Chinese e-commerce upstart Pinduoduo has rolled out a series of measures to help smaller merchants during the economic slowdown caused by the current novel coronavirus outbreak.
Why it matters: Small- to medium-sized businesses are among those businesses hit the hardest by the panic surrounding the viral outbreak crisis sweeping China. Helping online sellers during this economically challenging time either through subsidies or more flexible platform policies could help the Shanghai-based company to attract and retain these merchants, important components for its ecosystem.
- Pinduoduo and its rival Alibaba had a public spat last year when Pinduoduo’s CEO accused the e-commerce giant of compelling merchants to choose between the platforms through its forced exclusivity policy.
Forcing sellers into exclusivity deals on marketplaces is illegal: regulator
Details: For the majority of orders placed during the period from Jan. 17 to Feb. 10, Pinduoduo has extended the delivery time to Feb. 12, according to an emailed statement from the company. Meanwhile, parcel pick-up time from the sellers after order confirmation was widened from 24 hours to 96 hours.
- Taking the effects of the virus outbreak into consideration, the company made the adjustments accordingly to “ease pressure on merchants” (our translation), the statement said.
- Pinduoduo says it has allocated RMB 1 billion ($140 million) toward subsidies for the initiative, adding that it is “not setting upper limits on the support.”
- The company is offering a RMB 2 to RMB 3 per order subsidy to merchants that are fulfilling their orders during the virus outbreak to mitigate rising logistical and operational costs.
- Likewise, tech giant Meituan also unveiled supportive plans for smaller businesses including setting up a RMB 350 million (around $50 million) fund for merchants, providing no less than RMB 10 billion in low-interest loans to sellers, and lowering commission fees for merchants in Wuhan.
Context: Alibaba invested RMB 30 billion worth of resources to support the growth of small- and medium-sized merchants in 2019.
- Alibaba’s Hema grocery store unit is temporarily hiring employees from restaurant chains in an attempt to ease labor cost pressures on a sector hit hard by the outbreak while addressing a workforce shortage caused by rising grocery delivery orders.
- In June 2019, home electronics manufacturer Galanz accused Alibaba’s online marketplace Tmall of hiding its products from search results after it refused to remove its listings from Pinduoduo’s platform in May.