In Tanzania, East Africa, the scorching sun of the dry season beats down on the land, causing the soil to crack and crops to struggle in the barren earth. In 2021, Tanzania faced severe drought, which significantly impacted the stability of agricultural supply and left farmers in dire straits. Traditional diesel-powered irrigation systems are not only costly but also generate large amounts of carbon emissions.
In recent years, a new "climate-smart irrigator" has quietly been changing the situation. This irrigation system uses sensors to monitor soil moisture and water quality in real-time, combined with AI and big data technologies to control irrigation levels, thus preventing water wastage. Powered by solar energy, it significantly reduces carbon emissions and costs compared to traditional diesel pumps. This solution offers a more environmentally friendly and sustainable option for local agriculture, helping farmers improve productivity in harsh natural conditions.
Figure 1: Tanzania Team Presenting Digital Agriculture Solutions at the 2024 Global Agri-Tech Startup Competition Finals.
Photo by: Fu Fan
Thanks to this technological innovation, the research and development team won the Silver Award at the 2024 Global Agri-Tech Startup Competition. Notably, behind this competition is the involvement of the Chinese e-commerce platform Pinduoduo. Since 2020, Pinduoduo has supported the event for four consecutive years. Organized by the Food and Agriculture Organization of the United Nations (FAO) and Zhejiang University, the competition recognizes AI+ agriculture projects globally, with a special focus on Latin America, Africa, and Asia.
Figure 2: Finals of the 2024 Global Agri-Tech Startup Competition
However, it is not common for e-commerce platforms to support agricultural technology projects. Why has Pinduoduo chosen to continue investing in the agricultural sector?
Pinduoduo’s "Helping Farmers" Strategy: Balancing Two Goals
By pioneering the innovative "group buying" model, Pinduoduo has not only established a new way to sell agricultural products but also risen to become one of the leading e-commerce platforms in China. At the same time, Pinduoduo has been laying the groundwork for its long-term development into an agricultural and food platform. Analyzing Pinduoduo's actions in the agricultural sector, its strategy can be summed up as "balancing two goals": On one hand, it innovates along the distribution chain to reduce intermediaries and increase farmers' income; on the other hand, it promotes the application of agricultural technology to improve production efficiency, reduce costs, and drive the modernization of Chinese agriculture.
Innovating the Supply Chain: Reducing Intermediaries to Boost Farmers' Income
Pinduoduo leverages its platform’s technological capabilities to optimize the sales chain for agricultural products, enhancing their market performance. Its unique “group purchase” model has distinguished itself in the competitive e-commerce landscape, rapidly propelling the platform to become one of China’s e-commerce giants. Pinduoduo’s success lies in its innovative approach to efficiently matching dispersed market demand with high-quality agricultural supply. Coupled with initiatives like the “Billion-Dollar Subsidy” program to support merchants and aid farmers, the platform has attracted small- and medium-sized businesses as well as farmers in remote areas. These businesses, which previously struggled to compete with large brands, now have access to an effective sales channel through Pinduoduo.
Pinduoduo has also developed the "Central Agricultural Product Information Processing System" (Figure 3), which monitors the supply and sales of agricultural products nationwide. This system provides precise insights into what agricultural products are available in different regions and how best to distribute them across the country. By shifting from the traditional e-commerce model of “consumers searching for products” to “products finding consumers,” the system significantly enhances sales efficiency. For instance, when consumers purchase fresh produce such as apples or oranges on Pinduoduo, they often enjoy fresh products at affordable prices. This efficiency is underpinned by Pinduoduo’s streamlined supply chain and large-scale group-buying mechanisms.
Moreover, the platform has developed a “Cloud Farming Group Purchase” system. By integrating nationwide demand for agricultural products via the cloud, the system aligns consumer needs with the characteristics of various agricultural products, such as their types, harvest times, and logistics conditions. This ensures a precise match between products and consumers, maximizing sales efficiency and benefits for farmers.
Pinduoduo not only supports agricultural development through technological advancements but also enhances the visibility of agricultural products through marketing innovation. The platform’s "Free Fruit Giveaway" game, which uses an entertaining approach to engage users, stimulates consumer interest in fresh produce (Figure 3). This user interaction has not only increased sales of agricultural products but also opened up larger markets for farmers.
