Pinduoduo took less than six years to become China’s largest e-commerce platform, with almost 800 million consumers buying from its marketplace in 2020.
The company has now set its sights on becoming the world’s top grocer, banking on its deep roots in agricultural commerce to source for affordable groceries and deliver them at low cost to its consumer base. It started Duo Duo Grocery in August 2020 and the next-day grocery pickup service is available in more than 300 cities across China.
Duo Duo Grocery “caters to the rising consumer demand for more timely and better value-for-money goods without home delivery requirements,” Pinduoduo said in its annual 20-F filing. “Through Duo Duo Grocery, we connect local farmers and distributors directly to local consumers on a daily basis and provide supporting services on the delivery of such goods to consumers.”
Groceries represent the tip of Pinduoduo’s efforts to modernize agriculture. The company operates China’s largest agricultural platform, connecting more than 12 million farmers to its pool of customers. Last year, agricultural GMV on the platform doubled to 270 billion yuan ($42 billion).
As part of a system-based approach, the company views the agricultural value chain in three key parts: upstream production, midstream transportation and downstream consumption.
At the upstream, Pinduoduo works with farmers and local partners to reorganize small-scale farms into cooperatives and introduce know-how and technology in sustainable and precision farming to achieve better efficiency and economies of scale.
At the midstream, the company continues to explore potential collaboration with logistics companies to develop a nationwide logistics network optimized for the delivery of perishable agricultural goods. At the downstream, Pinduoduo helps farmers sell directly to consumers and provide training to farmers on operating online agriculture businesses.
The aim is to create long-term structural changes that would improve users’ experience in buying agricultural products online and contribute to the value creation of the agriculture industry, the company said.
“We continue to focus on digitization of China’s agriculture value chain as a long-term strategic priority,” Pinduoduo said.
“Our aim is to drive further e-commerce penetration in this segment by improving the efficiencies across the entire value chain and to generate sustainable value to our consumers, our farmer merchants and other ecosystem partners.”