Sisyphus, a king In Greek mythology, was punished for cheating death. In the underworld he had to roll a large boulder up a hill. Every time he almost reached the top the boulder would roll down the hill. Sisyphus was cursed to repeat the same task every day. That’s what it felt like when I spent a few days trying out the gamifications inside the popular Chinese e-commerce app Pinduoduo…
Pinduoduo, an e-commerce marketplace with dirt-cheap deals, took the Chinese internet by storm in the second half of the last decennium. In 2020 is surpassed Alibaba in annual active buyers, although the average customer’s purchases are just a fraction of what people spend on Alibaba platforms like Taobao and Tmall. The business model behind Pinduoduo’s success has been cheap products through the C2M and demand aggregation model (link in Dutch).
Pinduoduo has also been known to have incredibly low customer acquisition costs. This has often been explained by the group-buying mechanic of Pinduoduo. Users are encouraged to team up with their contacts to buy products together, thereby pulling new users into the app. However, teaming up with your contacts to group-buy is not an absolute requirement; users can also team up with other unknown users in the app. As we will see the gamification of Pinduoduo’s app is another factor that makes existing users pull in new ones and thereby keep Pinduoduo’s acquisition costs low since the costs of rewarding those ambassadors is almost negligible.
Besides low acquisition costs Pinduoduo has also seen high levels of user retention. Apps are often evaluated by their monthly active users (MAU). Popularity of high frequency apps like social media, short-video apps and chat apps are also often judged by their daily active users (DAU). Dividing the daily active users by the monthly active users shows the ‘stickiness’ of an app. The closer the two numbers are the stickier the app; users will log-in multiple times a month.
Chat apps and super apps with lots of functionality like WeChat have a high ratio because most people use them daily. Content apps like short-video platforms Douyin and Kuaishou and social media like microblog platform Sina Weibo will also have relatively high ratios. e-Commerce platforms tend to not have very high DAU/MAU ratios since people only use them when they want to buy something. Before the arrival of live commerce consumers didn’t really look for entertainment to kill time on e-commerce platforms.
As the figures above show, Pinduoduo had the highest DAU/MAU ratio of all major e-commerce platforms. In the first half of 2020 almost half of the monthly active users used the app every day. What created this high ratio and the high retention scores of Pinduoduo compared to its peers? How is Pinduoduo different from other e-commerce platforms? Turns out it’s not just the cheap products. In a series of articles, I will explore the various forms in which Pinduoduo has ‘gamified’ the app, giving us the true explanation of its high stickiness. And beware, there will be stress and suffering…
In this first part of the series, I will look at the shake money gamification.
Shake Money
When opening the app, the bottom of Pinduoduo’s home screen shows an icon that invites me to ‘shake money’ (遥现金, yáo xiàn jīn). Clicking on the icon brings up a so-called ‘hong bao’; a red envelope (link in Dutch). Traditionally hong bao are used when handing people money as a gift. Wrapping the money in a red envelope makes it so-called ‘lucky money’; it is supposed to bring luck to the receiver. In China hong bao are handed out to children during Chinese New Year, wedding couples and sometimes to employees when they receive annual bonuses.
In the last decade virtual hong bao have become very popular. People use them to send each other money in chat apps like WeChat and internet companies use them in their marketing campaigns to hand out discounts or even small amounts of money that can be used inside their apps.
The hong bao that appears in Pinduoduo wishes me good luck and tells me that I can come to this section every day to get a new hong bao (每日打卡红包, měi rì dǎ kǎ hóng bāo). A flashing button invites me to open the current hong bao. Opening the hong bao tells me that my daily attempt was successful. Yes! I got 400.000 coins and 99.23 RMB (approximately €13-€14), the latter of which is transferable to WeChat Pay.
