Following in the footsteps of Pinduoduo, Taobao will now support "refund only" requests. How do you view this change? What kind of impact do you think it will have?

PDD has already become the teacher of Taobao

Once you look at the rules, you can get a quick refund

Ask the customer service, and the platform has no right to refund, please negotiate with the merchant

For refunds, the PDD experience is still better, the payment arrives before even receiving the package

The attraction for consumers lies in shipping insurance, truthful delivery, and no pre-sale for several days.

The most crucial issue is that Pinduoduo can offer free shipping even for items costing just a couple of dollars, while on Taobao, many sellers do not offer free shipping for items costing one or two hundred dollars, and the shipping fees can be quite expensive. Ultimately, the core of the business competition still revolves around enhancing customer experience.

Leveraging Big Data Technology Makes Identifying Most Cases of Malicious Refunds Quite Easy

Taobao’s policy is also quite clear; it’s not blind and rapid refunds. They consider product quality information and consumer integrity models, comprehensively analyzing data to determine if there is an issue with the product’s quality that makes it unsuitable for a return. High-credit users are supported for quick refunds.

However, Pinduoduo’s policy of “refund-only” appears to have relaxed constraints on some malicious refund buyers, which has caused dissatisfaction among many sellers.

Let’s “maliciously” interpret Pinduoduo’s logic:

Pinduoduo might not be incapable of implementing a similar integrity model but could still allow some “slip-through” cases of malicious refunds. Essentially, it may sacrifice the interests of a small portion of sellers to attract more buyers.

Compared to other e-commerce platforms, Pinduoduo started later, and its user base is relatively more price-sensitive with a higher proportion of users seeking bargains.

Similar information spreads quickly and attracts corresponding users.

From this perspective, Pinduoduo’s positioning is very accurate.

When the user base is large enough, sellers will have to develop on this platform, even if they incur some small losses.

(Disclaimer: The above content is purely speculative, and any resemblance is purely coincidental)

Taobao’s development history and Pinduoduo’s are not the same, and their business models have significant differences.

Anyone who has been a seller on Taobao would understand that from the moment you start, you must continuously pay Alibaba for various services like store decoration, ranking, and advertising…

In a sense, sellers are the true customers of Taobao.

For a platform like Pinduoduo, which directly challenges sellers, Taobao finds it challenging to take a similar approach.

If malicious refunds increase and both buyers and sellers agree, Taobao sellers, who were not making much profit in the first place, will inevitably flee the platform, putting pressure on Alibaba’s revenue.

So, while the refund policies of Taobao and Pinduoduo may seem similar on the surface, they are fundamentally two different approaches.

No Impact at All

The reason behind Taobao’s downfall is that every link in the supply chain was siphoning profits, even more aggressively than the East India Company during the Opium Wars.

As long as this underlying structure remains unchanged, copying Pinduoduo won’t serve any purpose.

Sellers are scolded by customer service every day for buying search ranking and fake orders, forced to participate in Taobao promotions, and struggling to make any profit.

Delivery drivers face daily fines, and the turnover rate is through the roof.

Local delivery point owners are running ride-sharing services to subsidize their operations.

Collection point owners are playing a never-ending game of passing the buck.

Consumers are forced to engage in a constant battle throughout the entire supply chain, wasting their time with various gimmicks.

Still Overpriced

Can Taobao seriously believe that PDD brought them down solely because of the refund issue?

It’s the entire process, a company-wide culture of wanting to be the “big boss.”

It’s that kind of authoritative attitude.

When you say pre-sales don’t work, they say you don’t understand, and they provide some explanation.

When you say local delivery points are inefficient, they say you don’t understand, and they offer a solution.

Everyone knows that sellers, due to high costs of search ranking and fake orders, would rather be scammed with refund-only tactics on Pinduoduo.

But they pretend not to know.

Anyway, Taobao is always right, Alibaba is the real deal, and everyone else is foolish. It’s their duty to teach you.

They are always right.

They squeeze sellers from above, treat users like fools from below, and never take a step back to consider things from a different perspective.

The overarching logic is revenue. When pushed, they copy, but even copying shouldn’t affect their earnings.

This time they introduced refund-only, along with a bunch of “however, maybe, mechanism design, big data.”

The underlying logic of refund-only isn’t about reducing user rights protection costs or enhancing user experience.

I’ve already applied for a refund, I’m upset, and you’re still babbling at me?

