What makes Pinduoduo one of the most disruptive forces in e-commerce?
In this episode, we explore the success story of Pinduoduo with Kaifei, a seasoned expert in China’s e-commerce. Kaifei provides a deep dive into the company’s unique approach to e-commerce and offers insights as an industry expert.
From its origin in China’s lower-tier cities to its global ambitions with Temu, we discuss how Pinduoduo’s focus on affordability and efficiency has reshaped consumer behavior. We also break down the company’s focus on cost-effectiveness, its intense competition with Alibaba and JD.com, and the challenges of maintaining low prices while balancing supplier relationships.
Not only that, Kaifei also offers thoughts on the future of e-commerce, the role of innovation, and the challenges of maintaining growth in a competitive global market.
This podcast was originally filmed in chinese, and was dubbed by the team.
Also available on Spotify and Apple Podcast
For those who prefer to watch it in the original Chinese audio, we have posted a version of that as well:
Also available on Spotify and Apple Podcast
Elody 00:00 Okay, hello everyone.Welcome to Impossible Podcast.Today we are in Hangzhou with our friend Kaifei.This time around, we are going to have the discussion in Chinese, but we’ll we’re going to voiceover later in post editing and have a English version for you to listen to. So let’s get started.
Jianggan 00:17 Ok ok.
Jianggan 00:19 Okay, then, um, I think today we will mainly discuss one topic, which is the topic of the table.Well, it’s about Pinduoduo and Table, and Kaifei may be one of the most knowledgeable experts in China about this company.
Kaifei 00:35 Well, you should know a little bit.
Jianggan 00:39 In China, people tend to speak more modestly, hahaha. Elody 00:42 Then the coffee kept going.Very modest.
Elody 00:43 Yes, yes, yes, and then, if we are overseas, in the past two years, we have opened up in various countries with Tim, and now we have almost 90 countries.Yes, um, and then, um, their overall expansion in various countries is actually quite radical.Therefore, it has attracted some attention from the media, the political and business circles, and the e-commerce industry.Then, but people don’t know much about this company. Yes, yes, yes, um, then we see a lot of these reports in the media, which are relatively negative, saying whether this company is dumping cheap things to Europe and America?Hmm, this company is exploiting suppliers. I think if we start, can we just talk about some of your general understanding of this company?
Kaifei 01:33 OK, I think there are still quite a lot of negative information about this company. Of course, it depends on how you look at this company from what perspective. Let’s review history together.Looking back at history, you will find that in the entire development of e-commerce in China, Pinduoduo appeared relatively late. Yes, it was around 15 or 16 years ago through fruit.The way to fight fruit is through WeChat, and then everyone shares, and then fight fruit, and then you can start how much cheaper, and then in 1819 everyone began to see the company’s growth rate is particularly fast, and in 1819 it completed the listing, and it should be 18 years, he completed the 1 trillion RMB scale GMV.Yes, so at that time, if you look back at that period of history, well, Taobao or Alibaba, including JD.com, its embryonic form basically started around 2000, which is basically Alibaba.
Jianggan 02:33 It’s probably similar to Alori.
Elody 02:36 Hahaha, so I only started to understand it halfway.
Kaifei 02:39 Yes, so the essence behind it is that I think it is also related to the time window, and then the second thing you find is that we say that Amazon Bezos actually has his own logic, that is, we have our own argument about how much faster, better and cheaper it is.Then if we look at the positioning of e-commerce companies, Pinduoduo has chosen one that is at least cost-effective or cost-efective. In fact, the essence of this is the same in the manufacturing industry. Behind it is the extreme control of costs, such as the manufacturing cost of goods, the extreme control of traffic costs, the extreme control of transportation costs, and the efficiency of organization.
Kaifei 03:28
What we can see, either directly or intuitively, is that this company seems to have higher requirements for its suppliers, as mentioned by Gangjiang Exhibition. There have also been some complaints from its service and logistics providers. This is closely related to the company’s position in the market.
The main reason is that it offers lower prices compared to other channels, which is especially noticeable in China. For those unfamiliar with China, Chinese e-commerce platforms are known for being very cost-effective. For example, if you compare 100 products, platforms like Alibaba, Taobao, JD.com, Pinduoduo, and Douyin may all have them. However, in many cases, Pinduoduo offers the cheapest prices for more than half of these products. The rest are slightly more expensive, but Pinduoduo still tends to be the most affordable option compared to other platforms.
Because of this low-price positioning, the company has to save costs in other areas. This idea aligns with the logic discussed in the book Disruptive Innovation, which suggests that when entering a market, companies should focus on strategies that allow them to compete with major platform players. Looking at JD.com, for example, its ecosystem is quite similar to Amazon’s.
Jianggan 05:07 Yes, very fast. Kaifei 05:08 Hmm, yes, provide more. Jianggan 05:10 Experience, the quality of his service is also relatively good.Yes, and he can do it too. Anyway, people with medium to high consumption also like JD.com in first-tier cities because of its stability and high quality.Yes, fast and reliable. Elody 05:22 Hmm, authentic.
