Who is being upset by Pinduoduo?

The turmoil of the Pinduoduo "store bombing" incident in March has gradually subsided. Behind the incident, a deeper question worth exploring is: what kind of after-sales policy has Pinduoduo built under the premise of ensuring efficiency? Is the "refund only" mechanism "brainless" to consumers? Is Pinduoduo still attractive to merchants?

Many years later, the Pinduoduo "store bombing incident" that occurred in March 2023 may still be talked about by e-commerce practitioners. Under the fuse, the interest game between merchants and e-commerce platforms is probably worth discussing in the history of e-commerce.

At the end of March, one of Cui Ping's Pinduoduo stores was attacked by a "store bombing" force. At that time, the store's orders suddenly surged, and most of them were "malicious orders."

Cui Ping found out that his store was targeted because a blogger "exposed" the statement "officially operated" on a screenshot of his store. He immediately explained to the blogger that it was not Pinduoduo's official website, but his official flagship store, and begged the blogger not to mislead him and destroy his years of hard work. As a result, the blogger ignored him and still released a video the next day, calling on fans to continue "bombing".

Cui Ping's store began to submit evidence and appeal to the platform. The platform supported his request and rejected most of the "refund only" requests, especially when large amounts were involved, the success rate was higher.

Now the storm has gradually subsided. Behind the incident, a deeper question worth exploring is, what kind of after-sales policy has Pinduoduo built under the premise of ensuring efficiency? Is the "refund only" mechanism that allows people to get a refund without returning the goods a "brainless" way to stop consumers? Is Pinduoduo still attractive to merchants?

01 Pinduoduo, who is it standing with?

People are getting more and more accustomed to online shopping. For example, Li Meng, who lives in Shandong, even chose to order a large electric car from Pinduoduo. But when the electric car arrived, she was dumbfounded.

When she inspected the car, she found that its speed was only half of what the dealer claimed, and it couldn't even climb a small slope, and it also shook during driving. Because of the safety hazard, Li Meng immediately applied for a refund, but she didn't expect to start a long process of rights protection.

At first, her application was rejected by the merchant on the grounds that "electric vehicles are consumables and will affect secondary sales". After several rounds of communication, the merchant agreed to return the products, but required the buyer to bear the depreciation fee after vehicle inspection, unpacking compensation fee, and round-trip shipping fee. Li Meng disagreed, and she uploaded the return logistics order number twice, but the merchant threatened the logistics party over the phone and the logistics party did not dare to accept the order.

Li Meng had no choice but to seek help from the platform and successfully returned the product with the help of customer service, but the merchant still refused to accept the product on the grounds that "the returned electric vehicle was damaged." Pinduoduo customer service intervened and contacted the logistics company to verify. Through the unboxing video, it was found that the electric vehicle was not damaged and the certificate provided by the merchant was false.

Finally, with the help of the platform's customer service, the electric bike was delivered three times before the merchant "received" it. Since the merchant's act of making false vouchers touched the platform's bottom line, the large shipping fee that Li Meng originally had to bear was also compensated under the coordination of the customer service.

More and more people are like Li Meng, whose consumption habits are shifting online faster due to the epidemic. The product and service system of e-commerce platforms is also becoming more and more complete, but such a bad shopping experience made her feel that consumers are still in a disadvantaged position compared to sellers who are familiar with the platform rules. If there is no intervention from the platform customer service, the situation where legitimate rights and interests are not protected will still exist.

In e-commerce transactions, there is a group that is more likely to be "particularly mistreated", and that is the elderly; there is a certain type of goods that consumers tend to deal with in a perfunctory manner even if there are problems, such as flowers and seeds.

Chen Yue, who is not familiar with mobile phone operation, encountered all of these problems. She bought a Phalaenopsis orchid seedling that can bloom in five colors on Pinduoduo. After raising it for more than a month, the flower finally bloomed, but only in purple-red color.

The after-sales period had expired, and she did not know how to upload photo evidence, so Chen Yue contacted the platform's customer service. After countless rounds of text communication, she finally opened the album authorization, uploaded the "evidence", and the customer service helped her complete the "refund only".

For consumers who have purchased special categories or cannot return products for various reasons, Pinduoduo's "refund only" rule allows them to enjoy a refund without returning the products. However, from the perspective of some sellers, the "refund only" rule has been labeled as "overprotective of consumers" and "easy for buyers to exploit loopholes."

A nursing bed merchant on Pinduoduo encountered a buyer who "returned goods without reason". Because he bought a lower-priced product, the buyer asked for a return, and the merchant agreed, but the two sides could not agree on the return fee. The merchant asked the buyer to pay the round-trip shipping fee of 361 yuan, but the consumer was only willing to pay 200 yuan. The platform customer service intervened. Considering that the merchant was not responsible, and checking that the consumer had no previous unreasonable after-sales record, the platform finally borne the difference. The consumer's demands were met, and the interests of the merchant were not affected.