Why doesn’t Alibaba dare to follow PDD’s lead with a blanket policy? Some people claim it’s because Pinduoduo cheats the system, but Alibaba has big data to prevent it.

Stop making excuses.

On Taobao, sellers work tirelessly for a month, barely sleeping, to earn $2000.

On Pinduoduo, they get scammed by refund-only tactics 4 or 5 times a day, and in a month, they make $6000.

Why?

The fundamental premise behind copying refund-only tactics is that it shouldn’t affect the overall bottom line.

No matter what business they do, it shouldn’t impact the revenue from search ranking.

Does Alibaba dare to eliminate search ranking?

I doubt anyone would dare to bring it up to Jack Ma.

So, it’s just a waiting game.

Taobao Chose the Wrong Path Completely

Many people are switching to Pinduoduo because, under conditions where quality is controllable, products are cheaper there compared to Taobao. It’s not just because Taobao’s return process is troublesome. Of course, the ability to get a refund without returning the product is a good thing, but since this isn’t the primary reason for user migration, making this change doesn’t bring much benefit to Taobao. Besides, Taobao’s average customer spending is likely higher, so this change could significantly impact sellers who are loyal to Taobao.

I strongly suspect that Taobao’s internal decision-making process is flawed, and the management has lost touch with the front line, failing to understand the users. Taobao’s users include not only buyers but also sellers.

I believe what Taobao should have done is to find ways to lower costs and engage in a full-fledged price war, just like when they first started the company. This should be the primary principle. With the current approach, Taobao seems destined to struggle.

It’s Not Just About Refund-Only: The End of an Era

On the surface, it seems like Taobao is learning from Pinduoduo by introducing the refund-only model to regain market share. However, in reality, this signifies the end of an era. It signals that China is transitioning into a period dominated by existing market dynamics, where the main theme will be the struggle for survival.

Let me share some common knowledge from the business world with you. In reality, there is no concept of “respecting consumers”; what truly exists is the law of supply and demand.

Do you remember the signs at state-owned restaurants in the past that said, “Employees are not allowed to insult customers”? Why did they have such signs? It’s because, at that time, consumers had no choice. There was only one restaurant available, and the market had a severe supply shortage. When you have no choice, what’s the point of talking about respecting consumers?

When did this change? It changed with the advent of the market economy. As more restaurants opened, they started emphasizing respecting consumers, and the customers became “gods.” It’s not that the customers became gods; it’s that the supply-demand relationship changed. Customers had options, and in such cases, some businesses were willing to provide benefits to consumers or, more accurately, were willing to say pleasing words to consumers. It’s that simple.

So, when you look at Pinduoduo, why do they dare to implement refund-only policies? Is it because Pinduoduo is extraordinary? No. It’s because there is an excess of supply in the market, and consumers are scarce. The market is oversupplied, allowing such practices.

If there were a shortage of goods in the market, this situation wouldn’t even be possible. Just look at how you get cigarettes from a tobacco office – there’s no picking and choosing; based on your cigarette permit, you get a specific quantity, and you settle the payment right there. There’s no way you can demand a refund.

Do you understand now? Refund-only is one thing; what’s behind it is another.

Let me provide another example. Advance payments to construction teams. Initially, there was no concept of advance payments for construction teams because, in the beginning, there was very little work available, and skilled labor was scarce. If you found a reliable construction team, you had to pay them extra to get the job done. You had to pay in advance.

As urbanization progressed, more and more people joined the construction industry, and contractors started to play tricks. They went from paying in installments after work to delaying payments for a year. The reason? Supply and demand issues.

Doesn’t it sound quite similar to Taobao adopting refund-only practices?

But let me be honest; when you see Taobao adopting refund-only, don’t celebrate. There’s a possibility that, in certain situations, we won’t be consumers but rather the merchants forced to accept refund-only policies.

For instance, look at when we receive our salaries. In some cases, they’re paid on the 1st of the month, or the 10th, or the 15th. In the worst cases, it’s the 20th for the previous month’s salary. Can you imagine asking for a refund in such a scenario? It’s like daydreaming.

So, do you understand now? Refund-only is one thing, but the bigger issue is something else.

One significant issue with refund-only is the collapse of producers' rights. As consumers, we understand how convenient refund-only can be. If we’re not satisfied with a purchase, we can simply request a refund without returning the product, and we don’t have to pay for shipping or go through the hassle of returning it. But what’s the problem? From a merchant’s perspective, this means they incur the cost of the product and shipping without making a profit. They become the ones bearing the cost.