Kaifei 05:24 Taobao, on the other hand, has a huge variety of goods—what we often call the all-encompassing Taobao.
Jianggan 05:30 Great.Yes, yes, yes, I still remember this, yes.
Kaifei 05:32 If we start a business or a company, we should look for a unique entry point, something different from what others are doing. When we spoke with the founder of this company, Colin Huang, he mentioned that if they had tried to be like Taobao or JD.com, they would never have surpassed them. Instead, they needed to create their own unique identity. This aligns with the core idea of disruptive innovation: everyone should find their own unique path.
Jianggan 06:04 Hmm, yes, you think that time point is probably around 2015, 2016, or 2017, because Huang Zhen had already spent a lot of time starting his own business before that.Yes, so the emergence of a company like Pinduoduo at that time, do you think it was inevitable or, well, there was a certain degree of chance.
Kaifei 06:19 I think necessity played a bigger role.
Jianggan 06:23 Occasional, necessarily greater than occasional.
Kaifei 06:25 Then, of course, Huang Zhen—or perhaps his team and the organization—played a crucial role. If we look back at that time, there were several advantages supporting their success. The infrastructure of the e-commerce industry had started to improve significantly. For example, delivery services like four-way and one-way logistics were becoming faster, and payment systems such as WeChat Pay and Alipay were widely adopted, making quick payments a habit for users.
By then, people were already familiar with online shopping through platforms like Taobao and JD.com. Pinduoduo was able to build on this foundation, effectively “standing on the shoulders of giants.” This aligns with what Duan Yongping, the founder of BBK, vivo, OPPO, and Xiaobawang, often said: he dared to follow others and make good use of the groundwork others had laid.
At the time, Alibaba’s contributions to e-commerce and the retail market were undeniable. Even though they were initially focused on other aspects, like building Alipay, their efforts helped create a more mature ecosystem for everyone, including competitors like Pinduoduo.
Jianggan 07:42 Thing, and then he went through it.
Kaifei 07:44 Back then, logistics was not very developed. Later, when it improved, Huang Zhen worked with partnered with Sitong, laying the foundation for the emergence of Pinduoduo. Of course, there was also a specific context. At that time, the Chinese internet was not interconnected. Companies like Tencent, Alibaba, and Baidu were fiercely competing in the e-commerce space. Baidu had tried to enter the market but quickly withdrew.
In this competitive environment, the lack of interconnection between platforms left some gaps—for example, Taobao couldn’t integrate with WeChat. This created an opportunity for Pinduoduo to grow.
But why was the team so important? It’s connected to entrepreneurial opportunities during 2015 and 2016, particularly in smaller towns. The “small town” concept refers to tapping into markets with massive populations—potentially reaching hundreds of millions of people. This was a key factor in Pinduoduo’s success. Elody 08:33 Small goals, small successes.Right.
Kaifei 08:35 Small, yes, small success.Yes, and then there are small goals one by one.Behind that, we found that many WeChat sellers have already completed this, which is what everyone has discovered.
Jianggan 08:45 Have earned 100 million RMB, yes.
Kaifei 08:47 Under the WeChat system, yes, there were significant dividends to be gained. Taobao couldn’t penetrate this system, and while JD.com received substantial investment from Tencent, but still didn’t fully capitalize on the opportunity. This left space for others to grow.
If we look at it through the lens of disruptive innovation, it’s about finding the right entry point. In this case, JD.com within the WeChat ecosystem struggled to attract non-core users or incremental users. Back then, one major factor driving those incremental users was WeChat red envelopes. Suddenly, rural populations in China were online, moving money into WeChat Pay.
The amounts weren’t particularly large—just a few yuan, 10 yuan, or 20 yuan—but this wave of micro-transactions created new opportunities that JD.com didn’t fully capture, leaving room for platforms like Pinduoduo to rise. Elody 09:31 How about it?But cultivating the feeling of using it, yes, yes.
Kaifei 09:34
With ten or twenty yuan, JD.com wasn’t a good fit—users couldn’t buy much, haha.
Pinduoduo seized this gap, targeting users in smaller cities with affordable products, meeting needs that JD.com and Taobao overlooked.
Elody 09:43 But you can buy it with PinDuo.
Kaifei 09:44
Yes, because it’s cheap. Of course, this concept of “cheap” became clearer later.
In the early days, JD.com’s focus on fast logistics didn’t align with rural users’ needs. They didn’t have a strong demand for next-day delivery. If you told them it would be cheaper, they were more than willing to wait.
Jianggan 10:02 Don’t want to wait?Yes, yes, yes, so. Kaifei 10:03 Red envelopes made it easy for people to start buying things quickly.
However, JD.com’s fast but expensive logistics created challenges. It struggled to cooperate with Sitong, and to cover costs, it had to sell pricier items, which didn’t appeal to price-sensitive users in smaller cities.
Amazon faces a similar issue with its costly FBA. To adapt, it needs efficient solutions like Rhino to manage operations better.
