US and China are different markets and so is India.
We may have scale similar to China but we are open for every business like the US. That makes it interesting to think can a Pingduoduo like model work in India?
For the uninitiated, Pingduoduo or PDD is a social commerce company(~200 billion USD market cap) which works on group buying concept that is highly popular in tier 2/3 cities of China.
We thought of crowd-sourcing some thoughts from our AJVC community on Linkedin and Slack. There were some interesting points made both for and against the topic.Here are some comments we picked from those discussions.
Kaushik felt while the model of PDD can see early traction in India but the bigger challenge lies in the manufacturing quality. As Indian manufacturing sector is not very evolved, products are of cheaper quality that will lead to higher customer returns making it a loss making proposition.
Jaineel took out some time to cover broader aspects- logistics, cost of acquisition, who in India could have done (Paytm was Jaineel’s bet) and many other aspects.
You can read the complete post on this thread over slack.
Jaineel In short felt challenges are more for someone to build an exact PDD model here.
Suman took on the challenge to do some number crunching and brought into picture how the maths works in favour of both customer and seller when extra discount is thrown in. However, his main issue with PDD model to work in India is low ASP. Suman argues, the bulk order gain is not significant enough to take car of the logistics and transactional cost.
A good framework on which categories may work and which may not work in such social commerce or group buying model was shared by Tanay Shah
Tanay says, status or identity based products like clothing or jewellery may not work in group buying model while utility based products like electronics where users prefer using what others use, group buying format may work.
Overall, the group seems to be more inclined towards the challenges that a PDD like model may face in India and will need some tweaks if it has to work in India.
There are some good resources that were shared as well around the subject like this podcast script gives a good insight and some food for thought.
You can join and participate in the discussion on our slack community here or on our Linkedin post here.