Of course, as benefiting consumers, we don’t care about these issues, and honestly, we shouldn’t have to. But if we take a step back and consider whether we are just consumers or something more significant, the perspective changes. On a macro level, China is not just a consumer country; it is a production powerhouse. We are the world’s largest sellers.

Think about it: if these factories also experience refund-only policies, what will happen? If factory profits diminish, can they still pay their employees? Can they distribute profits among various stakeholders? This scenario is reminiscent of the Qing Dynasty, when silk worth 500,000 taels sold to foreign traders was never delivered because they stopped buying it. It eventually led to local officials allocating the shortfall.

So, do you see any benefits in refund-only? If you think from the perspective of consumers, it seems great. But if you take a macro view, it seems problematic.

The interesting point is this: Pinduoduo introduced refund-only at a time when it was becoming difficult for working-class people in China to make money. Now, when Taobao is adopting refund-only, it makes you wonder if it will become even harder for working-class people in China to make money.

When goods lose their value, do you think labor will retain its value? Who is the labor force?

To sum it up, after reading all this, you’ll understand refund-only isn’t just about refunds; it signifies the end of an era. We have transitioned entirely from a period of market growth to one dominated by existing market dynamics. This is the most crucial point we should contemplate.

Refund-Only Policy on Taobao and Pinduoduo: A Shift in the E-commerce Landscape

In the past, when consumers on Taobao received counterfeit or low-quality goods, it was challenging to protect their rights. Merchants were willing to accept returns, but they often demanded users to leave five-star reviews. At that time, Taobao had its share of counterfeit products, but genuine ones were also prevalent. When purchasing items, being cautious typically prevented falling victim to scams.

However, the situation was different on Pinduoduo. Counterfeit products were abundant to the extent that some content creators used Pinduoduo’s counterfeit goods to boost their viewership regularly. It can be said that the refund-only operation was created by Pinduoduo to adapt to its unique environment.

Initially, Taobao did not require such a policy. However, due to Pinduoduo’s rapid market value growth, Taobao had to adapt and make some changes. Refund-only is undoubtedly unfair to merchants, but it offers greater convenience to consumers. In reality, consumers are at a disadvantage when interacting with merchants because they do not physically inspect the goods. They can only judge the authenticity of products based on images and textual descriptions. Cases of receiving subpar or incorrect items frequently occurred. For example, I recently purchased some snacks on Pinduoduo and found that they were 10% short in quantity upon delivery.

Many people are concerned that the refund-only policy might create opportunities for exploitation. However, merchants can also exploit various loopholes. Taobao, Xianyu (a second-hand marketplace under Alibaba), and Tmall have seen numerous cases of counterfeit and high-quality knock-off devices.

It is worth recalling that Taobao was once known for its prevalence of counterfeit goods. The refund-only policy may damage merchants' interests, but there is no perfect solution that benefits everyone. Such a move might harm Taobao’s relationship with merchants, but it can win the hearts of users.

Certainly, there are individuals who may exploit the platform for fraudulent activities. However, this is a matter for law enforcement to address. Alibaba cracked down on such activities last year, with effective results. Therefore, there is no need to overly worry about the potential harm to merchants.

Additionally, it is important to emphasize that individuals should not engage in zero-cost shopping schemes. Those who attempted such activities last year were apprehended and sentenced, including one university student.

{Source}

Pinduoduo’s “Refund Only” Policy Benefits Consumers

Pinduoduo has done a good thing for consumers. Once, I purchased two cans of pistachios from a Taobao factory store. When placing the order, it was stated that each can contained 300 grams. However, upon receiving the goods, I found that the quantity was much less. Upon opening one can, I weighed the pistachios and discovered that they only amounted to 110 grams. In other words, the net content was 110 grams, while the packaging and desiccant weighed a surprising 190 grams.

I immediately felt deceived and contacted customer service. They asked me to carefully examine the packaging and the product page. After a long search, I found the phrase “net content 110 grams” hidden in a very inconspicuous place. The packaging prominently displayed 300 grams per can on the order page and in the product images. I believed this was misleading consumers.

I engaged in a discussion with customer service and requested a refund, but they refused. After escalating the issue to the platform, I was only refunded 5 RMB in the end.

