Pinduoduo returns some service fees to sellers after parent PDD pledges US$1.4 bln waiver

Chinese budget e-commerce platform Pinduoduo, run by Temu owner PDD Holdings, is offering partial refunds of service fees to merchants, after company executives promised to waive 10 billion yuan (US$1.4 billion) in charges.

The main point of contention arose over so-called technical service fees, which are essentially sales commissions charged by Pinduoduo for merchants to use the platform. Sellers were displeased that the fees were non-refundable even when customers cancelled an order and requested a refund.

After a recent policy change, Pinduoduo has begun to return some service fees to merchants who took part in certain promotional campaigns, they said. The platform has also adjusted the fee structure, so that sellers are charged the same rates whether a customer paid outright or opted to “buy now, pay later”.

The move was first reported by Chinese media outlet Ebrun. Pinduoduo did not immediately respond to a request for comment on Friday.

PDD chairman and co-CEO Chen Lei said in a post-earnings conference call last week that it would waive 10 billion yuan in transaction fees for “high-quality” merchants over the next year, as the company was prepared to make short-term sacrifices and accept declines in profitability.

PDD’s service fee adjustments followed similar measures taken by its Chinese rivals. Alibaba Group Holding’s e-commerce platform Tmall said that starting September, it would stop charging merchants an annual software service fee, which previously cost between 30,000 yuan to 60,000 yuan. Alibaba owns the Post.

The changes by PDD also came days before China’s fair-competition regulations for the internet industry are to come into effect on September 1. According to the rules, “platform operators must set service fee standards in a fair and reasonable manner in service agreements and transaction rules, and must not charge unreasonable service fees that violate business ethics or industry practices”.

While PDD’s overseas arm, Temu, has gained popularity rapidly, it faces competition from rivals like Shein, Alibaba’s AliExpress, ByteDance’s TikTok Shop and Amazon.com, as well as heightened regulatory scrutiny around the world.