Quiet e-commerce giants in China are thriving with fresh products

He Shuang, who grows pomegranate in southern Sichuan Province, is the new grower of Pinduoduo. The former hostess returned to her remote mountain town from Kunming in 2017. Initially the fruit was trucked to wholesalers across China, who then resold the fruit to consumers. After switching to Pinduoduo, it can reach consumers directly; This has created “strong and predictable demand for our products, which in turn keeps our cash flow intact,” she says.

In a recent video, she picked a pomegranate from a bush in her orchard and, because she “has no nails,” bites off its peel to reveal its juicy seeds. Although it was tough at first, he now shows flair on camera. “Live broadcasting is just like chatting with clients to build trust,” she says. Her massive sales prompted Pinduoduo to recruit Video And the text marketing. Its warehouse now has 150 employees, and 2019 annual revenue is 40 million yuan (5.7 million US dollars).

Sophia Bakhta, Analyst at Daxo Consulting, says Pinduoduo’s group buying model helped aggregate dispersed consumer demand and connect these buyers with farmers, “effectively creating an expanded national market.” This lowered farmers’ costs and gave them some of the benefits of farming on a large scale. In the past, says Gerard Silvestre, an investment officer at the Food and Agriculture Organization of the United Nations, farmers often suffered from uncertain demand and price volatility. “We have seen several cases of a farmer pushing his produce to market, only to find that the price of the product has fallen, far below the cost of his production, and he has dumped the entire crop out of the market to avoid paying extra cost to the conveyor to bring it back to his village.”

Sylvester says Pinduoduo has benefited from its robust logistics network and the ease of mobile payments via the Chinese mainstream messaging platform. WeChat. He says Pinduoduo raised farmers’ incomes and made it easier for them to plan, which helped create new jobs in rural areas. In August 2020, Pinduoduo introduced Duo Duo Grocery, a next-day pick-up service, to help farmers sell directly to local consumers.

Not all farmers are happy with Pinduoduo. Yang Lin sold 30 tons of apples a month on the platform in 2019, but says he “didn’t make any money” on Pinduoduo, especially after he took into account the ads he bought on the site to attract consumers. He thought he could have made a profit from Pinduoduo if he sold more apples, but he quit because that turning point seemed too far fetched. Ads are not required. Asked about Yang’s situation, a company spokesperson said Pinduoduo “is championing” farmers and is “working to expand farmers’ access to markets so they can sell better”.

Other critics said Pinduoduo and its competitors are disrupting traditional sales chains at the expense of some farmers, because these traditional networks are more balanced and inclusive than e-commerce algorithms that unfairly favor the best-selling crops.

Technology “is not the only solution to lifting farmers out of poverty, or structurally improving their lives and businesses,” Dodarinok says. But it says Pinduoduo has provided a stable consumer base, sales channel and logistics for sellers. “Both farmers and consumers win by cutting the middle man,” she says. However, she says, farmers also “need to ‘work for it’ with live broadcasts and buying ads. You have to be good at catching eyeballs.”

Pakhta says that apps like Pinduoduo are not likely to replace physical markets, because China is large enough to accommodate both. The four years she spent in China convinced her that local markets “are more than a place to buy groceries. This is a kind of club where you can come and chat and practice your bargaining skills and at the same time buy something fresh and delicious.” “Offline stores, especially those with agricultural products, are part of Chinese culture.”

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