Pinduoduo’s Client-to-Producer Mannequin Helps Manufacturers Home Gross sales Throughout Pandemic

COVID-19 modified the whole lot. For quite a lot of China’s export-dependent producers, the pandemic was an enormous blow as some Chinese language corporations noticed their export orders had decreased tremendously.

However for Zhejiang Sanhe Kitchenware Co., it hasn’t been that affected due to its preparation for home gross sales since two years in the past.

Sanhe is one in all Europe’s greatest cookware producers via its collaboration with manufacturers like Germany’s Zwilling J.A. Henckels and WMF, France’s Le Creuset, Italy’s Bialetti and Tescoma. The corporate, which additionally sells underneath its personal model title Sanho, manufactures greater than 25 million pots and pans a yr.

Again in late 2018, e-commerce platform Pinduoduo (PDD) launched a “1,000 New Brand Initiative,” serving to the expansion of China’s small, medium and micro manufacturing enterprises. Sanhe was one of many first batch of corporations to enroll in this initiative.

PDD told local news that they found quite a lot of platform customers have been price-sensitive however not brand-sensitive. Correspondingly, they launched into the street of fostering and incubating manufacturers.

The subsequent yr, PDD labored with Sanhe to develop a multipurpose pot for the home market with the identical craftsmanship and high quality as its export fashions, however at a lower cost of 99 yuan ($14) per piece.

Sanhp’s Maifan non-stick stone pot retailing at 99 yuan on PDD (Supply: Pinduoduo APP)

PDD additionally offered market insights into shopper preferences comparable to performance, materials, colour, in addition to evaluation by age, gender and spending energy. These insights helped with analysis and improvement in addition to stock administration, based on Sanhe.

“Foreign trade companies are often faced with supply-side, demand-side, and distribution-side issues when they switch to domestic sales,” mentioned Hu Xiaopeng, a researcher on the Institute of World Economics at Shanghai Academy of Social Sciences.

“They don’t know who, what, and how the products are sold. The positioning of products and brands, and the formulation of differentiation strategies, can effectively give play to the advantages of production and price, and finally form the brand and scale effect.”

The 99-yuan pot was a success and Sanhe’s each day orders surged from about 6,000–7,000, to greater than 100,000 throughout large promotional occasions. Sanhe’s total home gross sales climbed 108% in 2019 with the assistance of e-commerce platforms.

Home gross sales for Sanhe often contributed 30% to whole gross sales earlier than the coronavirus however have doubled because the second half of February, as demand for cookware surged with extra folks consuming at residence.

SEE ALSO: How National Chinese Watch Brand Transforms its Sales Model under New Ecommerce Era

“Thankfully, the growth in domestic sales helped partially compensate for the drop in exports,” a Sanhe gross sales and advertising and marketing govt informed native information outlet Pingwest in an April report. “Domestic e-commerce sales in particular grew quite fast.”

PDD’s consumer-to-manufacturer (C2M) mannequin works by connecting producers with customers. The direct-to-consumer mannequin removes stock, logistics, whole gross sales, distribution and different intermediaries, thus customers should buy high-quality merchandise at ultra-low costs.

“Under the C2M model of Pinduoduo, the factory can develop and produce in a more timely manner according to online demand, and the product development cycle is shortened by 50%,” the Sanhe govt mentioned.

Aside from Sanhe, different manufacturers that take part in PDD’s 2018 initiative embody Songfa ceramics, Chongqing Baiya diapers, Anhui Fuguang thermos cup, and many others.

In response to PDD knowledge, as of the top of 2019, 106 corporations had formally develop into members of the brand new model initiative, greater than 900 corporations participated within the C2M custom-made manufacturing, cumulatively launching greater than 2,200 custom-made merchandise, and greater than 115 million orders.

In Might, PDD launched a marketing campaign to advertise these lesser-known manufacturing unit manufacturers to its greater than 600 million customers. PDD additionally livestreamed excursions of those factories, providing customers a behind-the-scenes peek at how the merchandise being provided have been made.

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