Jianggan 10:28 You mentioned a traffic-related topic earlier, specifically about the two ecosystems of Alibaba and Tencent. Both of these ecosystems are massive and have deep reach, but they are completely separate and don’t connect with each other. This situation is quite unique to China. Elsewhere in the world, you don’t see such isolated ecosystems. Overseas, companies usually stick to their own fields—like e-commerce companies focus on e-commerce, and other companies work in their own areas. Elody 10:58 There won’t be such a large and complete company.
Jianggan 11:01 You are his body.
Jianggan 11:03 So you might think, um, does this mean that when Pinduoduo is doing temu overseas, um, what it can use is the so-called dividend, which is very different?
Kaifei 11:15
Yes, but I don’t think it will have as much opportunity as it did in the past. Back in 2015–2016, the competition was simpler. There wasn’t TikTok e-commerce yet, so it was mainly JD.com and Alibaba. Alibaba couldn’t enter JD.com’s space, and JD.com had high costs, making its services and competitors difficult to work with. They had logistics, but they couldn’t provide affordable services or collaborate effectively.
Returning to Jianggan’s point, overseas opportunities are not the same as in China. In the past, platforms like WeChat created a favorable traffic environment in China with huge daily and monthly active users (DAU around 700–800 million, MAU over 1 billion). Overseas, platforms like Facebook, Instagram, WhatsApp, and Telegram offered good traffic opportunities, but they were more focused on being social tools. They didn’t provide the same kind of ecosystem advantages or growth opportunities as WeChat did in China.
Kaifei 12:19 This is challenging, but today’s referral method is interesting, though controversial. In China, some criticize it as deceptive. For example, promotions like “9.9 yuan to grab an iPhone” or furniture for 9.9 yuan, which turns out to be a tiny toy. Users feel misled because the details, like size or conditions, are often unclear or written in small print.
Legally, these methods don’t break the law, but they raise ethical concerns. Even so, they attract traffic and users, though opinions about them are divided.
There’s no easy traffic advantage anymore, these strategies help outperform overseas competitors. Platforms like Shopee haven’t yet reached Amazon’s level, but such approaches help them grow and acquire users efficiently.
Jianggan 15:04 Can’t see it, of course China can’t see it either, which means I don’t know if you know or not?It was the users outside the Fifth Ring Road who were mentioned at that time, yes.
Elody 15:11 Outside the Fifth Ring Road, outside the Fifth Ring Road in Beijing.
Jianggan 15:12 Explain to the user that it is because of China. Explain to overseas users that if Chinese cities are divided by ring roads, the higher the ring road, the better it is.
Elody 15:22 Bigger, it means users who are biased towards the suburbs.
Jianggan 15:24 It may be updated, and then he said that only users outside the Fifth Ring Road in Beijing will use Pinduoduo.Yes, that’s right. Alas, there was something that left a deep impression on me before. One year when I was in Beijing, all the investors came in and told me that they had recently heard about something called Kuaishou, which we had never noticed before.200 million users, yeah.
Elody 15:45 Used to be a North Kuaishou man, with a Douyin mindset, right?Kuaishou is only used in the north.
Kaifei 15:50 Kuaishou in the north will have more users.Right.
Jianggan 15:53 Yes, but this matter is quite interesting. It means that sometimes, um, yes, when you come back and see me, it’s just us people. Sometimes when you come to a big city, you don’t understand many things.Yes, another example is, um, two years ago, I was in Vietnam. At that time, Meixue had nearly 1,000 stores at Nankai University.Well, then I asked all the investors in Ho Chi Minh City, and he said, Ah, I haven’t heard of Mixue. In the end, it was one of their interns because the intern’s family lived in a sea house.Hmm, yes, his family lives in a second-tier city. He said, Oh, the one next to my house is delicious and I haven’t even heard of Chen Sheng’s dish.
Kaifei 16:29 Understood. Pinduoduo faced similar challenges in China, and now TMU (Temu) is experiencing this in the US. While it struggles with quality perceptions, it appeals to users in smaller or less wealthy cities, much like Pinduoduo did in lower-tier Chinese cities.
Meanwhile, platforms like Taobao and Alibaba have regained dominance in China, with the highest DAU and fastest GMV growth, as users vote with their money. Those in higher-tier cities, like New York, may not fully grasp Temu’s appeal. Jianggan 17:38 On this point, I remember discussing this matter with many friends from Brazil’s e-commerce industry in 2024.Local analysis refers to local retailers, who are e-commerce practitioners, including logistics practitioners.Then there is an interesting phenomenon here, which is that everyone will think, well, Liber in Latin America is very good, well, the service is also good, and finance, technology, self-built goods, and logistics are also well done, basically following the Amazon model, maybe with its finance added, because the US was already very developed in finance at that time.Yes, it’s about paying for these things.
Jianggan 18:15 Yes, and then they have a very confusing point, which is that they came to China. Well, everyone said, oh, Mai Li is not good. Shopee had a chance at that time. Well, they thought Shopee was making such low-priced and low-quality things. Well, the service was not good, and the timeliness was not high. Well, how could there be a chance?I think it was around 2020 or 2012 when people were evaluating Shopee like this. Yes, now when people look at Pinduoduo, they actually have the same perspective.Right. Kaifei 18:47 Yes, I think the essence behind this is about finding common ground. In China, or even when studying mathematics, there’s a concept called the “greatest common divisor,” as I’ve shared before.