Honestly, in such a situation, a refund-only policy is the only reasonable course of action. I can tolerate not finding beef in my beef noodles, but when the packaging weighs over twice as much as the food itself and is not clearly labeled in a prominent place, using vague language that ultimately leaves the interpretation to the discretion of the merchant is simply deceiving consumers. Moreover, the fact that the platform’s factory store endorsed the product was the reason I made the purchase.

Therefore, no matter what, I support the “refund only” policy for consumers in exceptional cases where a refund is warranted without requiring a reason.

Remember This: If You Can’t Beat Your Enemies, Join Them!

If you can’t win, joining them is the best choice, and this is most suitable for Taobao!

The moment when Pinduoduo’s market value surpassed Alibaba’s, it was destined for the newcomer to lead!

Pinduoduo continuously teaches Taobao how to do business!

How many companies can achieve the “refund-only” policy? Only Pinduoduo dares to lead the way!

Pain Makes You Realize: Taobao’s Negative Reviews Are Only Visible to Yourself

It hurts before you realize the change - Taobao’s negative reviews can only be seen by yourself, others cannot see them, showing a clear bias towards sellers.

Delayed shipping comes with no compensation measures, only prompting you to return the item, and even the refund process is often cumbersome. On the other hand, Pinduoduo automatically provides vouchers as compensation for delayed shipments, and returns are processed quickly.

However, apart from the massive subsidies during special events, Pinduoduo relies on luck for shopping at other stores.

Trending! Taobao Announces New Policy: Supports “Refund Only”! How Does It Affect Our Shopping?

By Jingjing Editor, Li Zedong

Recently, Taobao has posted a proposal regarding changes to its platform’s dispute resolution rules. Among these changes is the addition of a rule that allows Taobao, based on its own big data capabilities, to quickly process refunds or return refunds for buyers under certain circumstances. Subsequently, this topic started trending.

It is understood that this proposal was officially implemented as of yesterday (December 26th). This means that after Pinduoduo and Douyin, another e-commerce platform has introduced the “refund only” after-sales mechanism.

Image source: Visual China - VCG41N1172681671

This mechanism aims to provide consumers with a better user experience while taking stricter measures against sellers with inadequate long-term service or unreliable quality.

According to the adjusted rules, the first point is “the addition of Taobao’s rules based on its own big data capabilities, which identify multiple dimensions and provide a basis for quick refunds or return refunds for buyers under relevant circumstances.”

Specifically, based on the protection of buyers' rights and the reasonable reduction or elimination of the threshold for buyers to provide evidence, Taobao will use its own big data capabilities to conduct a comprehensive evaluation of the seller’s product from various dimensions, including penalties on the information or product level, seller store quality indicators (such as quality score), a high degree of certainty that the product recently sold by the seller meets inappropriate descriptions, misleading, counterfeit, and other conditions.

Based on this high degree of certainty, Taobao will directly support quick returns or refunds for buyers who initiate relevant after-sales requests.

In other words, if there are too many negative reviews or violations, once a complaint is filed, the platform will directly determine either a refund or a return refund for the seller.

The second point involves adjustments to shipping standards: “For situations where the seller delays or forcefully ships without the buyer’s consent,” the seller will bear the related costs and the risks of product damage, destruction, and loss, and the order will support refunds for buyers.

This also means that if a seller delays or forcefully ships without the buyer’s consent, the system will support the buyer with a “refund only” option.

The third point is related to “7-day no-reason return” items or items rejected by the buyer, and it supports buyers in applying for refunds after rejecting the delivery.

It is understood that “refund only” is an after-sales mechanism pioneered by Pinduoduo. When a consumer applies for a “refund only” on the platform, if the seller does not take any action within 48 hours, the system will automatically assume that the seller agrees to the refund request and initiate the refund. This mechanism, which is clearly user-centric, is considered a key step for Pinduoduo to break through the fiercely competitive e-commerce landscape.

Now, the “refund only” after-sales mechanism is gradually becoming a standard in the e-commerce industry.

On September 21st of this year, Douyin e-commerce also updated a rule regarding “refund only” in its “Merchant After-sales Service Management Regulations”: “If the seller’s ‘good review rate’ is below 70%, the platform has the right to support consumers with ‘refund only’ measures for the transaction orders of that product, including refund or return refund covering shipping fees. The measure can be lifted when the product’s ‘good review rate’ remains above 70% for seven consecutive days.”

