Social Commerce: How Pinduoduo and Instagram Challenge Alibaba and Amazon in E-Commerce

Social commerce is a new trend in e-commerce that leverages individual relationships and affiliations to drive growth in online sales. The case compares two companies, Pinduoduo and Facebook/Instagram, and their different social commerce business models, notably social network based vs. social group based models. Social network platforms (like Facebook/Instagram in the US) generate supply-driven commerce ecosystems that leverage the social graph of individual relationships to drive sales through highly-connected influencers in an ad-based business model. Social group platforms (exemplified by Pinduoduo in China) generate a demand-driven commerce ecosystem based on rich, gamified interactions that don't depend on prior relationships in a direct sales business model. The case describes the recent evolution of social commerce such as the launch of Facebook Shops and Instagram Shops that resemble Pinduoduo's model.

This case illustrates important lessons about social commerce, social networks and social media, e-commerce, digital strategy, digital entrepreneurship, and online platforms across the US and China.