Jianggan 19:02 Yes, the greatest common divisor pair. Kaifei 19:03 It’s just poverty. When we talk about poverty, the poverty in quotation marks refers to the group of people with lower incomes. It’s like a pyramid.Right.
Jianggan 19:14 So you are in any country. Kaifei 19:16 Yes, it’s all relative. If you compare countries by measures like per capita GDP, the population proportion may vary—larger in some countries, smaller in the US. But the “greatest common divisor” shows that price power becomes key. It simplifies things—there’s less focus on speed or service. Even now, Pinduoduo’s logistics performance holds up well compared to other e-commerce platforms.
Elody 19:47 The slowest, but the user’s.
Kaifei 19:50 Acceptable. I even asked them, “Wouldn’t delivering faster to users be better?” They laughed and said, “Yes, but it comes with a cost.” So, they let users decide, and users vote with their money. What does that mean? They partnered with SF Express and other faster options, allowing users to choose faster delivery when placing orders. Jianggan 20:08 For example, choosing means that I am faster to my price is higher. Kaifei 20:11 Yes, but most users may not realize that over 90% didn’t choose SF or weren’t willing to pay extra for faster delivery. They’d rather wait an extra day. This shows that many users are still price-sensitive. When choosing based on price, the trade-off between speed and cost-effectiveness becomes clear. Price is the most noticeable factor, while speed is only prioritized by a smaller group. Elody 20:36 It’s the same, you see that number, um.
Kaifei 20:38 Right. But if you focus on delivering quickly, how many times would you need to deliver before the user actually makes a purchase?
Elody 20:43 Moreover, having bought it, my understanding of them is that they want to provide the best service at the lowest price, which is within a reasonable price.Yes, that’s right. He first has a price, and then within that price, he provides the best quality products and services that he can achieve.Yes, it is.
Jianggan 21:00 Yes, that is to say, um, hey, there is a similar point here?I used to talk to some friends who work in the catering industry about the matter of Mixue.Why can MIXUE quickly spread in South East Asia?Then these other things, other Chinese types, including Nayuki, Nayuki can’t be spread here. I also have an interesting analogy here, which is that I remember talking to some friends in Thailand last year, and the Thai people said that I think the variety of Mixue’s products is very limited.So little.The thing made by Mixue is called Snow King. Hmm, although it’s cute, it’s not that delicate.Well, then I went to check out Naixue offline again. Naixue is a relatively high-end tea brand from China, one by one.You know, I just saw Nayuki in a mall.Well, there are five or six local brands next to it.Hmm, one of these is quite exquisite, and exquisite in different aspects.Yes, so when I talked to a friend from South East Asia who works in catering and Chaoyang, he said that Mixue is the cheapest park mentioned, and everyone understands.Well, if you want to do tonality, everyone has a different understanding of tonality.Yes, you need to do this well.Well, it may be difficult to vote for everyone.
Kaifei 22:10 You’re right. When users decide to buy something, many factors matter—like appearance, price, quality, or delivery speed—but saving money holds the deepest appeal.
Take Costco or Sam’s Club: their profits don’t come from product premiums but from membership fees. Without those, their profit margins on products are nearly zero. This shows price is the key driver.
Even with quality control, cost-effectiveness remains central to consumer behavior. Globally, trends like reducing energy usage highlight the growing focus on efficiency and economy, not just in products but across systems.
Jianggan 23:27 Finished.I think it should be the first one. The one he issued on January 1st is the new prospectus with 45,000 shares entering the store, exceeding it.
Kaifei 23:36 For example, take McDonald’s—it succeeds by focusing on universally appealing factors like affordability, convenience, and consistency. Similarly, in other industries, identifying and addressing the most common or essential needs often leads to success
Jianggan 23:46 Yes, actually we look at many overseas e-commerce companies, including Miley from Latin America mentioned earlier. Then we talk about several e-commerce companies in Europe, such as Alegro from Poland and the one called Polo. These companies generally have one thing in common, which is that they were all founded around 1999.Then many companies went public later. Yes, after going public, there will naturally be pressure from investors to increase the per customer transaction, that is, to improve the monetization ability of individual users. If you map this to China, you will find that there is also pressure to go to Alibaba JD.com.Yes, the so-called previous Consumption Upgrade, to some extent, also increases the unit’s per customer transaction and increases the brand’s participation.Here in Pinduoduo at this time chose a counter thing.Yes, so do you think this thing about him is a long-term thing?Because to a certain extent, he will definitely feel pressure, saying how to improve your per customer transaction and how to improve yours.
Kaifei 24:41 You’re right—the global economic downturn is pressuring everyone, with lower employment and less disposable income. However, companies like TEMU and Pinduoduo benefit by targeting cost-conscious consumers.
In the U.S., Costco and Walmart show how income levels shape strategies. Costco appeals to higher-income households ($100k–$120k per capita), while Walmart targets broader demographics ($70k per capita). Both succeed with low-price models and strong channel control, proving value-based strategies work across income brackets.
