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while other platforms followed the low-price strategy, pinduoduo made a surprise counterattack and started giving red envelopes to merchants.

on september 9, pinduoduo's "10 billion tax exemption" plan launched another benefit. from now on, for all transit orders in remote areas, merchants only need to send the orders to the transit warehouse. the logistics transit fees for the second shipment from the transit warehouse to xinjiang, tibet, gansu, ningxia, inner mongolia and other regions will be borne by pinduoduo. at present, this new tax exemption initiative has covered all merchants on the platform.

due to factors such as geographical location, the logistics costs in xinjiang and other regions have always been high. major e-commerce platforms generally use transit and consolidated shipping to reduce merchants' logistics costs and charge merchants a certain amount of logistics transit fees. pinduoduo's exemption of merchants' logistics transit fees is the first in the industry.

and this is just one part of pinduoduo’s recent package.

on september 5, pinduoduo sent an in-site notice to merchants on the platform to adjust the merchant business policy: the basic deposit of merchant stores will be reduced from 1,000 yuan to 500 yuan. the initial deposit of new personal stores and corporate stores will also be reduced to 500 yuan.

as early as the release of the second quarter financial report, pinduoduo announced that it would invest 10 billion to support new merchants and significantly reduce merchant transaction fees, with an estimated reduction of 10 billion in the next year. this is also known as pinduoduo's "10 billion reduction" plan.

what does “10 billion yuan in tax relief” mean?

in the second quarter of this year, pinduoduo's operating profit was 32.5645 billion yuan, and the net profit attributable to pinduoduo's ordinary shareholders was 32.0094 billion yuan. this means that pinduoduo will give up nearly one-third of its profits in the second quarter of 2024, which is almost the operating profit of the entire second quarter of last year.

and all of this seems to have footnotes.

at this year's second quarter financial report performance exchange meeting, pinduoduo group's executive director and co-ceo zhao jiazhen stated that management has reached a consensus that sacrificing short-term profits is necessary for long-term healthy development.

pinduoduo founder and ceo chen lei directly stated that pinduoduo feels that the company is still in the investment stage, and multiple lines of business are facing fierce competition and uncertainty brought about by the external environment. it will not consider repurchases or dividends in the next few years!

as an e-commerce platform, pinduoduo links merchants and users. after launching a consumer-oriented "10 billion subsidies" to win market share, why is it now taking out a "10 billion subsidies" to "give red envelopes" to merchants at this point in time?

merchants: pinduoduo is playing a big game

on september 4, mumu (pseudonym)'s pinduoduo store suddenly received an in-site message stating that the store's basic deposit threshold had been lowered from 1,000 yuan to 500 yuan, and that it could be checked by going to "merchant backstage-account funds-deposit".

mumu was also confused because this was the only store she operated that had a discount information prompt. later, she learned that the platform was undergoing a centralized test and this store was the first to receive the discount. she directly withdrew the discount amount, and the discount was directly credited to her account 24 hours later.

not only has the deposit decreased, but some merchants have also discovered that pinduoduo has recently made a number of adjustments to its policies toward merchants.

li lin (pseudonym), a toy merchant, was pleasantly surprised to find a "red envelope arrival reminder" in the promotion finance department. the news said, "in order to improve your advertising experience, the system will refund the promotion red envelope corresponding to the service fee during the promotion period for some refunds. the refund of the promotion red envelope by the system can be viewed under account management-financial management-my cards and coupons. there is no threshold for the use of the red envelope, and the validity period is 14 days."

behind this is actually the implementation of a series of "reduction and exemption" actions by pinduoduo. since mid-august, pinduoduo has successively launched refunds for technical service fees and promotion service fees, and upgraded the refunds for technical service fees.

on august 13, pinduoduo launched a refundable benefit for technical service fees to merchants who signed up to participate in the on-site resource activities. for all product orders generated by on-site activities such as 10 billion subsidies, flash sales, platform promotions, 9.9 special sales, trendy prices, and multi-person groups, after the user initiates a refund, the platform will proportionally refund 1% of the basic technical service fee for pay-later orders and 0.6% of the basic technical service fee for other orders.

subsequently, pinduoduo upgraded its "technical service fee refund rights", and for merchants' pay-later activity orders, the technical service fee was directly discounted by 40%.

in addition, the "promotion service fee refund rights" have also come into effect. that is, if the consumer makes a full refund for an order before shipment, the platform will automatically return a promotion red envelope corresponding to the merchant's promotion software service fee, without the merchant having to file a complaint.

pinduoduo recently released the latest merchant notification, reducing the basic deposit of merchant stores from 1,000 yuan to 500 yuan, and the initialization deposit of newly settled personal stores and corporate stores will also be reduced to 500 yuan.

according to pinduoduo, "the first batch of merchants enjoying this policy has covered nearly 70 categories, and some merchants have completed cash withdrawals. millions of merchants will benefit from this."

