---
title: "Why is Pinduoduo Entering Community Group Buying Now? An In-depth Analysis of Duoduo Maicai"
description: "Community group buying has attracted major e-commerce players. Pinduoduo has launched Duoduo Maicai to expand its user base, improve last-mile delivery, and tap into a market projected to reach 720 billion yuan in 2020. The article analyzes its model, strategies, and the future of the sector."
author: "第三类人"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-10-13"
language: "en"
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---

# Why is Pinduoduo Entering Community Group Buying Now? An In-depth Analysis of Duoduo Maicai

> Community group buying has attracted major e-commerce players. Pinduoduo has launched Duoduo Maicai to expand its user base, improve last-mile delivery, and tap into a market projected to reach 720 billion yuan in 2020. The article analyzes its model, strategies, and the future of the sector.

Since the rise of the community group buying model, major e-commerce giants have entered the fray. Alibaba has Yizhan Group Buying and invested in Shihui Tuan, Tencent invested in Xingsheng Youxuan, Suning has Su Xiaotuan, and JD.com has Ququ Gou and Youjia Puzi. **Meituan also formed Meituan Youxuan in July and launched its "Thousand Cities Plan"; on September 11, Meituan Youxuan just set a record of 100,000 orders in a single day in Jinan.**
Recently, Pinduoduo also entered community group buying, launching the "Duoduo Maicai" mini-program on WeChat and the "Duoduo Maicai Store End" official account.
**-01- What is the Duoduo Maicai model?**
Duoduo Maicai is positioned as a low-cost community group buying platform, with a model focusing on **online booking + next-day delivery to stations + self-pickup at stations**. For example, if users place orders before 23:00, logistics will deliver to the station by 16:00 the next day, and users can pick up goods after 16:00. In terms of product categories, Duoduo Maicai focuses on high-frequency daily necessities such as fruits, vegetables, rice, oil, and salt.
**-02- Why is Duoduo Maicai entering at this time?**
**First, to expand the user base.**
Pinduoduo's current users are mostly **price-sensitive but not logistics-speed-sensitive users in lower-tier markets**. According to data, Pinduoduo has over 600 million users. The strategic layout and positioning this time target a group different from the existing user base. Although group buying also uses low-price strategies, users demand freshness and timeliness for daily meals.
On the other hand, despite Pinduoduo's large user base, the frequency of online shopping is determined by product categories, which is not as high as daily meals. Therefore, if it does not enter the community group buying market in time, it will miss the needs of **users who have high requirements for logistics and frequency**.
Thus, to capture this user segment, Pinduoduo must enter the track as early as possible to avoid being too late. **Second, to improve last-mile delivery capabilities.**
**JD.com, Alibaba, and Suning all have their own logistics supply chains. As a new e-commerce entrant, Pinduoduo has not yet built its own logistics channels.** Although users and order volumes have grown, it remains constrained by others in the logistics segment.
For Pinduoduo, entering community group buying now is **both an entry into a new high-growth track and a good opportunity to learn and build experience. To do community group buying, it must build large and small warehouses, cold chain, delivery, stations, and team leader systems. Building the entire system also builds the underlying logistics capabilities.** Given Pinduoduo's current order volume, using business to drive expansion, first growing aggressively to capture the market, then refining operations, is a viable path.
**Third, the market potential is huge, and competitors are entering.**
According to iiMedia Research, the community group buying market has maintained high growth in 2020, with the market size reaching 72 billion yuan this year. Especially with the stimulus of this year's epidemic, user awareness of community group buying has been fully developed, and trust between community group buying business groups and consumers has been substantially enhanced. **It is predicted that by 2022, the scale of China's community group buying market is expected to reach 100 billion yuan.**
At the same time, more players are entering the community group buying track. There are Shixiang Hui, Shihui Tuan, Xingsheng Youxuan, Meiri Youxuan, Dingdong Maicai, etc., all entering with hundreds of millions of dollars in financing and transaction volumes around 10 billion yuan. Later entrants include e-commerce giants such as Alibaba's Cainiao Group Buying, Meituan Maicai, Meituan Youxuan, and even Didi has laid out Chengxin Youxuan.
Image source: New Distribution
Image source: New Distribution
The financing capability of the community group buying track is also visible this year. In the first half of 2020 alone, the community track attracted at least 6.4 billion yuan in funds.
In June, Xingsheng Youxuan completed a $200 million Series B round, and in July completed an $800 million Series C+ round. Xingsheng Youxuan previously claimed national daily orders of 8 million, with a 2020 GMV target of 40 billion yuan. Shihui Tuan also completed an $81.4 million Series C round. On June 28, the community group buying platform "Liancai Wang" received 155 million yuan in Series B+ financing.