According to Jiemian News, a cross-platform e-commerce seller said that after several years of “refund only” operations on Pinduoduo, many consumers have formed habits and now have higher demands on other platforms. “According to feedback from customer service, we now often have users in our Taobao store saying that for the same order, Pinduoduo can refund immediately, while Taobao’s ‘7-day no-reason return’ is not as convenient, and returning the item requires effort and prepaid express fees.”

The above-mentioned seller interprets Taobao’s new rules as meeting user demands and cultivating user awareness. The platform can also reduce consumer attrition.

According to the reporter, Taobao’s new “refund only” rules will be based on the seller’s actual business behavior to determine whether to support quick returns or refunds for buyers, effectively helping sellers avoid “scalpers.” In addition, a fast-track appeal channel for sellers is provided, and all orders from sellers within 30 days can be appealed.

Source: Daily Economic News (Translated from Chinese)

“Refund Only” Now Available on Taobao - What’s the Impact?

In the past, “refund only” seemed like a dream. But now, it’s not just a dream; more and more businesses are offering this “benefit” to customers.

“Refund Only” is a model introduced by the Pinduoduo platform to protect consumer rights. If a consumer claims that the received product doesn’t match their expectations, they can choose “refund only.”

We often hear businesses making bold promises in their advertisements, such as “unsatisfied? Return it, full refund, anytime.” With such promises, customers feel more confident making purchases, knowing they can easily return items if needed.

Previously, when talking about returns, it typically meant returning the product for a refund, which made sense as long as the item was unused and undamaged. However, in practice, many businesses started playing tricks. When customers wanted to return items, some businesses would find various reasons to deny the refund, claiming that the product was damaged, the label was torn, the packaging was opened, and so on, effectively refusing to provide a refund.

This situation is akin to a recent news story where a man in Changsha participated in a company competition that challenged participants not to use their phones. He signed a challenge contract and paid a 9,000 yuan registration fee. However, he was eliminated within a short time.

This outcome is not surprising; the company’s goal was to earn the registration fee, not to pay out a big prize. You can’t expect to win when the referee and the players are all controlled by the same entity.

Returning to the main topic: following in the footsteps of Pinduoduo, Taobao will now support “refund only.” How should we view this change? What impact will it have?

As we all know, “refund only” was pioneered by Pinduoduo, and it was a hit in the market, attracting numerous customers. Now, Taobao has seen the benefits and decided to adopt it. In the business world, there’s no innovation; all business actions are essentially imitations.

Taobao has publicly announced changes to the “Taobao Platform Dispute Resolution Rules,” and this notice is officially effective today.

The core change, the first point, is “the addition of Taobao’s rules based on its own big data capabilities, which identify multiple dimensions and provide a basis for quick refunds or return refunds for buyers under relevant circumstances.”

This rule change is significant.

Jack Ma once said, “If you don’t change, I will change you.” Now that Pinduoduo has surpassed Taobao, Taobao naturally doesn’t want to lag behind. In fact, there isn’t much difference between Taobao and Pinduoduo. Early Taobao was essentially Pinduoduo, selling various products at low prices.

But later, as Taobao grew, it began emphasizing product quality, aiming for higher standards, and introduced platforms like Tmall, seemingly leaving behind low-end products. However, the low-end market remains vast, and even after all these years, a Pinduoduo emerged and became highly successful, which was unexpected.

In the realm of business competition, it eventually becomes a battle of wits and details. Whoever has the last laugh must continually improve themselves in the details and in service.

Why Taobao Must Follow Pinduoduo’s “Refund Only” Policy

I’ll give you an example to illustrate why Taobao must adopt the “refund only” policy, just like Pinduoduo.

Whenever it rains, you’ll find people selling umbrellas at subway entrances. They cost around 20 yuan each, with a wholesale price of 10 yuan, and the quality is decent, allowing sellers to make a 10-yuan profit per umbrella. This business was going well until someone came up with a different idea. They realized that people only needed umbrellas when it rained, and quality wasn’t a significant concern. So, they started selling umbrellas for 9.9 yuan, undercutting the original sellers who were selling them for 20 yuan.

But the original sellers couldn’t ignore this competition. If they didn’t do the same, customers would flock to the cheaper option. So, the ones who used to sell umbrellas for 20 yuan started buying 2-yuan umbrellas and selling them for 9.9 yuan. They had to follow suit, or they’d lose all their customers.

Now, when it rains, no matter which subway entrance you go to, you’ll see umbrellas that cost 2 yuan wholesale. The only difference is that some subway entrances sell them for 9.9 yuan, and others for 18 yuan.

