Our cover this week considers Silicon Valley, which has become a victim of its own success
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Pinduoduo: A close look at the fastest growing app in China
Chinese da ma (literally meaning “big mamas”) are budget-savvy shoppers who are eager to snap up a good deal. They do most of the shopping for the family and know just the place to score bargain prices on everyday items.
But these discounts come with one condition: whip up enough friends on WeChat to order the items in bulk, directly from the manufacturer. After all, the deal is so good that it deserves a spot on everyone’s Moments (the equivalent of Facebook’s news feed).
The place to find these kinds of deals is Pinduoduo, a leading Chinese app for social ecommerce and the fastest growing app in the history of Chinese internet.
Let’s take a close look.
How fast is Pinduoduo growing?
Pinduoduo has seen explosive growth since its launch in 2015, becoming one of the largest ecommerce apps in China.
The shop-with-friends app combines a group-buying strategy with cheap products and social media. It is now the fastest growing ecommerce platform with 13.85 percent YoY growth.
The usage rate of the platform among Chinese internet users has grown from under 2 percent to 19.4 percent over the course of 2018 (this leaves it right behind JD at 20.6 percent, but still far behind Taobao with a 53.3 percent usage rate).
Pinduoduo also benefits from the best retention rate (seven days after installation) from all Chinese ecommerce platforms.
Users changing phones are, however, more likely to install Taobao or JD than Pinduoduo.
The company reported having 114 million active users in January 2018 and is behind only Taobao (425 million) and JD (145 million). It boasts a 300 million-strong user base, with 65 percent of its users coming from third-tier cities and beyond.
In fact, a large proportion of their users are female, above 40 years old, and living in smaller Chinese cities.
Pursuing a significant but often overlooked market
The lure of Pinduoduo is not just the incredibly low prices but the satisfaction of getting a good deal and scoring massive discounts. This hit home with the low-income segment in China’s more remote towns and villages.
As ecommerce giants competed for affluent customers in urban areas, Pinduoduo focused on sourcing fresh produce from local growers to build an initial user base.
The platform scaled quickly and has since expanded their product range to include household items like groceries, fashion, beauty, and electronics.
The company claims that over the course of two years, about 1,000 factories have opened to sell on the platform.
Focusing on producing just a few items in colossal quantities, these “pin factories” (拼工厂) are able to achieve and handle order volumes that have grown exponentially.
An example is Chinese tissue manufacturer CoRou and ZhiHu (also known as Botare), whose factories have collectively completed more than 9.3 million Pinduoduo orders.
The sheer volume of each group order leaves sellers more room to cut prices, and the incredibly cheap prices attract even more customers, creating a positive ecommerce cycle.
But as one might accurately assume, Pinduoduo is not known for quality. Last year alone, the platform took down 10 million “problematic listings” and set up a RMB 150 million fund (roughly US$22.4 million) to compensate users for shoddy goods, rotten fruits, and difficulties in getting refunds.
A de facto substitute for Taobao?
A subtle relationship exists between Pinduoduo and Taobao: 50 percent of the users that uninstalled the latter installed the former a month later.
Pinduoduo is by far the most common substitute for Taobao.
On the other hand, 78 percent of the Pinduoduo uninstalls are followed by Taobao app downloads in the following month, according to QuestMobile’s November and December 2017 data. Taobao is still leading the fight.
There are two words that come to mind when thinking of Pinduoduo: addictive and viral. And the app combines a bunch of tactics to achieve these results.
The core function of the app is group buying (each item has an official price and a group-buy discounted price). In order to get the discounted price, people will need to find friends to join the group-buy deal.
The app offers a range of products for free. You just have to get enough new users to follow the Pinduoduo official account, install the app, and sign up via WeChat.
One app install will get you a small box of candy, for example. I wanted to try this, so I went for the promotion that will get me a 1.3kg bag of nuts for nine app installs.
