618前，「仅退款」的168天

Previously, e-commerce platforms have launched the "refund only" policy. It has been so many days since the refund only policy was implemented, so what is the situation now?

In 1999, Alibaba's "Eighteen Arhats" gathered in Hangzhou, and the phrase "Let's make business easy" opened a glorious page for China's e-commerce industry. 25 years later, "e-commerce" has been prefixed with search, shelf, live broadcast, short video, etc., and the industry situation of competition among many players has returned to stability and unity, but the difficulty of doing business has not decreased.

On December 26, 2023, Taobao announced the launch of a refund-only service, and the next day JD quickly followed suit and announced the addition of a "support for users to refund only" policy. So far, Pinduoduo, Taobao, and JD have all launched "refund only".

Coupled with Douyin, which launched the "refund only" service in September 2023, and Kuaishou, which joined the "refund only" team in January 2024, the rules that Pinduoduo has been implementing since 2021 have almost become the industry standard.

If we follow the time when the "refund only" policy officially takes effect according to JD.com's "JD Open Platform After-Sales Service Management Rules" - December 29, 2023, before this 618, today's "refund only" policy has been online for 168 days.

Not long ago, Pinduoduo released its first quarter performance report for 2024, and its market value once again surpassed Alibaba, making "questioning Pinduoduo, understanding Pinduoduo, and becoming Pinduoduo" more and more a new trend in the e-commerce industry. However, when the e-commerce industry collectively turns to "refunds only", it does not mean that everyone will have a "bright tomorrow."

The e-commerce industry ecosystem composed of platforms, users and merchants is undergoing a "big adventure" at the expense of merchants.

1. The Eve of “Refund Only”

For Chinese e-commerce, 2019 is a special year. At the macro level, the Chinese economy, which has experienced a period of rapid growth, has just experienced a five-year "slowdown period", with GDP growth falling from 7.3% in 2014 to 6.1% in 2019.

At the micro level, the new economic cycle has led to a slowdown in income growth. Chinese consumers, whose appetites have been opened by consumption upgrades, have shifted their attention back to cost-effectiveness. Pinduoduo seized the opportunity and has since moved from "outside the Fifth Ring Road" to "in the city" where Alibaba and JD.com are entrenched.

Riding the carriage of the new economic cycle, Pinduoduo bravely entered Goose City and became the county magistrate: the 128G version of iPhone11, which is priced at 5,999 yuan on Apple's official website, is only 5,299 yuan with Pinduoduo's 10 billion yuan subsidy. The huge subsidy is like the money thrown to users' homes by bandits in the dark. While buying users, it also rudely disrupted the big promotion gameplay that Alibaba and JD.com have always insisted on.

Although it is shameful to “cut prices”, human nature cannot stand the temptation. Even if they buy inferior products on Pinduoduo, most users will complete the logic with the sentence “What else do you want at this price?” After Pinduoduo opened the entrance to the new market with 10 billion yuan in subsidies, it is also quietly accumulating its own competitive chips - the supply chain.

Pinduoduo, which just entered the city from outside the Fifth Ring Road, knew that it could not compete head-on with Tmall and JD.com, which have rich supply chain resources, so it set its sights on those white-label merchants who have products and production capacity but no brand. It is also the C2M (Customer to Manufacturer) approach that allowed Pinduoduo to overtake others with "low prices" all the way.

According to the financial report, Pinduoduo had 585.2 million active buyers in 2019, a net increase of 167 million over the same period last year, a year-on-year increase of nearly 40%. In the fourth quarter of 2019, the net increase in users of Pinduoduo, Alibaba, and JD.com was 48.9 million, 18 million, and 27.6 million, respectively.

Alibaba and JD.com also took timely countermeasures to Pinduoduo's rapid growth driven by the 10 billion yuan subsidy. On the eve of the 2019 "Double 12", Alibaba's Juhuasuan urgently launched the "10 billion yuan subsidy" as a benchmark. JD.com, which is particularly sensitive to the supply chain, launched Jingxi this year, also laying out the C2M model. However, these actions did not really produce any effect.

Rumor has it that there are many complaints about Juhuasuan's 10 billion yuan subsidy on Alibaba's internal network. Especially compared with Pinduoduo's "simple and crude" 10 billion yuan subsidy, Juhuasuan has been criticized for not being friendly enough and having too many tricks. The hesitant attitude towards the 10 billion yuan subsidy is also due to the will of the management to a certain extent.

Zhang Yong, former chairman and CEO of Alibaba, once said in an earnings call: "No one in history has been able to change the situation through their own continuous price subsidies." Now that it is clear that "you cannot defeat your opponent using your opponent's methods," Alibaba's other imitation behaviors have lost their specific meaning.