What bothers Cui Ping the most is not the "wool-seeking party" among a few ordinary buyers, but the peer merchants who are more familiar with the platform rules and have more diverse tools and methods. "They have caused us greater losses and more serious damage to the competitive environment." In fact, some wool-seeking parties have committed crimes. Someone bought an Apple phone and returned it, but the merchant received a brick instead. In response to this situation, the platform will not only remind the merchant to preserve evidence and report it to the police, but also cooperate to provide relevant evidence.

But whether it is individuals or businesses, the resistance to taking advantage of the situation is getting greater and greater. "If an account initiates refund-only requests multiple times within a period of time, it will be put on the platform's 'blacklist'," said Cui Ping.

He, who has been running a store on Pinduoduo since 2019, concluded that the rules of this platform are more friendly to two groups: consumers with normal consumption and no unreasonable after-sales records, and stores that do normal business and have passed the platform rules.

02 Pinduoduo, what’s the purpose of its “aggressive” after-sales service?

Going back to the essence of business, e-commerce platforms make money from information matching fees, and this business is obviously more complicated than offline hypermarkets.

First of all, it has to attract buyers and sellers of sufficient scale to allow information to flow. Accordingly, it has to solve the trust problem caused by online transactions. Therefore, the e-commerce platform has a second role - "guarantor", which can convert uncertain information in performance into certain information. Only in this way can it deal with large-scale buyers and sellers at the same time.

He Le, a senior e-commerce practitioner, gave an example that the "7-day no-reason return" policy was first launched by Taobao in 2007. After it was officially "written" into the Consumer Rights Protection Law on March 15, 2021, the popularity of online shopping has "soared". There is a set of data that can prove this to a certain extent: from 2013 to June 2022, the scale of online shopping users in China has increased from 302 million to 841 million.

There are 1 billion Internet users, and more than 800 million of them shop online, which is a number that the e-commerce industry is excited about. But from another perspective, some products and some groups are indeed excluded.

Zhang An, a vegetable wholesaler in Urumqi, Xinjiang, told Shenran that non-standard products such as vegetables, fruits and melons are not eligible for "seven-day unconditional return" and freight insurance, but it is also more difficult for them to leave the fields; people in Xinjiang and Tibet, where logistics costs are relatively high, cannot enjoy "free shipping" and cannot experience the low prices brought by e-commerce...

It is said that competition on the Internet has no boundaries, but agricultural products and "rural areas" seem to receive little attention.

Back in 2016, from Pinduoduo's perspective at the time, this was an opportunity in the gap between the two giants, Alibaba and JD.com. As a result, in two years, Pinduoduo relied on its affordable label and "rural market" to grow into China's third largest e-commerce platform after Alibaba and JD.com. In 2018, when Pinduoduo was listed on the Nasdaq in the United States, it was already one of the largest agricultural product upstream platforms in the country.

However, bilateral matchmaking of agricultural product sales is still an industry-wide problem. "In e-commerce transactions of fresh produce and fruits, returns and exchanges are unlikely to be possible because the products have a short shelf life and are difficult to return through cold chain logistics," said Zhang An.

Cui Ping's shop owner sells aquatic products. "Fresh food does not support unconditional returns, and such products are prone to problems, so consumers are likely to have prejudices against fresh food e-commerce and will not choose to buy through online channels," he said.

If we want to expand the scale of fresh fruit e-commerce, we need the platform as an intermediary to come up with some innovative mechanisms to balance the interests of buyers and sellers. Buyers are worried about whether there is any guarantee for after-sales service. Sellers are concerned about whether they can expand sales.

It is in the context of urgent development of agricultural products and increasing consumer demand that Pinduoduo's "refund only" model plays a role similar to that of a "guarantor".

Cui Ping told Shenran that Pinduoduo's higher after-sales standards can be said to be a necessary condition for the large-scale development of agricultural products e-commerce sales. Buyers have accumulated trust in Pinduoduo merchants through repeated transactions and formed a mindset of shopping for fresh produce and fruits online. "Only then can our business grow bigger and bigger."

"If the platform mechanism always favors merchants, the merchants' business will become narrower and narrower, and consumers will think that fresh produce and fruits on a certain platform are 'not worth buying'. It may not be that you are not doing well, but that your peers are not doing well." Cui Ping and Zhang An's company, Pinduoduo, is the main online sales platform and the fastest growing channel.

However, the "refund only" policy supported by some merchants has recently become the target of public criticism.

After dealing with Pinduoduo for nearly four years and experiencing the store bombing incident this time, Cui Ping has figured out a set of priorities for Pinduoduo platform rules: if a store's sales and ratings are not high, and its refund rate is higher than its peers, but the buyer is a normal consumer user, then this mechanism will be more inclined to the latter and will provide better services and guarantees.

On the contrary, if the store's various indicators are within the normal range in the same industry, when the buyer applies for "refund only", the platform's manual customer service will intervene to identify whether the buyer's consumption behavior is normal. If the refund record is higher than the general level, the probability of a successful refund will be low. In this case, this mechanism is more inclined to stores with high sales and high ratings.