**-03- Duoduo Maicai's strategy and tactics**
To squeeze into such a competitive track and secure a place, Duoduo Maicai is going all out, with thoughtful strategy and tactics. We can analyze Duoduo Maicai's strategy from three dimensions (see figure below).
**1. User strategy**
**Online official traffic diversion:**
**Popup reminders:** In cities where Duoduo Maicai is deployed, such as Wuhan and Nanchang, opening the Pinduoduo homepage triggers a popup reminder, so every user who opens the app is reached once.
**Channel switching:** Those who have used Pinduoduo know that there is a traffic-biased entrance at the most prominent position on the homepage, called "Billion Subsidies." This time, the Duoduo Maicai entrance is placed below the Billion Subsidies, which is very eye-catching.
**Low-price strategy:** Similar to Billion Subsidies, Duoduo Maicai has set up "One Billion to Challenge," meaning low product prices. For example, fresh fruits are almost never over 5 yuan, and there are no additional delivery fees, even for 0.99 yuan peppers or 2.99 yuan baby cabbage.
**2. Team leader strategy**
For community group buying, the team leader is the core because they are the direct link to users. In the early stage of Duoduo Maicai entering community group buying, how to fully develop the team leader link is one of the keys to making the entire business work. Pinduoduo has put a lot of thought into the team leader strategy.
**Ground promotion recruitment:** It is reported that in cities like Xi'an, Pinduoduo directly hired professional ground promotion agencies and thousands of ground promoters to recruit team leaders, showing a strong momentum.
**Low entry threshold:** There are no restrictions on the business form of stations; tobacco and alcohol supermarkets, fruit shops, grocery stores, etc., can all become stations, which is conducive to comprehensive and diverse development.
**Low withdrawal threshold:** Everyone knows that most platforms have thresholds and fees for withdrawals, but Duoduo Maicai temporarily waives withdrawal fees and does not set limits on withdrawal amounts. This is attractive for new team leaders. Whether this policy will continue is unknown, but it should remain unchanged during the aggressive expansion period.
**Low delivery threshold:** For newly joined stations, regardless of order quantity, delivery will be made even if there is only one order and the amount is only a few yuan. This encourages new stations and also stimulates the experience for C-end users.
**Incentive mechanism:** To ensure team leaders' enthusiasm and strive to attract new users, in addition to the normal 10%-20% rebate on products, Duoduo Maicai also sets a monthly transaction amount reward of 0.1%.
**Training support:** In addition to the cash policies mentioned above, Duoduo Maicai also provides practical training before team leaders start and a 1-on-1 assistance plan.
**3. City strategy**
In terms of city strategy, Duoduo Maicai prioritized several key cities, such as Wuhan, Nanchang, Xi'an, Xianyang, Huanggang, Huangshi, Ezhou, Xianning, Xiaogan, and Chongqing, and has not yet fully expanded.
Community group buying cannot be achieved overnight; it requires building city by city, community by community, team leader by team leader, and station by station. From the selection of the first batch of cities, Meituan prioritized cities with mature community group buying awareness, such as Wuhan. After the epidemic, Wuhan consumers have a relatively high acceptance and recognition of buying daily meals through community group buying. On the other hand, Xingsheng Youxuan has developed well in neighboring Hunan Province, so Wuhan is a good choice.
Of course, in addition to user awareness, infrastructure, product supply chain, and competitive landscape analysis are also key factors in city selection.
**-04- How to play the second half of community group buying?**
First, the market potential of community group buying is undoubted. Although community group buying has been developing since 2015 and has seen explosive growth in the past two years, the market is still in a period of aggressive expansion. After the e-commerce and retail giants complete their layouts, **the second half of community group buying will move toward refined development.**
**Refined personnel:** Team leaders are crucial. They must manage communities, recommend products, remind customers to pick up goods, and maintain relationships with C-end users.
In the process of operating communities, how to provide standardized, refined, and high-quality services in terms of providing services, answering inquiries, handling disputes, and assisting after-sales is a critical issue to be solved in the second half.
**Refined products:** The essence of community group buying is C2M, a model of selling based on orders. Products are carefully selected, and product selection directly determines user loyalty. How to accurately select and push products is another issue to be solved in the second half of community group buying.
With the continuous application of big data and artificial intelligence technologies in retail scenarios, community group buying platforms can accumulate a large amount of user data after gaining users. The winner in the second half of community group buying must deeply cultivate user data analysis capabilities to accurately predict user needs and provide more precise and detailed products and services.
Source: Third Kind of Person Wave World (ID: The-3rd-Planet) Author: Third Kind of Person


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