Figure 3: "Free Fruit Giveaway" Game Interface. Consumers can earn a set amount of fruit as a reward by completing tasks.
From the supply side, Pinduoduo has brought together a large number of farmers from remote areas, enabling agricultural products that were previously difficult to access large-scale markets to reach consumers nationwide. Pinduoduo also offers a "zero entry fee" and "zero commission" policy for merchants, particularly for fresh agricultural product sellers. The platform waives both service fees and annual fees for these vendors. According to data released by Pinduoduo, since the implementation of this policy in 2020, the platform has helped merchants save a total of 80 billion yuan in operational costs. Pinduoduo has also launched initiatives like the "New Farmer Training Program" and "Duoduo Classroom" in rural areas, providing e-commerce training to returning youth and teaching them how to sell their local agricultural products online. During the recent "2024 China Farmers' Harvest Festival Golden Autumn Consumption Season," Pinduoduo partnered with 300,000 agricultural product vendors to launch the "Duoduo Harvest Pavilion," showcasing more than 500,000 types of agricultural products from across the country, especially seasonal fruits and vegetables.
The "Agricultural Cloud Initiative" is another key strategy for Pinduoduo to strengthen its agricultural foundation. In 2023, Pinduoduo launched the "Agricultural Cloud Initiative," aiming to support 100 agricultural industry clusters by providing centralized resources and promoting their digital transformation. Pinduoduo has also made significant strides in logistics and supply chain management, further reducing the distance between farm and table and minimizing product loss during transport. For example, for strawberries from Dandong, Pinduoduo introduced a standardized process for picking, packaging, and shipping. By partnering with courier companies such as SF Express, the platform ensures cold-chain transport throughout, greatly extending the shelf life of the products. As a result, consumers can receive the fresh produce within as little as 48 hours.
Improving Production Efficiency: Promoting Agricultural Technology to Reduce Costs and Increase Efficiency
From the production side, Pinduoduo has been advancing agricultural technology to help farmers improve production efficiency and reduce costs.
Pinduoduo has established a number of funds and projects to support agricultural research, investing significant capital to facilitate collaboration between universities, research institutes, and international organizations in the field of agriculture. The company has also introduced Ivonne Rietjens, an agricultural expert from Wageningen University in the Netherlands, as an independent director. Furthermore, Pinduoduo actively supports agricultural research by partnering with China Agricultural University to establish a 100 million yuan research fund to support agricultural studies.Pinduoduo has also launched initiatives such as the "Duoduo Agricultural Research and Technology Competition," which supports interdisciplinary talent in exploring more efficient and digitalized farming methods. In addition, Pinduoduo has collaborated with CCTV to produce the agricultural reality show "Debut! Tech Farm," encouraging more young people to participate in the modern agricultural movement, also known as the "Agri-Trend."
Why Pinduoduo is Heavily Investing in Agriculture
According to Wang Haiwei, Vice President of Pinduoduo, "Agriculture is Pinduoduo's long-term core strategy." Pinduoduo is currently the largest platform for agricultural product sales in China.
So, why is Pinduoduo heavily investing in agriculture? The answer lies in the unique characteristics of Chinese agriculture. One of the main features of Chinese agriculture is the "small-scale farming economy," where over 98% of agricultural operators in China are smallholder farmers. These farmers generally have limited capacity for modernization, facing challenges not only in mechanization in the fields but also in distribution, sales, and market access. Pinduoduo, which started as a platform for agricultural products, has, over time, gained deep insight into the pain points of this vast market, making it a key player in solving the challenges facing China's rural areas.
From the sales perspective, a major issue for smallholder farmers is their inability to predict market demand. They often have to "depend on the weather"—worrying about both the uncertainties of the natural environment and sales difficulties. Many farmers are unsure whether they can sell the products they grow or face issues like price declines due to oversupply in the market or losses during transportation. This uncertainty often results in incomes falling short of expectations. Through its "Agricultural Cloud Group Buying" model, Pinduoduo bridges the gap between consumer demand and farmer supply, connecting scattered demand across the country with rural production. This allows farmers to access market demand more easily.
