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How Pinduoduo Beat Alibaba to Become China’s Top Shopping Site

A five-year-old e-commerce app that turned discount shopping into an online game has overtaken Alibaba Group Holding Ltd. as China’s most popular internet shopping site.

Pinduoduo Inc.ad 788.4 million users at the end of 2020, the company said Wednesday in its quarterly earnings report, ahead of Alibaba’s 779 million, as measured by the number of people who made purchases over the past 12 months.

The app—whose name roughly translates as “bringing lots of people together”—allows friends and strangers to band together and win deals for goods bought either individually or in bulk for a discount. With socializing foremost and shopping almost an afterthought, friends congregate on Pinduoduo to watch live streams, share deals and make purchases together, while playing the app’s built-in games.

One hit is “Duoduo Orchard,” where players nurture virtual fruit trees to earn shopping vouchers, tangible prizes such as boxes of mangoes and kudos from friends. The game sparks fierce rivalry among players, said Li Wenjun, a 19-year-old from Pingdingshan in central China who obsessively tends to her digital orchard.

Pinduoduo’s approach reflects the gamification trend in the tech sector, with stock-trading recently garnering attention. For Pinduoduo, keeping people on the platform is the games’ purpose: They help build user habits and serve as gateways into the site’s shopping areas.

“Pinduoduo did one thing very well: We grasped the shift from searching to browsing” as a social activity, said Chen Lei, who took over as chief executive from Mr. Huang last year after serving as chief technology officer.

Unlike older rivals born in the PC age, Pinduoduo is a native smartphone app without a desktop version or a shopping-basket function.