Similarly, Pinduoduo attracts not only budget shoppers but also wealthier consumers, as seen with high-end purchases like iPhones. Offering value appeals universally, regardless of economic conditions.
Jianggan 26:19 Electricity, my friend who studied for an MBA in Shanghai used something like McKinsey Partner. In fact, he has been using Pinduoduo more and more in the past two years.Yes, then I went to a colleague gathering, and everyone said it was the same thing as you, me.
Elody 26:31 Really, why should I spend more money?I really…
Jianggan 26:33 I can’t think of any reason why I should spend more money on the same thing. Yes.
Elody 26:36 Yes, right?
Jianggan 26:37 Yes, and I don’t have to arrive at everything on the same day.Well, yes, that’s a very small requirement.Yes, yes, so if I really want to be fast, I can use Meituan for timing. Elody 26:49 Right.Pinduoduo also gave SF Express this option, right?
Kaifei 26:52 Huh?It was given before, but the user didn’t choose it, so they almost didn’t choose it.
Jianggan 26:54 Yes yes yes.Well, in the end, let’s take a look at this company, that is to say.Hmm, did I just mention something from Walmart?Who was I at last time?Um, where?I was there last time.Hmm, yes.OK, where was I last time?In Shenzhen.I think I talked to a friend who used to work at Walmart about this, and he said that Pinduoduo has done a lot of things similar to what we used to do, such as squeezing suppliers, squeezing logistics, and so on.But our previous suppliers were all manufacturers, and everyone looks forward to long-term cooperation with us.Well, so I won’t report it. If I don’t know, I’ll just rent out public channels to complain. Now, maybe because Douyin and other channels are available, people can openly complain after being exploited.
Kaifei 27:43 Yes, I think it’s similar. When I discussed Sam’s Club and Walmart with friends, we talked about how companies like Costco maintain strong price control.
Kaifei 28:03
Another point that often gets criticized is how companies like Pinduoduo, Alibaba, JD.com, and others handle their supply chains. Whenever there’s a supply team, corruption within the investment teams seems inevitable—it’s always a matter of proportion. This is a widely discussed topic online. For example, some companies have recruited former police officers to address these issues. If you look at Walmart’s recruitment practices in China back then, it was similar. They had many options, but the underlying issue remains the same.
Now, if we look at today’s situation, you can’t exactly say these companies are “squeezing” suppliers, but they are definitely more dominant in their dealings with suppliers. The core reason for this is the surplus in China’s supply chain today. The reality is that consumers have less money to spend. Where someone might have spent 10 yuan a day before, now they’re spending 8 or even 7 yuan. You can see this trend not just in e-commerce but also in industries like catering. Companies like Xiaohuajia and Meituan are offering cheaper meal options like “Pinhaofan.” It’s the same idea: lower prices.
The essence behind this shift lies in increasing competition, which pushes us back to the harsh principle of “survival of the fittest.” Companies are iterating their production capacity to adapt. However, I believe every company has its own responsibilities, and this applies here too.
But then there’s the question: why is this related to the founder? Do you think your company has been consistently focused on offering low prices? If so, always pressuring suppliers for lower prices leaves no room for innovation. Innovation requires both time and money. For instance, if you want better battery technology with smaller ampere capacity, it will cost more. Similarly, advanced equipment like DJI drones requires investment.
Kaifei 30:02
Does cost-cutting harm innovation? Likely, but every company has its own positioning, some focus on affordability, others on innovation. This company has chosen its path.
Elody 30:20 If he chooses to solve the problem of cost-effectiveness, will he always choose to solve the problem of cost-effectiveness in the long run?Or will he make any changes?
Kaifei 30:27 I think the key is consistency. If you stay consistent, you’ll become very strong—strong in the sense of being sharp and focused. Trying to do everything, like balancing low-cost “white label” products and premium branding while also maximizing profits, splits focus.
This reminds me of what Costco’s founder said before he passed away. He made a fascinating remark: “If you make money from product premiums similar to the membership fees, I’ll jump out of my grave.” Hahaha! Essentially, he meant you can’t profit from both. If you try to earn from both membership fees and product markups, you’ll lose focus, much like how IKEA operates.
Elody 31:01 Take good care of both ends.
Kaifei 31:03 The team might say, “I can earn 5 points here,” but if customers can’t afford the membership fee, what should you do?
Balancing product margins and membership fees is tough. If you raise one, it undermines the other, creating tension and internal conflicts over priorities
Jianggan 31:09 So speaking of this, if you look at it domestically, it’s like Alibaba and JD.com’s response to Pinduoduo. I think this is also a process of self-exploration and self-reflection.What kind of inspiration can this process bring to some overseas e-commerce platforms, such as Amazon and Many?Well, let’s just say everyone saw Pinduoduo coming.
