(We originally posted this in 2020. You can read more of our original ideas in our archive.)
Problem: Pinduoduo, China’s second-largest platform by users, has a phenomenal feature that allows a friend to buy to a product via request. Unfortunately, no American app has this feature.
Solution: This business would build a business off that feature: moreover, the feature would be one that is inspired by Pinduoduo, a Chinese shopping site similar to Amazon.
I came across this idea while reading about how “Money-launderers use Chinese online shopping sites to funnel cash offshore.” As summarized by Ryan McMorrow from the Financial Times:
Money launderers have used some of China’s leading online shopping sites to transfer billions of dollars to offshore gambling sites, police raids have revealed.
People wishing to evade China’s strict capital controls, for example to gamble on offshore websites, have been placing fake orders on the shopping sites, including on Pinduoduo, China’s second-largest platform by users. A corresponding sum is then credited to their gaming account.
In recent months, several police forces across China have announced arrests in a slew of cases, alleging that at least Rmb14bn ($2.06bn) was laundered to offshore gambling sites through these fake ecommerce purchases and other methods.
The People’s Bank of China has said it is digging into the networks enabling the cross-border transfers, and the government launched a publicity campaign to “attack and control cross-border gambling”.
In one large case, police in the eastern city of Wuxi found 600m fake packages had been inserted into courier firms’ tracking systems by company insiders in order to complete fake ecommerce transactions. Many of those same package tracking numbers appeared in money-laundering cases in two other Chinese cities where more than Rmb7bn was allegedly funnelled to offshore gambling sites.
I find this “hack” to get around topping off gambling accounts: it repurposes an existing system (buying packages on an online website) and abstracts away what most people use the platform for (receiving a package) to instead deliver another “service” (a top-off of your gambling account). Of course, it’s not the most legal method (and actually serves to increase money-laundering), but it’s always fascinating to see how people can adapt existing technologies to their needs.
Below is the process for achieving this hack, which simultaneously sparked a new business idea for me.
That “Ask a friend to pay” feature is so simple, but so ingenious. I can imagine use-cases in America where your “friend” is a parent who’s purchasing something for you, their college-aged student; or another use-case in which you request birthday gifts or wedding gifts by asking your friends to pay. It’s like a wedding registry, but plopped into every single check-out page.
Globally, the online gifting market is huge. As described by Entrepreneur, “Online gifting has gained massive popularity in recent times and is expected to reach $84 billion by 2024. From a broad perspective, the online gifting industry is segregated into corporate and personal gifting with the former accounting for up to 80 per cent of the market.” SeekersTime and another writer at Entrepreneur have corroborated these numbers (Seekers writes that “the global gifting market stands at $475 billion” and Entrepreneur writes that “it is predicted that the global gifting market for personalised gifts will be worth USD$31.63 billion by 2021”). Either way, the market is huge.
Monetization: Percentage of transaction volume.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)