On a deeper level, there is a more profound business logic behind this. In the fiercely competitive e-commerce industry, Pinduoduo has made agriculture its core strategy to achieve differentiated competition. While other platforms focus primarily on categories such as electronics, clothing, and consumer goods, Pinduoduo has focused on agriculture, accelerating the upward movement of agricultural products. This not only helps increase farmers' income but also strengthens Pinduoduo's brand image as a platform that offers high value for money. Agriculture has become Pinduoduo's foundation, and through initiatives like the "Billion Yuan Subsidy," "Agricultural Cloud Actions," and "Agricultural Research Competitions," it has enhanced its core competitiveness, allowing Pinduoduo to stand out in the competitive e-commerce market.
Agriculture remains closely tied to Pinduoduo's financial performance. According to its Q1 2024 earnings report, the company spent 2.9 billion RMB on R&D, a 16% increase year-on-year, with a major focus on agriculture. Driven by a significant increase in agricultural product orders, Pinduoduo's revenue for the second quarter reached 97.06 billion RMB.
Additionally, on Pinduoduo’s platform, over 49% of merchants are from the post-90s, post-95s, and post-00s generations, with post-95 "New Farmers" accounting for more than 13%—over 126,000 individuals. The majority of these are young people returning to their hometowns to start businesses. At the 2024 China Farmers' Harvest Festival, Pinduoduo announced that it would provide 2 billion RMB worth of platform traffic for agricultural products and offer a 1 billion RMB special consumption subsidy for agricultural products.
The Road Ahead for Agriculture is Rocky, Pinduoduo Needs to Keep Striving
Although Pinduoduo has achieved significant success in the e-commerce sector, its journey into agriculture remains challenging and long.
On one hand, agriculture is an industry that requires heavy investment, long cycles, and slow returns, demanding substantial financial and technological support. This long-term investment can test Pinduoduo's cash flow, especially amidst fierce market competition.Furthermore, the agricultural supply chain is complex, with numerous stages including production, processing, and sales, many of which face issues of fragmentation and inefficiency. While Pinduoduo has made progress in agricultural product sales through its "group-buying" model, transforming the entire agricultural industry chain requires addressing deep-rooted issues such as improving farmers' production techniques and building brands for agricultural products. These challenges cannot be solved overnight and will require sustained investment and commitment from Pinduoduo.
On the other hand, true agricultural intelligence and digitalization are not merely about applying "AI+Agriculture." There are still numerous complex problems to overcome.Cost is the most direct pain point for farmers. Although AI technologies can significantly improve agricultural efficiency—such as increasing fertilizer utilization by over 50%, saving approximately 350 RMB in water costs and 400 RMB in labor costs per acre— the high upfront costs of the equipment deter many farmers. For example, installing basic equipment like fans and skylights in a greenhouse can cost anywhere between 50,000 to 100,000 RMB, and more advanced equipment could cost as much as 200,000 RMB. For many small-scale farmers, these investments are far beyond their financial capabilities. While the returns from AI in agriculture are substantial, the high initial costs make it difficult for many farmers to take the leap.
Scale production is another major hurdle. Smart agricultural technologies often require large areas of land to fully realize their potential, but China's agricultural landscape is characterized by fragmented, small plots of land. Smallholder farmers are unable to support the widespread use of intelligent equipment on such small-scale plots.
A lack of data is also a significant challenge for smart agriculture. AI technologies rely heavily on large amounts of historical data to train and optimize algorithms, but data acquisition in agriculture is limited. The planting cycle in most of China is typically once a year, with a few areas able to grow 2-3 crops annually. Each cycle provides only limited data, and this data must be accumulated over years to meet the requirements of algorithm training. Moreover, with recent global climate change, the relevance of past data is decreasing. Currently, sensors in smart greenhouses primarily capture environmental conditions like temperature and humidity, but more specific information, such as the absorption status of plant roots or overall plant health, still requires manual sampling. Furthermore, AI agriculture lacks feedback records for decision-making data, making it difficult to track how plants respond to changes in environment or agricultural practices. This slows down the advancement of agricultural digitalization.
Therefore, investing in agriculture will be a long-term battle, and Pinduoduo will need to continue its efforts in the future.