Pinduoduo Temu headquarters was besieged by merchants, a crusade against "refund only"?

Pinduoduo's cross-border e-commerce platform Temu has been frequently sued by merchants for rights protection, with hundreds of merchants besieging its headquarters due to after-sales fines. Temu has implemented a "refund only" after-sales policy, and merchants are facing high fines and fund freezes, and rights protection incidents are frequent. Merchants questioned the transparency of the penalty mechanism, saying that the reserved funds were withheld for no reason. Pinduoduo responded that the fines were used to compensate consumers, but the merchants' dilemma was not resolved. This incident has once again sparked heated discussions on the relationship between e-commerce platforms and merchants.

Temu, a cross-border e-commerce platform under Pinduoduo, has been pushed to the forefront.

On July 29, according to media reports, hundreds of merchants gathered at the Guangzhou headquarters of Temu, a cross-border e-commerce platform under Pinduoduo, to defend their rights. The reason was that the merchants were fined by Temu for after-sales issues, with the amount ranging from tens of thousands to millions of yuan.

After failing to appeal, merchants who were forced to go to the government office building to seek an explanation after receiving fines. Why did the merchants resort to such a desperate measure? How did the government respond?

1. Temu headquarters under siege

"If Temu doesn't lend us money, we won't have money to pay our employees. Temu should pay us back as soon as possible and also give us the legitimate rights and interests of e-commerce merchants..."

According to videos and screenshots circulated online, on July 29, many merchants came to the headquarters of Pinduoduo's cross-border e-commerce platform Temu in Guangzhou Panyu - Guangzhou Panyu Aoyuan International Center, and some merchants entered Temu's office on the 25th floor.

(Picture from the Internet)

According to media reports, merchants collectively surrounded Temu’s headquarters and came to negotiate for rights protection because “Temu frequently issued fines.”

It is understood that most of the hundreds of merchants who denounced Temu are bosses doing cross-border e-commerce business in Guangdong, and most of them are small and medium-sized factory owners.

In fact, this is not the first time that the Temu headquartered company has been protested by merchants.

As early as the beginning of May, the first batch of merchants who were dissatisfied with the "refund only" function gathered downstairs of Temu's headquarters in Aoyuan Building in Panyu, Guangzhou, and launched a rights protection campaign against Temu with a petition signed and stamped by the merchants.

(Picture from the Internet)

In July, some merchants came to Temu to protect their rights, but the method they used was that dozens of merchants represented the company and conducted friendly negotiations with Temu. However, Temu never provided an effective solution.

2. Why do businesses collectively defend their rights?

Since Pinduoduo launched the "refund only" function, Temu has also launched an after-sales policy of "full refund within 90 days if not satisfied but no need to return the product".

At the beginning of this year, Temu made new adjustments and revisions to its After-Sales Service Policy, indicating that products that are judged by the platform to have quality issues will be divided into four levels of penalties based on product quality scores: 5 times, 2.5 times, 1.5 times, and no deduction of compensation. In addition to "not settling the order payment", merchants will also have to bear the compensation penalty.

Temu’s policy means that merchants not only have to face the “refund only” wool-pulling behavior, but also the high fines imposed by the platform on merchants.

The minimum penalty is not settling the payment for the goods, and the maximum penalty is to impose compensation of 5 times the declared price of the goods on the basis of not settling the payment for the goods.

One of the merchants in the clothing category said, "If I quoted the platform 100 yuan for a piece of clothing, after the refund, I will not only lose the money for this order, but also be fined up to five times the price of the product by the platform. I may lose 600 yuan for a single order just by refunding. Users can happily get a refund, but my store will be fined and confiscated."

In addition to the compensation, there is also a reserve fund. According to merchants, once the buyer applies for after-sales service, Temu will freeze the order fee as a reserve fund for after-sales service, resulting in the merchant only getting a small amount of money back.

The emergence of the reserve fund mechanism was not expected by the merchants. When they asked Temu staff, they learned that the platform would freeze the reserve fund every month, and the reserve fund was the merchant's funds frozen to protect consumers after-sales when there was a dispute over the order.

Many businesses have discovered that their reserved funds have actually been frozen, and even the reserved funds that should have been unfrozen last year are still frozen.

Pictures from the scene showed that some merchants held up banners demanding that the platform give a reasonable explanation for the high fines and withholding of reserve funds.

Some merchants reported that in March this year, Temu issued a large number of fines, mainly due to "after-sales issues", but did not explain the specific issues involved in each order.

According to media reports, in this incident, the merchants calculated that the total amount of post-sales fines and withheld reserves was as high as 139 million yuan, involving 407 merchants. The extremely high fines made it impossible for smaller merchants to afford them, so they could only defend their rights in this way.

In addition, merchants also questioned the transparency of the platform's penalty mechanism.

Another merchant said, "It's OK to fine people since the end of last year, but this year the After-Sales Service Policy has been adjusted. Now we will be fined if there is a refund. They say the fine amount is divided according to the product quality score, but we merchants don't know how the quality score is defined."

Merchants also revealed that the time it takes Temu to handle after-sales penalties has changed from "once every few weeks" to "once a day", resulting in merchants now receiving a large number of refunds and penalties every day.

At the same time, a reserve fund that was not known when the contract was signed dealt a greater blow to the merchants.

Merchants who were overwhelmed by the fines went completely crazy.

There are also rumors online that Temu makes money from fines. In response to this, Pinduoduo responded to the media on the evening of July 30, saying: "The platform will not make money from fines for merchants violating regulations. If fines are imposed, they will be compensated to consumers."

However, the issues such as the penalty mechanism mentioned by the merchants are only the merchants' statements at present. What is the truth? We will continue to pay attention.