this wave of operations by pinduoduo has aroused heated discussions among merchants. "for us, the main operating costs of operating a pinduoduo store are: store opening, tool costs, platform service fees, traffic promotion fees, and logistics and after-sales costs. therefore, this series of measures are very practical for merchants, which is to reduce operating costs and strive for a better operating environment." chen qing (pseudonym), a seller of fresh food on pinduoduo, said.

li lin said bluntly: "this is a big game played by pinduoduo. following this line, the logic of this operation is very simple. only when we benefit from it will we be willing to bear the cost and finally pass on the benefits to consumers. only then can this chain work. similarly, only when the interests of consumers are protected and the trust crisis between merchants, consumers and platforms is eliminated can the business be sustained for a long time."

mumu said that the main reason for his continued efforts on pinduoduo is "to make money". compared with other domestic e-commerce platforms, pinduoduo still has a huge traffic dividend. moreover, for white-label merchants, they have to compete with small and medium-sized merchants and big brand merchants for traffic on taobao and tmall; on jd.com, they have to compete with self-operated products for traffic, but on pinduoduo, white-label merchants have received the most direct attention from consumers. the second is that the procedures for entering pinduoduo are relatively flat and simple, such as 0 yuan entry and fast review speed, which are all advantages. these are more friendly to small and medium-sized merchants who want to try e-commerce. now with this package plan, pinduoduo will be greatly helped in attracting merchants.

platform: "the blade is turned inward" is a natural thing

pinduoduo has only been established for 10 years. looking back at its development history, the platform has always provided support policies for merchants, including 0-yuan entry, store traffic support plan, and 0-commission policy for fresh agricultural products... in 2018, pinduoduo broke through the circle through "10 billion subsidies" to attract brand merchants to settle in, and began to shift to a "high cost-effective" mentality. in 2020, pinduoduo implemented the "0 commission" and "0 platform service annual fee" policies, saving merchants more than 80 billion yuan in operating capital costs.

thanks to the joint efforts of merchants and consumers, pinduoduo achieved total revenue of 97.0595 billion yuan in the second quarter of this year, an increase of 86% from 52.2807 billion yuan in the same period last year, and is only one step away from breaking the 100 billion yuan mark.

from this logic, it is natural for pinduoduo to decide to adopt a "turn the knife inward" strategy.

at the 2024 mid-year performance exchange meeting, it was pointed out that pinduoduo's senior management made a rational judgment on future growth, "pinduoduo's profit curve is not linear", "the profit growth in the past few quarters is the result of the short-term investment cycle and the financial reporting cycle being out of sync."

pinduoduo founder and ceo chen lei directly pointed out that pinduoduo's high-quality development path will enter a new stage. in the future, it will continue to build a healthy and sustainable platform ecology through "strong support" and "resolute governance".

why does pinduoduo, which leads the industry in revenue and profit growth, take the initiative to "slow down" and re-examine the relationship between the platform and merchants?

from the perspective of the industry, the high growth dividend of the extensive e-commerce industry has gone, and the platforms have begun to fight hand-to-hand for existing users. however, in the siege of low prices, it is difficult to say whether there is a real winner among e-commerce platforms, merchants, and consumers.

a leading e-commerce seller once told times finance that excessive pursuit of low prices will lead to no profits in all links, and the participants in these links are also ordinary consumers. when they have no money to make, consumers will also face reduced spending power, forming a vicious cycle.

today, the era of high growth in e-commerce is gone. whether it is traditional shelf e-commerce such as alibaba and jd.com, or new e-commerce that grew up on the mobile internet such as pinduoduo, as well as content e-commerce such as douyin, kuaishou, and xiaohongshu, they are all adjusting their competitive strategies.

for platforms, when they reach a certain size, they will face the choice between short-term high growth and long-term stable growth. obviously, pinduoduo's management chose the latter and came up with its own solution. on the one hand, "10 billion subsidies" compete for consumers, and on the other hand, "10 billion exemptions" support merchants, creating a virtuous cycle of ecology. from a broad perspective, the healthy growth and increased profits of merchants can drive employment, drive consumption, and achieve a positive economic cycle; from a narrow perspective, pinduoduo provides merchants with better soil, and the healthy development of merchants can in turn strengthen the platform and serve more consumers.

pinduoduo said that since the beginning of this year, pinduoduo has been continuously increasing its investment in high-quality development. with the implementation of a series of policies, high-quality development will also enter an acceleration period, bringing more benefits to both the supply and demand sides.

according to insiders of pinduoduo, pinduoduo will also upgrade the after-sales service system for merchants. it has opened a green channel and established a special after-sales service team to fully support merchants in filing appeals against abnormal orders, malicious complaint orders, and orders with negative consumer experiences. once the merchant's appeal is successful, the platform will compensate for the relevant orders.

source: nanfang net