My awesome WeChat friends helped out and installed the app, and on the next day…
This can sound like a crazy strategy, but it’s not. The package sells for RMB 99 full price and RMB 79 in group buying. But Three Squirrels (the brand that makes the nuts) makes a heavy margin on this, and most likely only charges Pinduoduo around RMB 20 to 30 to ship the free product.
That’s RMB 3 per high-quality app install linked with a WeChat social account.
This is exactly the kind of strategy that propelled Pinduoduo onto the top of the app stores.
Pinduoduo offers coupons, which is nothing special in China. However, the company’s coupons have exceptionally short durations: usually only two hours.
The message is clear: don’t linger around or hesitate.
Ask friends to “bargain”
Another way Pinduoduo creates viral incentives is by asking friends to help “bargain” for a cheaper price.
It works like this: You can share a product with friends, and each time a friend volunteers to help you bargain, the price decreases a bit. Eventually, you can get the product for free.
This trick may seem costly, but it can be worthwhile for brands.
For example, to get a cooking pot worth RMB 150 (which may only be worth RMB 50), you’ll need 25 friends to log in to the WeChat shop. In doing so, you’ve told your friends that you really care about this product, giving the brand strong “social proof.”
Red envelopes + leaderboard
Using cash/red envelopes to reward users for inviting friends is another old trick of viral marketing. Pinduoduo rewards users a cash red envelope between RMB 5 to RMB 20 (US$0.75 to US$3).
But Pinduoduo takes it a step further. Not only do they reward users but also display a leaderboard of the users who made the most money from inviting friends.
The top user made RMB 2,940 (~US$430) from sharing with 290 friends. Many of us have thousands of WeChat friends, and it’s easy to imagine earning similar amounts from sharing on our Moments.
One more viral mechanism from Pinduoduo is the use of lotteries. Typically, users have to pay a small entry fee (RMB 0.01) to get into a lottery. For the lottery to be active, they must also invite enough friends to join it within a specific period of time.
If they get enough friends to join, users can then get a chance to win the product for only the entry fee.
It’s also not clear how many users in total will join the lottery and what the chances of winning are. The interface is also tricky, as it looks like any other group-buy. And, if you don’t win the lottery, the app offers you a refund with a coupon to buy more stuff on the app.
Customer service messages
These are customizable messages that can be sent 48 hours after the user followed the account or interacted with it.
Most of the accounts only use these messages to welcome users or for customer service requests. But Pinduoduo does more: they use these messages to continually recommend new products to the user.
Unlike the “broadcast” messages that are limited (four per month for service accounts), these messages are unlimited, can be customized for each user, and are the perfect way to make recommendations based on order history.
We received an average of five messages every 24 hours after subscribing, and these are very visible messages sent from a WeChat service account!
Moreover, if users click a menu item on the WeChat official account (for instance to check their order status), the 48-hour window is reopened and Pinduoduo can keep messaging them.
The first time you pay, the app enables “password-less payments” by default. After this first purchase, you won’t have to enter your password anymore and will be able to do one-click payments.
This is an amazing way to increase impulse purchases, which are the bread and butter of Pinduoduo.
Ecommerce is hyper-competitive, especially in China. It is important for new players to stand out with unique offerings that attract customers, and Pinduoduo is one such case, crafting a convergence between social and commerce that discovers and capitalizes on a new source of user in lower-tiered cities.
As internet access in China’s rural areas continues to improve, it is likely that the bargain hunting app will sustain growth as its service reaches remote areas.
Although this trajectory is unique, a lot of brands and platforms can take cues from Pinduoduo’s success. By applying some of these tactics to your own business, you too can have more users with stronger levels of engagement.
Converted from Chinese Yuan. Rate: US$1 = RMB 6.69.
This article was first published on WalktheChat.
Augmented Reality in an Ionic/Angular PWA
Recently, I published a tutorial on using ThreeJS with Ionic to embed virtual reality content into a mobile application using WebVR. This tutorial is going to be somewhat similar, we will still be making use of ThreeJS and WebGL, but we will be creating an augmented reality experience in an Ionic/Angular application.