Back to Taobao and Pinduoduo, we’ve noticed some interesting and chaotic things happening.

For some products, the same items are sold for 9.9 yuan on Pinduoduo and 59.9 yuan on Taobao. Don’t doubt it; I have friends in this business. Taobao aggressively manipulates sales numbers, uses various tactics, and as a result, users on Taobao don’t see the lower prices. You can search for the same product on both platforms. High-selling products on Pinduoduo are around ten yuan, while Taobao charges several tens of yuan for the same item.

This leads to a situation where users who initially chose Taobao because of perceived quality and trust are paying four to five times more for the same item. Unfortunately, they often find that the quality isn’t as good on Taobao, and the after-sales service is lacking. This can result in customers having a bad experience on Taobao and eventually abandoning the platform.

Friendly reminder: If you see identical product images and similar descriptions but one store is selling for 90 yuan while another is selling for 20 yuan, don’t be skeptical; it’s the same product. Just choose the cheaper option. Some sellers are so lazy that they even use the same manufacturer’s product images and descriptions. The more diligent ones might change the cover image.

Taobao Shouldn’t Imitate Pinduoduo’s “Refund Only” Policy

A friend of mine, who owns a factory, told me that even substandard products can find buyers on Pinduoduo. Pinduoduo’s customers aren’t too picky; they’re fine with refunds, as these products are considered subpar.

So, following Pinduoduo’s lead isn’t suitable for Taobao because Taobao and Pinduoduo have entirely different positioning and strategies.

I’ve made purchases on Pinduoduo, and yes, they are cheaper, but honestly, the quality is often terrible. For instance, a 9.9 yuan ultrasonic glasses cleaning box seemed like a bargain, but when I opened it, I found only a vibrating motor inside. Where was the ultrasonic part? It was essentially a scam.

Taobao is better in this regard, but it also has issues. I’ve encountered cases where unscrupulous sellers resell products returned by other customers, so seeking bargains often comes with a price. I now primarily shop on Tmall and always inquire about shipping insurance.

Therefore, Taobao doesn’t need to adopt the “refund only” policy like Pinduoduo. Consumers with integrity don’t need to take advantage of this. However, Taobao can provide comprehensive shipping insurance, allowing cost-free returns if customers are dissatisfied. I believe this is essential.

Then, tighten quality control, and remove sellers who frequently receive complaints or have poor product quality. Create a safer and more reassuring shopping environment; that’s the core competitiveness.

Taobao should follow the direction of JD.com, rigorously control product quality on the platform, offer higher-quality services, and maintain overall lower prices than JD.com. Only this way can they carve out a successful path. Following Pinduoduo’s rough and aggressive approach, constantly bombarding users with pop-ups for red envelope giveaways every 30 seconds, might make consumers feel like they’re spending less, but it often leads to disappointment. In the end, it’s just a waste of time.

Constantly catering to low-end consumer groups, running vulgar promotions like aggressive red envelope campaigns, and aggressively pushing the Pinduoduo app everywhere are practices that ultimately disappoint consumers. What’s more, the products on Pinduoduo are cheap, but the quality is terrible.

I hope these e-commerce platforms continue to compete, as increased competition benefits consumers. However, I don’t want to see competition like this—harassment, fraud, selling substandard products as acceptable.

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The Rising Influence of Pinduoduo: Taobao’s Response and Pinduoduo’s Growth

Following the trend of low prices, another feature from Pinduoduo—refund only—has been emulated by multiple platforms. Recently, Taobao released a public notice about changes to its “Taobao Platform Dispute Handling Rules.”

In summary, sellers on Taobao who receive excessive negative reviews or violate platform rules may now face immediate decisions of refund or return, as determined by the platform.

Not too long ago, Pinduoduo briefly surpassed Alibaba in terms of market capitalization, becoming the number one among Chinese concept stocks listed in the U.S. Though Alibaba regained its lead in market capitalization by the end of the day, the difference was less than 2 billion USD.

Subsequently, an Alibaba employee posted on the internal network, acknowledging Pinduoduo’s rapid rise. Even Jack Ma commented on the post, congratulating Pinduoduo’s decisions, execution, and efforts. He noted that many can achieve greatness, but only organizations that are willing to reform for the future, no matter the cost or sacrifice, deserve respect.

According to the official website of Tianyancha, Pinduoduo currently has 29 member companies, including 4 core enterprises and 1 listed company.