JD.com also encountered similar problems. In 2020, Jingxi, which had been established for a year, was upgraded from a business unit to a business group, led by Liu Qiangdong himself. Combining the strategic goal of seizing the sinking market and the market opportunities brought by the "black swan" epidemic, Jingxi Pinpin joined the fierce competition in the community group buying field.

Unfortunately, Jingxi Pinpin failed to survive the "Thousands of Group Wars". With Liu Qiangdong admitting the failure of "Jingxi" at the strategic meeting in July 2022, JD.com's two and a half years of sinking market strategy also came to an end.

At JD.com's Q4 2021 earnings call, CEO Xu Lei concluded: "Business competition is changing rapidly and sometimes even cruel." What makes the failure of Alibaba and JD.com even more miserable is that Pinduoduo has already achieved results on the C2M road.

On April 30, 2021, Pinduoduo released its 2020 annual report, which is also the first annual report after founder Huang Zheng stepped down. Data shows that as of the end of 2020, Pinduoduo's annual active buyers reached 788.4 million, exceeding Alibaba's annual buyers of 779 million during the same period. In addition, Pinduoduo's annual active merchants increased from 5.1 million in the previous year to 8.6 million, an annual increase of 69%.

From imitating Pinduoduo to enter the sinking market to collectively launching the "refund only" policy, the giants watched Pinduoduo complete the "diaosi counterattack" while trying to keep up with the market rhythm. The current "refund only" is like a Pandora's box, which has a series of complex impacts on the e-commerce industry.

2. Who does “refund only” protect?

Open the Black Cat Complaint Platform and search for "refund only", and you will get more than 150,000 complaint messages. However, unlike common complaints from consumers against merchants, the majority of the content here is complaints from merchants against Pinduoduo and other e-commerce platforms for their unreasonable "refund only" behavior.

For example, after the buyer reported the after-sales problem on the platform, the platform has already taken the initiative to intervene and provide the buyer with a "refund only" before the merchant has time to understand the relevant situation. Or the buyer may request a refund only for various reasons after having already signed for or even used the product in daily life.

According to the Jingzhe Research Institute, the amount of goods involved in complaints about refunds ranged from tens to hundreds of yuan, and the vast majority of the categories involved were clothing and footwear, digital accessories, and fresh food. Judging from the number and specific content of the complaints, Pinduoduo merchants were particularly concerned about "refunds only."

Previously, industry insiders pointed out that the introduction of a refund-only policy by e-commerce platforms can help reduce consumers’ rights protection costs and simplify the after-sales process. In addition, e-commerce platforms themselves can also lower the shopping threshold and reduce decision-making costs to achieve the purpose of attracting consumers. However, from this point of view, in the "ecological triangle" composed of e-commerce platforms, consumers and merchants, only merchants have not gained any benefits.

Li Jun, who sells home products on Pinduoduo, JD.com and other e-commerce platforms, told Jingzhe Research Institute that refunding only is a very unfair platform rule for merchants, and it does more harm than good to the development of the entire e-commerce industry. "Directly refunding customers when there is a problem improves the consumer experience, and customers will of course feel very happy. The platform also reduces after-sales costs, but contradictions still exist."

Li Jun pointed out that on platforms like Pinduoduo that focus on sinking markets, there are not many merchants with mature e-commerce operation experience. "Many merchants even opened a factory in a village and have no technology, awareness and ability to operate a store. They simply opened a store on Pinduoduo because the price is low enough and they want to sell the goods through online channels. Pinduoduo specifically looks for such white-label merchants."

According to Li Jun, the conflicts caused by refunds alone actually reflect that the products and services provided by merchants do not meet the actual expectations of consumers. On the one hand, small and medium-sized merchants lack necessary processes in the production of products. For example, the burrs common in plastic products are not solved in the production and quality inspection stages. On the other hand, white-label merchants generally lack attention to service details. For example, the express packaging is not reliable enough, resulting in the appearance of damaged goods when they are delivered to consumers.

"The platform sometimes automatically detects some keywords and takes the initiative to intervene in the after-sales process, directly sending consumers a pop-up window for refunds. At this time, the merchants lose their autonomy. This also shows that the platform chooses to stand on the side of consumers, and the merchants can only bear the losses caused by refunds."

Li Jun particularly emphasized that the refund-only policy on the e-commerce platform was originally intended to eliminate low-quality merchants and improve user experience, but the platform's attitude of blindly favoring consumers has not only failed to solve the problem of low-quality merchants, but has instead given rise to "professional wool parties."