If you are unfamiliar with technologies like WebGL (which uses the GPU of a device to render 3D graphics on the web) and ThreeJS (a framework that makes using WebGL easier) it might be beneficial to read the previous article about WebVR first.
Introduction to Augmented Reality
Put simply, augmented reality uses technology to “virtually” change a real physical space. Unlike virtual reality which throws you into a fully artificial/simulated world, augmented reality adds to an existing space. Although an augmented reality experience isn’t limited to just the use of a camera, most AR projects available today involve using your device’s camera to view a physical space, and additional objects will be added to that space on the screen – your device acts as a “window” into the augmented space.
This technology is still in its infancy, and I don’t think this is something people are really using in their day-to-day lives, but there are a few interesting examples out there already. Many people would have seen the use of augmented reality to add Pokémon to a real physical space in Pokémon GO which is a bit of fun, but then there are also projects like Google Lens which allows you find out more information about particular objects by using your device’s camera.
Web vs Native Augmented Reality
Apple are working on developing ARKit for native iOS applications, and Google are working on ARCore for native Android applications which will allow developers to provide augmented reality experiences in iOS and Android applications.
If you are building your Ionic applications with Cordova or Capacitor, then you can still access these Native APIs. Although comparisons are often framed as “native or hybrid”, it is important to note that when you build an Ionic application for iOS or Android it is a native application like any other – the difference is that “hybrid” applications use an embedded browser to display the web-powered user interface for the application. An application built with Ionic still has all the native tools that any other application has access to available to it, and that includes the ability to launch native views that use ARKit or ARCore.
A downside of using Native APIs to provide an augmented reality experience is that it is platform specific. One of the big draws of Ionic and the web is that you can code an application once that will work everywhere. When you deviate away from the web and into platform-specific native integrations, you lose some of that portability.
Whilst you’re probably not going to be building something like this using Web AR:
(although to be fair, this could be possible with WebAR for all I know)
There are still uses cases for a fully web-based AR experience, and since this tech is still in its infancy this is sure to grow in the future.
Building an Augmented Reality Experience in Ionic
In this tutorial, we are going to walk through an example of projecting a 3D ThreeJS scene built with A-Frame right into real life through your device’s camera. This will run completely through the web. We will be able to deploy this application as a PWA (Progressive Web Application) and access it directly through a devices web browser to activate the augmented reality functionality (assuming the device has a camera, of course).
We will be using a package called AR.js which was created by Jerome Etienne, which makes it absurdly easy to get an augmented reality experience up and running. You can literally just dump this 10 line example from the documentation into a web page:
and you have a working demo. This demo (and the example we will be building) relies on using a marker image like this. You simply point your camera at the marker image and the 3D object or objects will be projected there. You can just display the image on your computer, phone, or you could print it out on paper if you like.
What we will be focusing on in this tutorial is how to get a similar example working well in an Ionic/Angular environment. When we are done, we will have something that looks like this:
www.joshmorony.com/wp-content/uploads/2018/06/arcat-166×300.png 166w” sizes=”(max-width: 499px) 100vw, 499px” class=”clear” style=”max-width: 100%; margin: 0.5em auto; display: block; height: auto; clear: both;”>
You can view this demo directly yourself by clicking here. You don’t even need to be on your phone, if your computer has a webcam then it should run through that as well.
Create the 3D Scene
We can create the 3D scene that we want to display in augmented reality using A-Frame – which is basically a framework that makes using ThreeJS easier (which is a framework that makes using WebGL easier). A-Frame allows us to use simple HTML syntax to embed 3D objects into a scene. I will likely post a more in-depth tutorial about A-Frame in the future, but for now, we are just going to use it for a simple example.
We can trigger the behaviour of AR.js by adding the
arjs attribute to the A-Frame scene, but it is important to note that it will attach its functionality to the
<body> tag of the page. This makes it a little difficult to just add an A-Frame scene to one of the page’s templates in our Ionic/Angular application because it isn’t going to play nicely with the rest of the application.
