Merchants accuse Ele.me of unfairly deducting money from orders

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Merchants are accusing food delivery startup Ele.me of forcing to deduct RMB 3 per order for promotion fee for a bid ranking, Tencent News is reporting. 

When food & beverage businesses and Ele.me cooperate, Ele.me deducts 6% of every single order. Adding the RMB 3 to original 6% deduction, it will become money-losing deals for businesses.

“After verification, the problem was about Alipay’s promotion. Our local market managers have put business owner online for the increase his personal performance without confirming the business owner’s decision. With this feedback, we have arranged people to communicate with the involved merchants to communicate and pay for the corresponding losses,” Ele.me’s spokesperson told TechNode.

According to DCCI’s 2017 food delivery startup report, Meituan Waimai was dominating the market with 53.9% market share, followed by Ele.me (29.8%) and Baidu Waimai (13.7%). Despite Ele.me’s merger with Baidu, Meituan still ranks the first in the food takeaway turf war.

2017 Chinese food delivery startup market share (Chart: TechNode)

According to media reports, the RMB 3 promotion fee is a “promotional bidding” activity for Ele.me. It is used to increase the rankings of merchants on the list of Ele.me app, thereby increasing user traffic and bringing more customers. Ordinary merchants’ rankings are based on several factors such as the merchant’s popularity and sales volume. After paying for the promotion fee, the merchant’s ranking will be higher and ensure more exposure.

“Deducting the promotion fee is against the ethics of the industry. The ultimate victim of the promotion fee is still the consumer. The merchant will also lose trust in the platform in such events. The reputation of the company will be damaged and will lose both customers and merchants,” Chen Liteng, an assistant analyst with the O2O Department of Life Services at the China Electronic Commerce Research Center said