According to the Jingzhe Research Institute, most e-commerce platforms have not clearly defined the reasonable scope of application of "refund only". For example, on the Pinduoduo platform, when consumers find that there are quality problems with the goods, they can choose to only refund without returning them. However, there is a lack of relevant basis for how to determine quality problems.

Correspondingly, in the rights protection communities spontaneously formed by small and medium-sized businesses, various bizarre reasons for "only refunds" are constantly shared, such as refunds only for damaged courier packaging, and refunds only for food that is not tasty. It is the platform's support for this kind of subjective feedback that gives the wool party an opportunity to take advantage of it.

"Refund only magnifies the evil of human nature. What is particularly puzzling is that there are still many student groups who specialize in looking for free guides and taking advantage of loopholes in the refund-only policy. It is difficult for merchants to pass appeals afterwards. In order not to affect their daily operations, many merchants can only choose to endure silently." Li Jun said that he has now closed his Pinduoduo and JD stores, and turned more attention to live streaming and private channels.

3. Whose worries can be solved by “refund only”?

In fact, from the perspective of Pinduoduo's development path, the original intention of launching a refund-only service was to solve various problems arising from the express delivery process, and at the same time, with the help of platform rules, to continuously regulate white-label merchants and improve product quality and service experience. However, this "one-size-fits-all" platform rule is too rough, making some small and medium-sized merchants who are not familiar with the e-commerce industry the target of the wool party.

At the same time, other e-commerce platforms that have joined the "refund only" team seem to be trying to improve user experience and attract user attention, but the real purpose behind it is actually to seek new growth by leveraging the power of small and medium-sized businesses, or even sacrificing the interests of small and medium-sized businesses. To put it more bluntly, e-commerce platforms not only want "low prices" but also high quality, but the platforms themselves are unwilling to invest more. Therefore, merchants have become "scapegoats" and bear the risk of being fleeced by "refund only".

It should be pointed out that the impact of "refund only" on brand merchants is almost negligible. The main reason is that the express delivery fulfillment process of existing brand merchants on the platform is standardized enough, the probability of errors is low, and the after-sales service experience is relatively more complete. In addition, out of fear of well-known brands, "wool party" will not rashly take advantage of free stuff. Therefore, small and medium-sized merchants with weak voice in the cooperation relationship with e-commerce platforms are "placed with high hopes".

Take Taobao as an example. According to Alibaba's annual report released on July 21, 2023, Taobao added 5.12 million merchants in the fiscal year 2023 ending March 31, most of which are small and medium-sized merchants. As the fresh blood of the platform, these small and medium-sized merchants naturally have to bear more responsibility for the growth of the platform, and "refund only" is an efficient means to quickly activate small and medium-sized merchants.

On the surface, "refund only" is like weaving a safety net, allowing consumers to boldly try the products provided by small and medium-sized merchants, but e-commerce platforms are also using "refund only" to get rid of their own responsibilities. As an e-commerce platform that provides transaction scenarios, it also needs to be responsible for the products sold on its own platform. For illegal merchant behaviors such as counterfeiting, false advertising, etc., e-commerce platforms have the primary responsibility to promptly discover and deal with them.

However, after the launch of the "refund only" policy, the merchant governance link that the e-commerce platform needs to complete in advance has been weakened. Any dissatisfaction of consumers with products and services can be resolved by "refund only", and the actual losses caused are also paid by small and medium-sized merchants.

In this way, consumers get the low prices they want, and the operating costs are shared by small and medium-sized businesses. The value of e-commerce platforms is more focused on traffic, and they can focus on the recommended positions and do the traffic business they are best at. This approach of only taking benefits without taking risks is naturally questioned by businesses.

Rain runs a fashion accessories store on Taobao with an annual turnover of over 10 million yuan. He told Jingzhe Research Institute that the freight insurance is sufficient to cover the problems that may arise from product quality and express delivery. If the buyer feels that the product quality is not good or is not satisfied with the express delivery, he can apply for a return and refund, and the merchant will bear the freight insurance. So from the merchant's perspective, "refund only" is just a rogue clause.

"If the purpose is to improve consumer experience and retain consumers, e-commerce platforms can also directly provide consumers with the most intuitive discounts in the form of subsidies to achieve the purpose of retaining users, without having to impose the platform's operating costs on merchants." Rain said.