This makes using an
<iframe> an attractive option because we can just load our scene directly into the
<iframe> and we can embed the frame wherever we need it in the application. We can just create a standard HTML file and save it as a local asset for the application, then we can just load that directly into the IFrame. We are going to create an example that is almost identical to the demo code – we are just going to tweak a couple of things so we have some more interesting objects.
Save the following file as aframe-ar.html in your assets folder
This will create a simple 3D scene with a
plane positioned at the bottom, and a
box that is sitting on top of it. The AR functionality is completely self-contained in this frame, so there is no need to install or make any modifications to the Ionic/Angular application. All we will need to do is embed the IFrame somewhere.
Add the IFrame
You can embed the IFrame anywhere you like in your Ionic/Angular application (just make sure that you supply your static
.html file from the assets folder as the
src for the IFrame), but you will probably want to add a few styles to make it display more nicely (just add this to whatever component you are displaying the frame in):
For the example application, I created an ARLauncherPage that I launched as a modal to trigger the AR functionality:
Deploy to the Web
The cool thing about AR.js is that it runs entirely with web tech, there is absolutely no native integration required which means we can just run it directly on the web (you could also deploy it as a native application if you wanted to).
If you would like to set the application up as a PWA (you don’t have to) you can follow the steps in this tutorial. Once you are ready to host it on the web, you can follow this tutorial to get it set up with Firebase Hosting (or you could host it wherever you prefer).
With your application hosted, all you need to do is go to the URL, launch the page that contains the AR functionality, and point your camera at the marker image.
www.joshmorony.com/wp-content/uploads/2018/06/arcat-166×300.png 166w” sizes=”(max-width: 499px) 100vw, 499px” class=”clear” style=”max-width: 100%; margin: 0.5em auto; display: block; height: auto; clear: both;”>
Whilst AR.js – and augmented reality on the web in general – is still under development, it is exciting to see the kinds of things we are already able to do with the web today.
What to watch next…
This is a really good email. It took a long time to write but it’s a short read. That’s what makes it so good. View this email in your browser. June 26, 2018.
Briefed while companies spend ~$4b running legitimate sweepstakes in the US
THOUGHT OF THE DAY
“CYA is an insurance contortionist. With removable limbs. Or maybe we are more like Mr. Potato Head? You can add or remove or swap the assets you want us to cover – at any time! Simply log in to your CYA account to make the change.” That’s CYA, as in Cover Your Assets. A new brand in the warranty space.
We Need to Talk About Kevin
Kevin is a virtual roommate that gives the impression that someone is home with the aim of preventing burglaries. It was co-developed by Mitipi and the Helvetia Corporate Incubator. Functionalities include simulating presence with lights, shadows and acoustics (TV, music, cooking, shower and more). Established in 2016, the Zurich-based startup is led by Julian Stylianou (CEO), Laura Schilliger (CMO), Khanh Ngyuen (CTO), and Jakob Cevc (Head of Product). At some point later this year, the product will retail for ~$280. Bottom Line: raised more than CHF 50K above its Kickstarter goal.
You’ll Always Be CSA For Me
Last month Generali Global Assistance announced the launch of a new online claims portal for its US-based travel insurance partner Justfly (think: an online travel agent).
The portal allows customers to download their description of coverage or policy, start a new claim, add information to an existing claim, and track the status of their claim online. Generali Global Assistance was recently named a top travel insurance company for 2018 by The Elliot Readers’ Choice Awards. However, on Yelp it isn’t doing so well – 1.5 stars from 89 reviews for CSA Travel Protection, which rebranded to Generali Global Assistance in 2017. Speaking of reviews, Justfly made a general manager at Square very upset and the BBB has in the past issued a warning concerning the company.
Born in collaboration with AMEX and AXA Partners, Blue Protection is an insurance package that includes five policies in the areas of home, health, mobility, cyber and tech. The offers are geared toward Italy-based AMEX clients who can configure the protection based on their needs – from choosing one policy to the full package.
