and speed in which technology-centric companies are expanding their reach across the e-market space. Meet Pinduoduo, the largest agriculturally focused technology platform with more than 586,000 agarian producers serving an excess of 788 million active buyers today. Its product gross merchandise values stood at US $1.43 billion in 2020 only five years after its founding. Pioneering new trends in social and customer to manufacturer commerce has contributed to an expanding view on how e-commerce can deliver value across downstream and mid-stream supply chains and logistical infrastructures. Its differentiation is the social aspect where users can easily share what they have purchased with their social network, and enjoy lower prices. If people in the network also join their virtual community to buy the product, merchants stand to benefit because they gain both in larger order volume as well as more visibility to the demand, which in turn, they can use to better plan their production and logistical processes. The user experience in this case study is anchored around browsing and interactions, as opposed to deliberate search space discovery. The company presents users with personalized content to encourage them to explore new products for making shopping fun, interactive, and engaging. Lotteries, flash sales, and other gamification features encourage users to check in regularly and to browse other product categories. Pinduoduo is known for its interactivity and value for many offers that have been described as the combination of the best features of Costco and Disney with references to social commerce. The analysis of Pinduoduo's multi-sided business model revealed important value constructs, namely, how an organization can build relationships with its users by integrating e-commerce apps within popular social media platforms. How this knowledge helps refine the value proposition to attract new users. The data which it collects for the purpose of expanding user experience through collaborative team purchasing, intentionally supporting small and medium size businesses to find new target users and thus reshaping its value creation capabilities to attract new markets.