Although I’m delighted by this catch, I’m clearly not one of the lucky users that get a hong bao with the maximum value of 9.999 RMB that the game’s rules claim to hand out. Still, I’m lucky enough because I’m being told that today I’m one of the luckiest users since I got a higher amount than 97% of the other users. I am however warned that my hong bao will expire in one hour. A timer is counting down. A button says ‘okay, I want to receive it’. Clicking on the button results in a message saying I can get ‘coins’ and hong bao when I return here tomorrow. I’ll get back to those ‘coins’ later.
After dismissing the message, a new screen appears and see the coins and money I earned with my first hong bao at the top of the screen. I’m invited to shake my phone with my friends and earn more hong bao. I need to turn my location sharing on so the app can match me with another person shaking his or her phone ‘nearby’. When matched we will both receive an extra hong bao.
This shaking function in apps is something Chinese people have been used to for almost 10 years. It was used by WeChat to, among other things, easily add friends. It is also used during the annual Chinese New Year’s TV gala when, at specific moments during the broadcast, viewers at home can shake their phones to receive hong bao from internet companies.
I shake it like a polaroid picture but since there isn’t somebody near me shaking their phone the app matches me with a random user in China shaking his or her phone at the same time. Opening the new hong bao that appears shows I have earned another 0.18 RMB (€0,02). This amount is added to my total at the top of the screen. This new amount is not as exciting as the first one I’m afraid. The message below the amount tells me that if I do this with a friend that hasn’t done this before I will get more money! In other words, Pinduoduo wants me to recruit a fellow player for this game; a member-get-member scheme that helps them acquire more new users at little cost.
The next time I shake I get an ‘acceleration card’ and I’m told that the speed for getting hong bao has doubled for the next 5 minutes.
There’s a button on the screen that says, ‘get cash now’. When clicking on it I get to see the total coins and money I have collected so far. When clicking on the button next to the 99,53 RMB I have earned, I arrive at a screen where I can transfer 100, 200, 300 or 400 RMB to WeChat Pay or the Pinduoduo Wallet (the internal mobile payment option in the app). Unfortunately, I only have 99.53 RMB and won’t be able to transfer this, as a pop-up message tells me. I should try to get some more hong bao and get the money up to 100 RMB! Being this close that shouldn’t be too difficult, right? But I need to do so before my money expires within an hour! My heartbeat quickens…
Coins and direct cash
But what about those ‘coins’? Back in the previous screen I click on the button next to my 400.000 coins. Next, I see that I can earn more coins if I sign in 7 days in a row. If I do so for 7 days, I can seemingly earn up to 1 million coins! I sign-in by clicking on the red button and the app tells me I can return 6 more days. I can even have the app remind me through a push notification. Today’s 1.000 coins are added to my total on top of the screen.
Coins can be spent on free products shown on this page. For instance, I can get an iPhone 12 in exchange for 1,5 million coins. Unfortunately, the free cherries and strawberries I can get here already seem to be ‘sold out’. I ‘only’ have 401.000 coins and the cheapest freebee requires 950.000. If I can gather that number, I can get 5-10 RMB cash in my WeChat Pay account. When I don’t have enough coins to exchange for a free product, I have the option to buy extra coins, not unlike frequent flyer points of airline companies.
So now I’m not just trying to get my hong bao money to 100 RMB, I’m also chasing coins! As with the 99.23 RMB hong bao, starting with 400.000 coins feels like I’m quite far ahead in getting my hands on a free iPhone. But alas, as we’ll see getting to any target gets progressively harder in Pinduoduo.
Besides chasing the 100 RMB prize and free iPhones, I notice I can also get smaller cash prizes by clicking on the small hong bao next to a slider. I get a hong bao with 0.02 RMB (a quarter of a euro cent!) cash and immediately receive a payment in WeChat Pay.
I can get another micropayment, but I will first need to collect a total of 8 hong bao more before it will be transferred to my WeChat wallet. I spend the next few minutes shaking my phone repeatedly. Maybe it is the time of day in China, but it seems to be harder now to get matched with another shaker. During my attempts I am once again reminded that it’s much easier if I just find 2 people who haven’t played this before…
Maybe I should try something else. There are three buttons lower on the screen. The first one, ‘Open WeChat hong bao’, shows my progress towards the 100 RMB (currently 99.65 RMB). Again, the app suggest I ask my friends for help. I can copy and paste a code in a chat in WeChat and ask him or her to help me.