Jianggan 31:28 Hmm, we now feel that everyone’s opinions are different. Some people think that this job is the same as previous jobs like Visa, but it just disappears as they do it.Well, then some people say we need to deal with it, we need to do low prices, hmm, but when you want to do low prices, you will find that your cost structure or the burden of your entire organization makes it impossible for you to do this.Hmm, yes, yes.So what should they do?
Kaifei 31:50 I think it’s because when we talk about speed and efficiency, it’s hard to do everything well. JD.com, Amazon, and Mailey have each focused on specific areas, and many regional e-commerce platforms have done the same. I chose to focus on one as well.
For example, women’s clothing is still a weak point for some platforms. Compared to Douyin, JD.com, or Taobao, Pinduoduo struggles with women’s clothing, particularly at the branding level. Clothing is not just about being cheap—it’s about looking good, being affordable, and feeling worth it. People don’t buy clothes just because they’re cheap; they buy them because they like them and the price feels right. It’s like food: it’s not about eating the cheapest thing every day, like steamed buns, just to get full.
Elody 32:48 Yes, that’s it. It requires some emotional value.Right.
Kaifei 32:51 Or it could be about experience value. Unless it’s a matter of basic survival—what Maslow’s hierarchy calls the bottom level of needs—people don’t easily give up those higher values. This can apply to e-commerce platforms, catering, or brands.
It’s like deciding whether to be a Xiaomi or an iPhone. You don’t have to be Xiaomi, but becoming an iPhone is much harder—it demands constant innovation. Xiaomi might cater to the “sinking” wave of Maslow’s needs, offering simplicity and affordability. This aligns with the principle of Occam’s Razor: the simpler the solution, the sharper and more effective it is.
So, answering Jiang Gan’s earlier question: the essence is finding your position in a multi-layered market. For example, instant retail isn’t just about being cheaper than offline stores. It’s also about convenience and fulfilling the “laziness” factor—people ordering from home for ease, not just savings.
Elody 34:17 A lot of things or something?I’m just lazy, that’s not right, it’s like this.Do not.
Jianggan 34:21 I don’t know about this. Your generation refers to many of my former colleagues who now live in Shanghai. It’s really like this. He went to the convenience store in the community to pick up something that was group buying. He didn’t do it because of the timeliness, he thought it was too troublesome.Yes, someone delivers it downstairs, someone delivers it up, this is the best thing.Right.
Elody 34:39 Sophia and I insisted on buying eye drops last night. He said we were passing by, and I told him there was a convenience store nearby where we could buy them.He said, ‘You deliver Meituan to Xiangnan for me, and I’ll have my robot friend deliver it to my doorstep.’Right.
Kaifei 34:51
Yes, basically, if you think about it, it might take you 15 minutes to go downstairs, but just-in-time retail could take 30 minutes. People might say you’re not as efficient as they are, but actually, retail is slower than just going downstairs.
That’s one point. Another point is that you might not agree, but maybe you’re just being lazy. And also, people always want more. There’s this growing demand for variety. For example, with today’s LED contact lenses, especially for girls who like colorful ones, it’s different. Before, people would just buy one color, and the whole stack would be the same. But now, there are more options—like 5 different colors in one stack.
So, when I go to buy them, I want all 5 colors at once. But your local convenience store can’t stock that many options. That’s the issue
Jianggan 35:32 Can’t keep so many goods.Right.
Jianggan 35:54 So what’s needed in there is still what I talked about with my retail friends before, that is, everyone, yes, the old ones, such as cosplay cards.You must have strong consumer insights for this type of company.Yes, you must know what consumers want.Yes, and how did this trend change?Yes, use this to determine your direction, because otherwise it’s all these so-called needs, and everything comes from your mind. Kaifei 36:14
Uh, yeah. I think everyone today feels criticized or judged. People think, “If I don’t transform, I’ll be left behind, or I’ll feel anxious.” For example, we looked at Amazon today. Amazon launched a low-cost version of its platform, and it even benchmarked TikTok’s content style. They seemed to approach it project by project. But honestly, most people didn’t execute it that well.
I think the market’s anxiety really comes from the strength of players like Alibaba and JD.com. Everyone now says they’re weak, but from our perspective, they’re still very strong. The real issue is that platforms like Pinduoduo grew so fast—it started from nothing and grew at lightning speed. Meanwhile, for Alibaba and JD.com, who are already established, finding new areas of growth is much slower.
Jianggan 36:59 Then it will be slow for you to go and see.Right.
Kaifei 37:01 Nature is slow because you’ve become a large company. When you look at it today, yes, you cleared the entry quickly, but that’s only 50 billion. Meanwhile, Amazon has already grown to 800 billion. So, there’s still a big gap. What happens is, when you start from scratch, growth is much faster.
Jianggan 37:17 So you will feel more that Amazon is doing these things, and it is very likely that they are trying something internally. What we can see with our eyes is that they are trying something, and they have not invested a lot of resources in this thing.Hmm, yes, that’s right. So, from a higher-level perspective, I think their perception is still clear. We need to understand this by doing it ourselves.But actually, in the short term, if we invest heavily in this thing, we will lose our original advantage, um, the direction will be off track.Yes, it is.