Yunnan businessman Lao Cai has similar feelings. He runs a brand store and several regular stores. The brand store sells higher-quality fruit. In the past two years, there were orders for "refund only", but this year they have almost disappeared. Regular stores sell defective fruit, and the after-sales rate is already high. This year, the proportion of orders for refund only reached 2.6%.

In general, Cui Ping found that the balance of this platform's rules first cedes the favor to normal consumers and then tilts towards merchants operating in compliance with regulations. Their respective credit scores are like weights, and "the entire mechanism treats all merchants equally and ensures fairness with maximum efficiency."

03 Can Pinduoduo still attract merchants?

E-commerce platforms have their own platform governance and rule-making. If merchants want to expand their business, they must understand the rules and survive. Between the Pinduoduo platform, which prioritizes the interests of consumers, and merchants who are unwilling to accept the "refund only" rule, an unavoidable question is what does the "refund only" after-sales mechanism bring to merchants?

An obvious fact is that the after-sales costs are higher. On the one hand, under the "refund only" rule, if the application is successful, the buyer can get a refund directly without returning the goods; on the other hand, in the process of communication between customer service and sellers, the probability of Pinduoduo platform customer service actively intervening is higher than that of other platforms.

In this set of rules, merchants with poor product quality and poor service will have higher after-sales costs. On the contrary, for some merchants, it may not be a bad thing.

Sun Zhi, a fruit merchant in Yuncheng, Shanxi, said, "The quality of our store's products is relatively high compared to other stores in the industry, but it is difficult to avoid buyers receiving bad fruits. If there is a problem with the fruit, we do not need to return it and would rather directly refund the buyer."

"When customer service does not answer questions properly, does not actively deal with after-sales issues, or gets into a dispute with consumers, the platform's proactive involvement in after-sales service can help us complete the after-sales order in a timely and effective manner without involving too much manpower costs," said Zhang An.

“Refund only” has different impacts on merchants with different “credit”. Many of those involved in “store bombing” claim to be small and medium-sized merchants. So, is Pinduoduo intentionally protecting large merchants at the expense of the interests of small merchants?

From a company-wide sales of several million to a single Pinduoduo store of 200 million, Cui Ping's most direct feeling is that many new merchants often have such questions, "Does the platform protect large stores? Will it sacrifice the interests of some merchants to please the consumer group?"

"But when a store becomes the leader in the industry, whether it is the store clerk you contact, or the platform mechanism and operation logic, they will all 'tell' you that the platform cannot treat anyone specially, and big stores do not have amulets," Cui Ping said. For example, a brand knife merchant was punished by the platform to pay consumers three times the compensation because of whether a product had a logo printed on it.

"Some stores have a low approval rate for 'refund only', not because of the large size of the store. Instead, it's because the product quality, delivery capacity, and pre-sales and after-sales reception capabilities have all been tested, so the weight of the store will be higher than that of a new store." He concluded that the starting point of the platform rules is to allow the merchant group to form a positive cycle.

He Le, who has experience in operating several leading e-commerce platforms, said that Pinduoduo needs to be stricter with early stores. "Opening a store on Pinduoduo has natural traffic. If the mechanism is not strict, it may lead to new stores relying on natural traffic to engage in price wars, or even "cutting" a wave of leeks and then opening a new store to continue "cutting"."

From this perspective, in the second half of the Internet where traffic is becoming more and more expensive, Pinduoduo has the lowest entry threshold and the lowest early traffic cost for small and medium-sized businesses. Of course, in actual operation, " if merchants want to obtain traffic at a lower cost, it depends on whether they have the ability to handle after-sales problems, optimize the supply chain and improve the level of operations ," Cui Ping added.

According to multiple merchants, the overall cost of operating a store on Pinduoduo is lower than on other platforms. Among them, after-sales costs are relatively high, but traffic costs and platform commissions are relatively low.

As for the aquatic products category, Cui Ping told Shenran that for every 100 yuan of goods sold on Pinduoduo, the company has an average of 3.5-4 yuan in after-sales costs, 1-1.5 yuan in traffic costs, and 0.6 yuan in payment technology service fees collected by the Pinduoduo platform. These three costs total 5-7 yuan. Compared with other e-commerce platforms, these three costs range from 12 to 27 yuan out of 100 yuan in revenue, mainly due to the high traffic costs.

That is to say, when doing business on other e-commerce platforms, the platforms charge higher traffic fees. On Pinduoduo, merchants enjoy lower platform fees, but the hidden costs are the fees generated by higher standards of after-sales rules.

When doing business, you have to calculate the total account. For merchants, whether it is the bidding mechanism or the refund rule, Pinduoduo's rules are consistent: the platform can make less money, and correspondingly, merchants must not only provide lower-priced and better products, but also provide better after-sales service. Only when users are happy can merchants be happy, no matter how big or small.

*At the request of the interviewees, Li Meng, Chen Yue, He Le, Zhang An and Sun Zhi are pseudonyms in this article.

Author: Jin Yufan; Editor: He Shulong

Source public account: Shenran (ID: shenrancaijing), focusing on innovative economy and dedicated to in-depth content.