Coverage highlights: Blue Protection Mobility – roadside assistance that isn’t limited to vehicles owned by the insured – it also covers other vehicles of which the insured is an authorized driver. Blue Protection Home – coverage in case of emergency situations. The policy also offers warranty extension on a wide range of equipment and appliances. Blue Protection Tech – coverage for electronic devices in case of theft or accidental damage, along with personal items, such as bags and wallets. Blue Protection Cyber – reimbursement of expenses incurred for judicial proceedings relating to events suffered by the insured or by a member of the family due to matters relating to private life. Blue Protection Health – a medical call center available 24 hours, and the ability to request a doctor or ambulance if necessary. To purchase coverage, AMEX clients are redirected to AXA’s Inter Partners Assistance Blue Protection branded website.
Everything is Blue.
Blue Owl has a new look. Before:
When You Just Wanted To Get Shoes
Sun Life Financial announced its partnership with E-Commerce platform Lazada to make it easier for Filipinos to purchase insurance online. Recall: founded in 2012, Lazada is Southeast Asia’s leading online shopping and selling platform with $4.7b in funding from investors that include Alibaba and Tesco. The company enjoys over 32m monthly visitors to its website.
In what’s considered “a first of its kind” partnership (but really isn’t), Sun Life’s personal accident insurance product will be available to Lazada members through its website by July 2018. The insurance can be purchased and activated completely online.
Carro, the Singapore-based online marketplace for buying and selling cars with $78m in funding, is now offering Carro Care, Singapore’s first insurer backed warranty that covers direct owner purchases.
Underwritten by Tokio Marine Insurance Singapore and administered by The Warranty Group, Carro Care offers car owners protection from unexpected repair costs even if they haven’t bought their car on Carro. In the event of a claim, car owners take their cars to one of several authorized repair shops. The shop then provides a diagnosis of the problem, its cause, and estimated costs of parts and labor to The Warranty Group to get the claim approved. Founded in 2015, Carro also has presence in Indonesia and Thailand.
VIA COVERAGER POST
American Capital Assurance Corporation Live in 8 Months on Majesco P&C Suite
Majesco, a global provider of core insurance software and consulting services for insurance business transformation, today announced that American Capital Assurance Corporation went live with the Majesco P&C Core Suite, inclusive of policy, billing, and claims. Read the full Post here.
DroneDeply – the California-based drone data software platform announced it has raised $25m Series C, bringing its total funding to date to $56m.
AIG Malaysia. AMEX. Blue Owl. Carro. Consumer Priority Service. CYA. DroneDeploy. Generali Global Assistance. Helvetia. Majesco. Mitipi. State Farm. Sun Life Financial. The Warranty Group. Tokio Marine.
* WELCOME *American Family. Genworth Financial. Globant. Liberty Mutual. Metromile. National Partners. Primerica. Verisk.
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George Kesselman | 19 Jun 2018
Chatbot enabled quotation and application www.cigna.com.hk/zh-hant/our-insurance-solutions/medical-health/cigna-smart-entrepreneur-group-medical-plan
Allstate Elevates Customer Service Through AI
Amelia, an AI platform created by New York-based technology company IPsoft, is now assisting Allstate’s call center staff to improve the overall customer experience.
Allstate deployed Amelia as a test in September and, to date, has used the platform in more than 3 million customer conversations. With an instant message interface, Amelia leads call center employees through step-by-step procedures to help answer a variety of customer questions, including policy and policyholder information.
“Amelia is quickly becoming an important component of our customer service strategy . She provides our call center personnel with the information and procedures they need to address our customers’ questions and concerns” – Allstate Senior Vice President Carla Zuniga.
Amelia’s machine learning capability allows her to improve her ability to answer customer questions by “listening” to interactions she doesn’t understand and with Allstate experts’ help quickly expanding her knowledge.
This AI colleague knows more than 40 industry-specific topics and, because of access to Amelia, newer representatives need less time for training. Amelia can also help keep all employees in compliance with industry regulations. For instance, call center reps are not allowed to process address changes for policyholders in certain states. In this situation, Amelia can provide the information on the proper procedure, and the employee can quickly hand off the session to a licensed colleague.
Bottom Line: Flamingo AI comes to mind.