Kaifei 37:48 I think the essence of this is that, at this point in time, its growth has been especially fast because it has found a macro environment that’s more suitable for this era. Its supply chain, infrastructure, and payment systems have all matured.
Without logistics or payment systems in place, it would’ve been hard to grow further. Yes, and with the monopoly of these giants, if they don’t open up something like Alipay to you, it’s tough to succeed when it’s the only payment option. But because WeChat Pay is also available, I think there’s a historical factor at play here.
Jianggan 38:28 What do you think of the consequences?It’s about the development after Duoduo and Tim, for example, in 2025. Now we are looking at their business model in some core core markets, similar to the retail model.Well, go for the model of local delivery.Yes, and do you think the core of it is still low price?Or will this thing evolve over time?
Kaifei 38:52 In my understanding, the domestic market in China now exceeds 30,000 to 40,000 billion yuan. This market has been focusing on cost-effectiveness and affordability while maintaining its brand identity. It’s not as simple as just inviting brands to join. These brands are often resistant when you tell them they must offer the cheapest prices across all channels. They push back on that idea. But even so, we’ve seen that it’s still happening.
Kaifei 39:22
I think the essence of this is that when you try to expand into a new area—like moving from being strong in ‘A’ to trying to dominate ‘B’—you often become weaker in the new area. So, I think it’s better to focus on your strengths and make clear choices.
Take Duoduo as an example—it’s an organization that’s built on focus and careful decision-making. In any business system, people will talk about mistakes, and this company has been labeled as “wrong” by some. But their approach—the logic of going all-in, even when others don’t want to—is what defines them. That’s what I think.
Jianggan 39:59 The thing is quite interesting. In the past two days in Hangzhou, I have heard countless people complaining about trial and error. Yes, yes, trial and error, because the core issue of trial and error is not thinking clearly.Yes, do it, do it right, you don’t know why you did it right.Well, instead you went to look for post-model analysis afterwards.Yes, and it often leads to saying something about you.Well, it’s hard for you to judge this matter. If you make a mistake, what exactly did you do wrong?I think that attribution may not be done very well by everyone.
Kaifei 40:30 this will also bring higher requirements to the founder.
Elody 40:37 Hmm, yes. Our previous company had a Jiang Gan who shared with us. There was a sentence in it that said the company seemed to have succeeded in the past period of time because it did something right.Yes, and then he is in the sharing of Hua and Hua.
Jianggan 40:53 Yes, but often from the company’s perspective, you may not know what you did right, yes, what made you successful.
Kaifei 41:00 Yes, I think it’s the same. The logic you mentioned, Jiang Gan, is this: if you attribute your success to a strong organization, you might assume that because your organization is strong, it will also succeed in the next venture. But in reality, you might have been misled by external factors. For example, during the period when China’s mobile Internet was booming, the macro environment was particularly favorable, and this may have been the real reason behind your success. This kind of misattribution could lead to mistakes in judgment for what comes next.
Kaifei 41:30
I think this company’s approach today in China will, to some extent, also be reflected in Temu. Currently, Temu is still small, with a valuation of only 50 billion dollars. I believe there is still significant room for growth in the future. In this space, the company continues to focus on saving costs and catering to the 7 billion people in the world who are price-sensitive.
If we exclude markets like China, where they’ve already established a strong presence, and consider challenges like market entry issues in India—such as barriers for Chinese companies and e-commerce businesses—there’s still a lot of untapped potential globally. At 50 billion dollars, it’s still relatively small, especially when you factor in these additional opportunities.
Jianggan 42:06 Speaking of which, what he just said was that he was sharpening to hit this point. Yes, there is still enough room for growth at this point.Yes, um, and will they say the same thing?It’s just because its organization is organized from top to bottom, which is relatively simple and has strong execution ability.If one day the market changes and he wants to make a change, he may also change faster than others. Would he say that?Or say.
Jianggan 42:34 Or to ask this thing from a different perspective, to talk about this thing, do you think in the future, if Pinduoduo team becomes a global company, a company that is large enough in all markets, will it also suffer from the big company disease?
Kaifei 42:47 OK, I agree, 100%. This applies to countries, dynasties, and companies. None are continuous over time.
For companies, large ones must exist, but their issues can be delayed and are influenced by several factors. First, a company’s age matters. Older companies are more likely to face challenges, as size and bureaucracy grow with age.
Second, founding teams often leave over time. Once founders achieve their goals or make enough money, they lose interest. Without them, the company may lose focus. Professional managers take over, but they might prioritize short-term goals, hire poorly, or create inefficiencies, leading to confusion and poor communication.
Finally, decision-making under professional managers can involve compromises or flawed logic, which further weakens the company’s foundation.
Kaifei 43:54
If you want to evaluate whether a company is specialized enough in its business today, consider this: start-ups often have more opportunities because the CEO is deeply involved in everything, unlike in large companies where 20% of operations are delegated to professional managers. Start-ups rely on this hands-on approach to survive.
For example, Duoduo (Pinduoduo) is still young compared to JD.com or Alibaba, perhaps 10 years behind. As Huang Zhen mentioned, in another 10–15 years, Duoduo may also feel “old.” Additionally, many founding teams in older companies have already left, which impacts their ability to maintain their original vision and energy.