As per Pinduoduo’s financial report for the first three quarters of 2023, the platform achieved a total revenue of 68.84 billion CNY, marking a year-on-year growth of 93.89%, with a net profit of 15.537 billion CNY, a year-on-year growth of 46.73%.

It’s worth noting that in 2016, Alibaba and JD.com held an 86% market share, while Pinduoduo’s share was only 1%. Today, Pinduoduo has become one of the e-commerce giants.

In an era where consumers are increasingly price-sensitive, Pinduoduo’s combination of lower prices and refund-only policy has quickly captured the minds of consumers in the lower-tier markets.

Looking at the keywords of this year, “cost-effectiveness,” “special forces tourism,” “Luckin Coffee 9.9,” and “Kudi 8.8,” it seems that the consumer downgrade has also contributed to the success of Pinduoduo’s low-price strategy.

Besides successful marketing strategies, Pinduoduo’s success is also attributed to its talent pool, and competitive compensation and equity incentives play a significant role in retaining talent.

Pinduoduo is known to be generous in terms of salary and benefits. According to some bloggers, even fresh graduates can earn salaries 30% higher than those at Tencent or Alibaba.

For a Java engineer with 5-6 years of experience, an annual salary of one million CNY at Pinduoduo is considered normal.

It’s worth mentioning that technical positions at Pinduoduo can receive up to 16 months of salary, with an additional two months of overtime pay. The probationary period salary is not discounted, and there are two salary increases per year.

What are your thoughts on Pinduoduo’s benefits and compensation packages? Feel free to leave comments in the comment section!

PS: Tianyan Mei brings an exclusive discount code. Open the Tianyancha member page {https://app.tianyancha.com/channel?channelCode=Market_tyczh}, and before making a purchase, enter the code “114837” to get up to 100 CNY off!

The “Refund Only” Strategy: Pinduoduo’s Impact and Taobao’s Response

A well-established platform doesn’t undergo significant changes merely by adopting certain strategies.

The “Refund Only” platform strategy may seem like it’s protecting buyers, but many are unaware that “Refund Only” and Taobao’s “Shipping Insurance” strategy are similar; both have monthly limits and maximum amounts, not truly allowing unlimited refunds.

On one hand, “Refund Only” primarily focuses on enhancing the shopping experience for consumers, resolving issues in a minute that might take Taobao a month to address. On the other hand, it acts as a mechanism to weed out bad actors. Through this strategy, the platform can closely monitor which consumers are taking advantage of “Refund Only” and which merchants are generating excessive refund requests due to violations like shortchanging, false advertising, or user enticement. This further helps identify “high-quality users” and “high-quality merchants.”

Though the outcomes of this strategy may not be immediately evident on Pinduoduo, the platform has user rating standards. Your spending limits, purchase frequency, and return/refund rates all contribute to improving the shopping experience for high-quality users.

In contrast, low-quality users, with high return/refund rates, may find some products unavailable, lack the ability to create group purchases, discover that 90% of products lack shipping insurance, and are not eligible for free shipping. Additionally, they miss out on flash sales, various coupons, group purchases, and other benefits.

Similarly, low-quality merchants are forced out of the market, having no room to thrive, and are left with using “Refund Only” as a last resort.

At least from the time when Jack Ma made his statement, there haven’t been any signs of a true transformation for Taobao. The so-called “Daily Specials” and “Taobao Good Deals” introduced later seem insignificant compared to Pinduoduo’s approach. Furthermore, as we approach 2024, Taobao still cannot offer nationwide free shipping and universal delivery. Considering this, would anyone choose to shop on your platform?

Ultimately, Taobao (Alibaba) appears to lack the determination for reform. Believing that surface-level changes will suffice to regain lost market share, they seem unaware that, at this juncture, time is running out. In a few more years, users might question whether it’s even necessary to have Taobao installed.

Pinduoduo’s Unique Approach and Taobao’s Challenge

Pinduoduo started by minimizing its identity but maximizing its approach.

Looking at Pinduoduo’s refund process, “One-Click Refund” places the onus on sellers, sparing buyers from disputes. This strategy directly controls traffic.

Taobao, on the other hand, has a different mindset. Alibaba always seeks to strike a balance between customer and seller interests. However, you need to consider the context.

In our context, “difficult to determine fraud” and rent-seeking are factors. Therefore, for B2B platforms like Pinduoduo, JD.com, and Taobao, the most effective way to retain users is to act as the “judge.” Giving individual consumers more weight keeps your traffic intact. With traffic, sellers cooperate. Without you, their business logic collapses, creating a positive feedback loop.