By the end of 2023, Pinduoduo's market value will surpass Alibaba, bringing unprecedented anxiety to Alibaba and the entire e-commerce industry. Mr. Ma said internally: "The methodology that Alibaba relied on for success in the past may no longer be applicable." Liu Qiangdong also said on the intranet, "JD.com must change, otherwise there is no way out." However, after changing over and over again, it finally became Pinduoduo.

Returning to the industry competition scenario and re-observing the phenomenon that "refund only" has become the standard for e-commerce platforms, it is not difficult to find that traditional e-commerce platforms such as Alibaba and JD.com have been passively involved in the trap of low-price competition.

Pinduoduo has always relied on extremely low prices to attract customers, and because it can successfully grab traffic with "low prices", it has no shortage of white-label merchants. Therefore, although the "refund only" policy has been implemented since 2021, many merchants have left because they cannot tolerate the loss of profits caused by "refund only". However, a steady stream of small and medium-sized merchants still creates a stable supply of goods for Pinduoduo.

Relatively speaking, Alibaba, JD.com and Pinduoduo have natural genetic differences and have long possessed advantages in quality and service. However, in order to compete for the "low-price market", Alibaba and JD.com are now attracting small and medium-sized businesses while "sucking blood" from them, which seems particularly contradictory.

4. Rethinking the meaning of “low price”

At the beginning of the e-commerce industry, the reason why the platform was able to offer various discounts, in addition to its own financial subsidies, was largely because the hard costs of traditional sales channels such as site rental and storage fees were saved, so there was room for price cuts. Brand merchants were also willing to expand online channels to obtain higher revenue and profits.

Later, ordinary merchants began to enter the e-commerce field. In order to enrich SKUs and cover a larger market, e-commerce platforms would also allocate resources to support ordinary merchants. By the way, they would also require ordinary merchants to participate in low-price activities as a "pledge of allegiance" during various major promotional events.

However, when faced with today’s small and medium-sized businesses, the platform itself provides limited resources and conditions, and it also puts forward the “want both” requirement, which is tantamount to killing the goose that lays the golden eggs.

The equilibrium value theory holds that the price of a commodity is determined by the socially necessary labor time required for its production. From a business perspective, the most reasonable way to generate low prices is for businesses to reduce commodity costs by expanding production scale and improving production efficiency based on a stable supply and demand relationship.

However, the low-price competition within the e-commerce industry has now gone beyond the scope of supply and demand, and is seeking profits from the upstream of the supply chain. As a result, merchants have no time to improve productivity in order to survive, or counterfeit and shoddy goods have entered the market as good ones, creating a "low-price bubble." The benefits that consumers are happy to get are just a waste of time, and society has produced more junk products. The only "positive feedback" may be the performance data showing a slight growth trend in the financial reports of e-commerce platforms.

"Refund only" has become the standard in the e-commerce industry, and it has also laid a roadblock to the supply-side structural reform. Although the refund-only policy, which runs counter to the laws of social and economic development, has not had a serious impact on core participants in economic development such as big brands and manufacturers, it may become the last straw that breaks the camel's back for small and medium-sized businesses surviving in the cracks. Especially in the current economic environment, small and medium-sized businesses represent the real people's livelihood. The platforms destroy their jobs for industry competition and undermine the current stability of the industry.

If we put ourselves in their shoes, when small and medium-sized businesses provide a large number of low-priced goods to the market and provide new impetus for the performance growth of e-commerce platforms, should the platforms also consider: What do small and medium-sized businesses need?

Two years ago, the "Pinduoduo 200 yuan TV buyer show" sparked heated discussions across the Internet. Countless netizens saw the bare-bones environment and various unknown TV brands in the pictures posted by the buyers through the Internet, and were also overwhelmed by the reviews that "the TV I bought for 200 yuan is very good."

People finally understand that the low-priced products that they used to look down upon can actually bring the simplest happiness to others. At this moment, the "value" of low-priced goods is maximized. Now, small and medium-sized businesses that supply low-priced goods should also be given enough attention.

In market competition, low-end products are often eliminated, but the market still needs low-priced products. It is fair to allow consumers at different levels to have choices. Similarly, merchants should also have the right to choose - low-priced products are available because of market needs, rather than being forced to participate in a death race to create low prices for the sake of competition between platforms.

During the current 618 shopping festival, small and medium-sized businesses are once again pushed into the battlefield. Pinduoduo recently launched an automatic price-following system, which compares prices across the entire network and provides the lowest-priced products. The platform is sacrificing the profits of businesses to prepare chips to win the price war. Will Alibaba and JD.com follow suit this time?

There is no winner yet on the road to extreme low prices, but there must be merchants.

*Rain and Li Sun in the article are pseudonyms.

Author: Bai Lu