Kaifei 44:55 We observed that Duoduo’s team has remained stable. Most of the leaders across different business lines have worked with Huang Zhen for over ten years. They are part of the original start-up team and have proven their value within the organization. Additionally, the company’s staff efficiency is slightly higher than that of Alibaba and JD.com, though JD.com has a large number of logistics personnel. Kaifei 45:21 Yes, and Alibaba still owns several offline retail companies, which involve many employees. However, if we focus on core businesses like Taobao, Tmall, or Pinduoduo, the staff efficiency is higher, with fewer employees. This reflects well on Pinduoduo’s ability to maintain efficiency, even as it grows. Still, as it becomes a larger company, challenges will inevitably arise.
Jianggan 45:48 The last question, the last question is, um, do you think it’s just what Tim brought, and I think the business aspects are all very effective.Is this in the commercial business?Then look at the competitors, or how to deal with this now?There is another level of problem, that is, how should decision-makers of various governments and local governments deal with this problem?Recently, we have also seen that many governments in various countries are starting to worry about it. After all, for most countries, it is still a cross-border model. As for the cross-border model, it will inevitably have a certain impact on the local retail industry and even the manufacturing industry of some countries.Then you think, for example, if I am a policy maker from a certain country, how should I face this matter?
Kaifei 46:37
I think there are two main points. First, the issue of impact—how significant will it be? I think its impact varies: greater in some countries, smaller in others, but overall, it’s manageable and won’t affect every country equally.
For underdeveloped areas, where per capita GDP is lower, the impact might be greater because users are more willing to wait 10 days for a package. However, in developed countries, it’s unlikely to penetrate mainstream consumer habits or wallets.
Jianggan 47:18 He has more segmentation of his users, and then different needs.
Kaifei 47:22 Diversification is key. For example, if you tell me something is a few dollars cheaper but requires me to wait 10 days, I may not accept it. Waiting three days is fine, but for users in developed countries, where services like Amazon exist, the experience is already excellent. If your product isn’t significantly cheaper and requires a 10–20 day wait, it’s hard to enter mainstream wallets.
Kaifei 47:43 First, at the user level, it’s demand-driven. Differences in per capita GDP affect user demand and tolerance levels. In less developed areas, users may prioritize cost over speed, but in developed countries, this tolerance is lower.
Second, cross-border growth faces capacity bottlenecks. While annual growth might reach 20–40%, it’s hard to sustain growth above 50%. Once revenue reaches $100–200 billion and is divided across countries, the impact per market becomes relatively small.
Jianggan 48:14 So at first, it looked so strong, but in fact, it can’t always be like this, so, because of its small base, now it’s right.
Kaifei 48:20 The base is relatively small, and it will plateau soon. One interesting thing that governments or industry researchers can do is calculate how many Chinese planes are flying to various countries—haha.
Elody 48:31 Very.
Kaifei 48:31
it’s very challenging. For example, doubling growth is difficult. Over the next few years, growth may stabilize at 20–30% annually, but this requires distribution across many countries, which is manageable.
I think the third impact is inevitable. The company has already entered these markets, as seen in its official investment promotion policies. It’s recruiting local businesses, likely driven by user demand for local, affordable prices. Localization is crucial—it improves the impact on the local market.
For governments, every country acts based on its own positioning, and naturally, they will support these efforts to align with their goals.
Jianggan 49:11 Some adjustments.Yes, his industry is different in each country.
Kaifei 49:13
Yes, if I’m not skilled in a particular area and need to rely on imports, I might have a higher tolerance for external competition. But if I’m already in the cotton textile or clothing industry, would I accept you coming in to take my market share? That’s a different story. Similarly, platforms like TikTok (TK) are doing the same thing.
For example, is the company’s main entity Chinese or American? Behind the essence, I think most countries can replicate others’ strategies by analyzing their policies and their impact on the industry. Whether the impact is small or large, it’s still beneficial overall.
When you localize, you need to hire warehouse staff, fulfill contracts, improve the online conversion rate, and enhance online payment systems. Governments also have strong incentives to encourage currency circulation into banks. For e-commerce or the online economy, this is actually good news.
Overall, I think most countries—about 90%—can understand and adopt these strategies effectively.
Elody 50:12 So again it’s the concept of being the later one
Jianggan 50:15 Pretty much is fine, I was pretty good together in the past. I think we should talk today.
Elody 50:20 It’s very rewarding.
Jianggan 50:21 We talked very fully.Yes, thank you Kaifei.Yes, then we will actually come to Hangzhou frequently in the future.Well, then Kaifei would be best to come to Hangzhou, and then I, well, anyway, we can chat more in the future, because I think many of your topics can be more detailed.Yes, and this itself is also evolving in different ways.So the title we see today is actually quite different from two years ago, the title is the same.Yes, yes, yes.
Elody 50:47 Okay, thank you Kai Xue for joining us today.
Elody 50:49 hope you have enjoyed the video subscribe to our channel see you next time。
