notes on pinduoduo, snackpass

🚏🚌 home writing

Introduction and Background

  • Conventional purchasing habits.
  • Buying something online is usually a solitary activity
  • Example: Amazon, Walmart, Etsy
  • Radical changes in consumer behavior.
    • People usually spend more when shopping with friends, in-person.
      • Why?
        • Social pressure (if you see your friends buying clothes in a store, you’ll want to buy clothes)
        • Friends’ recommendations are more powerful, even if products are curated from a large corporation
          • People would much rather purchase something if it is curated by a person rather than a faceless corporation
            • Person does not have to be someone the customer knows well, just someone they can relate to
            • Reason why companies have sales people around to make small talk and relate to the purchaser
        • Shopping in a physical place such as a mall is seen as a more relaxed and fun activity than shopping at home from your computer → people want to feel fun shopping again while online browsing/shopping
    • Consumers are buying more items online.
      • Food, groceries tickets, athletic gear (not limited to clothes/home goods)
        • Grubhub, Instacart
  • Companies are realizing this.
    • Concepts
      • Online shopping mimicking in-person shopping
      • Methods to get people to spend more online shopping

Growth Strategies

  • PinDuoDuo
    • Problem: Chinese rural farmers found it difficult to sell their supply of fruits and vegetables in their rural regions
    • Solution: Consumers order groceries with their friends, getting a larger discount for every friend they invite to their bundle purchase
    • Growth Strategies:
      • 1. PinDuoDuo buys groceries in bulk
      • 2. Relied on digital WeChat wallets (led to extremely low cost for acquiring each customer and facilitating payments)
      • 3. Customers have a certain amount of time (typcially 24 hours) to invite a certain number of friends to buy groceries with them
      • 4. The more friends they invite, the greater the discount for each person
  • Snackpass
    • Problem: Most college students don’t want food delivery because it’s pricey. They prefer takeout instead because campuses are densely populated.
    • Solution: Takeout for college students that allows friends to gift friends food and bundle purchase to save money
    • Growth Strategies:
      • Friends can gift friends better because food is more specific
        • E.g. gift a friend their favorite smoothie from their favorite smoothie spot
      • Friends can combine orders at a restaurant and split costs easily. The more friends they add to the bundle order, the greater the discount for each person
      • Limited coupons
        • Limited by time (50% off only in the next 2 hours) or limited by number (only 50 free drinks)
          • Encourages students to impulsively buy
    • Effects
      • 12 campuses in a year, 75% of students were using Snackpass within 6 months
  • AirBnB
    • Problem: Hotels lack cultural aspects of the vacation spot and are expensive
    • Solution: Travelers can book homes for a short period of time that are in the city/town/village they are travelling in.
    • Growth Strategies:
      • If a person refer a friend, they get $25 credit if they take a trip and $75 credit if they rent out the place (total $100 credit)
  • Instagram live selling
    • Brief:
      • Instagram sellers sell through livestreaming their clothes and holding public bids for their clothes
        • Livestream
          • Followers bid by commenting in real time
          • Bids are often extremely fast-paced, ending in 5 minutes or less
          • Sellers can answer questions in real time
        • Have a post showcasing clothes
          • Followers bid by commenting a price
    • Growth Strategies
      • Instead of buying with friends, you’re buying with “strangers”
      • But, the feeling of shopping with others still arises.
        • You’re still participating in the act of buying with others who are similar to you, and thus, still feel pressure to purchase
      • Livestreams
        • having a person answer questions in a casual way and making conversation feels like you’re at the mall shopping with friends
      • Fast-paced concept
        • Lots of competition for purchasing on-demand clothes → encourages you to bid quickly and follow the seller so you receive updates
        • Livestreamed bids end in <5 minutes so you’re encouraged to impulsively purchase
      • Interesting concept to explore in the essay

Analysis

  • Which Growth hacks are most effective for increasing revenue in the long run?
  • How does regional geography affect the growth hacks used (e.g. PinDuoDuo’s focus on rural vs. Snackpass’s focus on urban college campuses)
  • Use of messaging apps to increase virality
    • Users send referral links to one another through text message
    • Users send bundle purchase links to one another through text message
    • Using SMS to cover abandoned carts
    • Connecting to mobile use cases
  • Growth during different stages of the company
    • Early growth: 0 to 1000 users
    • Scaling: 1000 to x users
  • Mobile use cases vs. computer use cases
    • Snackpass and PinDuoDuo’s customers are 99% ordering on mobile
    • What are the long term implications of this mobile trend? Will complexity decrease in exchange for accessibility?

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