Taobao, as the pioneer of the industry, failed most when it came to directly taxing sellers. Instead of selling “direct traffic” to merchants, they could have offered free traffic, profited from commissions and advertising, and secured more financing while improving services.

Internally, I can’t help but feel that Pinduoduo resembles a budget version of Walmart in the United States. They employ strategies like controlling market sales rates, keeping finances tight but influencing the supply chain. Profits double whenever they adjust a single product’s pricing. Pinduoduo follows the internet path but shares similar tactics.

However, Taobao’s attempts to emulate this may be too late. Once consumers adapt to certain habits, there’s a psychological cost associated with changing. From a consumer perspective, Taobao appears to have lost its business positioning. With JD.com above and Pinduoduo below, it seems to lack a distinct identity.

It’s better to be a durian than a banana. You might be loved intensely or disliked strongly, but expecting everyone to like you? That’s something even RMB can’t achieve.

The Cost Allocation of “Refund Only” Policy

Here lies a fundamental question: Who bears the cost of “refund only”?

Many people assume, without fully understanding, that sellers are the ones bearing the cost because they are in opposition to buyers. In reality, businesses can offset the cost of some buyers' refunds through various means, including but not limited to general price hikes, delivering less than expected, or falsely advertising product quality. Consequently, the majority of the cost of “refund only” is ultimately shouldered by the remaining honest buyers who do not request refunds.

Whether on Taobao, Pinduoduo, or any other platform, sellers operate to earn profits. If there is a prolonged lack of profit or even losses, eventually, no one will be willing to open an online store in the market. Ensuring that sellers can make money is essential for market sustainability, a concept commonly seen in economics as the “participation constraint.”

When market rules, such as “refund only,” force measures that significantly increase seller costs, the most direct results may be one of the following:

1. Some low-profit-margin sellers exit the market, reducing market supply.
2. Some sellers increase selling prices, including delivering less than expected or falsely advertising product quality, to ensure they achieve positive profit margins.

Regardless of which effect is more pronounced, the result is likely to be higher prices and reduced quantity of goods, a typical economic impact of supply reduction. Both buyers and sellers in the market bear the cost. In many cases, the overall cost borne by all buyers far exceeds that of the sellers, causing honest buyers to foot the bill for the “refund only” requests of other buyers.

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Oh, typing is quite tiring.

Impact of Individual Business Decisions on the E-commerce Industry

In many cases, the individual business decisions or actions of a company cannot be analyzed and interpreted solely from an isolated perspective. Instead, one must consider their long-term impact on the overall development trends of the industry.

The same holds true for e-commerce platforms. Their development has been much more rapid compared to traditional industries, rising swiftly with the growth of the internet. In just over 20 years, they have accomplished what would have taken other industries centuries to achieve. However, this overall process still adheres to the universal laws governing the development of all industries, following a spiral or step-by-step upward trajectory. Often, a particular innovation is initially introduced by one company, followed by others who quickly catch up. They add improvements and updates to the original framework, eventually establishing new industry standards, thereby propelling the industry forward as a whole.

This time, Pinduoduo is clearly at the forefront. Although the company was founded less than a decade ago, it is currently gaining substantial momentum. Its market value on the US stock market even surpassed the industry leader, Alibaba. While there is still a significant disparity in terms of total assets, net profits, and market share between the two, with Alibaba maintaining overwhelming advantages, a group of up-and-coming companies, represented by Pinduoduo, is rapidly rising. They are beginning to make their mark and have gained broad recognition from both the market and consumers in certain areas.

The internet e-commerce industry, as an emerging sector, places greater emphasis on future technological advancements than traditional industries, which often rely on economies of scale and find it difficult to establish industry monopolies. Even today’s leading companies may find their advantages to be temporary. If they fail to adapt to changing times, it may not take long for newcomers to replace them. Taobao, for example, recognizes the potential threat posed by rapidly rising newcomers like Pinduoduo, despite their smaller scale. As a response, Taobao has chosen to learn from their strengths to enhance its own products and services. This undoubtedly has a positive impact on the overall development of the e-commerce industry.

The Reflections on E-commerce Platform Strategies

Back when Taobao drove people like me to platforms like Pinduoduo, they should have foreseen today’s outcomes!

However, with Pinduoduo introducing the “refund-only” policy today, one must wonder about the future consequences. Let’s wait and see.