When this person copies the code and opens Pinduoduo we can match up for a hong bao. I receive 0.10 RMB. Not bad, better than the 0.02 RMB I got for being a solitary shaker. Unfortunately, I can only do this one time per day with one specific friend, so it won’t help me to get to the 100 RMB. Trying again with the same person results in the app telling you that you need to find someone else since you have reached your limit. Cheating Pinduoduo is not that easy…
Then the app tells me that if I send the code to a WeChat chat group of at least 50 people I can get more cash! Pinduoduo clearly wants to incentivize me for getting more users to join the game and doesn’t really care about my personal reputation. I decide it’s not yet time to risk getting kicked out of a chat group…
The middle button on the hong bao screen, ‘Open timed hong bao’ (定时开红包, ding shí kāi hóng bāo), gives me another hong bao after a certain length of time has passed. I try and get another 0.04 RMB. If I return later the app shows me how much longer I must wait for the next timed hong bao. It’s clearly a way to make me return to the app frequently within one day.
I’m at 99.75 RMB now, slowly getting closer to that prize of 100 RMB! Every time I get a hong bao the app shouts out that Pinduoduo has added money to my account.
The third button ‘Hong bao Friends’ (好友开红包, hǎo yǒu kāi hóng bāo) shows me a list of all friends I am ‘fighting for hong bao’ with.
A green WeChat icon in the upper left corner offers to exchange my WeChat cash into coins. I decide against trying that option for now. I’m too close to the 100 RMB prize. I need to focus!
While I try to reach the goal by continuously shaking my phone for more hong bao, rewards get progressively smaller until they are just 1 cent per hong bao. I’m about to give up when the game tells me that ‘recently’ 2.444 people have earned 100 RMB on the app. It clearly doesn’t want me to give up just yet. A mere 14 cents away from my goal it suddenly stopped giving me money altogether and the hong bao are now filled with coins only.
When I gave up, I had spent over 15 minutes in this part of the app alone, desperately trying to get to my goal and being stuck with 99.90 RMB and 401.649 coins. Looking at the list of people I had been matched with while shaking for hong bao I clearly wasn’t the only desperate Pinduoduo user spending his precious free time trying to win 100 RMB.
If first you don’t succeed…
The next few days, every time I open Shake Money the hong bao money I so painstakingly gathered the previous day is gone and I get a new hong bao with an amount between 99 and 100 RMB. Every day I have the chance to raise the amount to at least 100 RMB so I can transfer it to WeChat Pay, but this clearly is (nearly?) impossible without getting lots of friends involved that haven’t played this game before. Somehow this reminds me of a certain pandemic…
The good news? The coins I gathered in the previous day are still there! After all, I have a total of 7 days to try and gather enough for that free iPhone! But by now I would gladly settle for the free strawberries.
The new hong bao and cumulating coins are two of the ways Pinduoduo keeps me opening the app every day. The direct cash micropayments to WeChat are another incentive and easier to obtain but will only give me a few cents every day. I have tried several days but always got 0.02 RMB or 0.01 RMB. Again, that’s only a fraction of a eurocent. Not a bad investment for a platform to have me open their app again.
The shake money games clearly serve as both a retention strategy (getting persistent players back into the app every day) and an acquisition strategy (stimulating users to get more friends involved, especially the ones that haven’t played the game before). A thought crosses my mind. How many people in China are doing this? How many are mindlessly chasing unattainable goals and rolling that ball back up the hill every day?
As I would find out, the hong bao and coins were only the start. Stay tuned for more Pinduoduo ‘fun’ and find out how I get addicted to beans in the next part of this series.
Read the other articles in this series on PDD.
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