Alibaba Group Holding Ltd Inc's BABA Taobao and JD.com Inc JD, China's e-commerce giants, are escalating competition in the sector by adopting a "refund only" policy for dissatisfied customers, mirroring a strategy implemented by budget online retailer Pinduoduo PDD since 2021.
Taobao recently added a similar approach to address misleading product information and fraudulent goods, SCMP reports.
This move comes after JD.com updated its platform rules on Wednesday, with the new refund policy becoming effective on December 29. The policy applies to goods that customers believe do not match the site's product descriptions.
PDD Holdings Inc PDD Pinduoduo, a company that has rapidly grown despite a weak domestic consumer market, offers consumers a "refund only" option and can automatically issue refunds when merchants fail to respond to complaints within 48 hours.
Zhuang Shuai, founder and chief analyst at Bailian market consultancy, highlighted the increasing competition in China's e-commerce sector, particularly with JD.com and Alibaba Group Holding's Taobao adopting a "refund only" policy, SCMP notes.
This approach mirrors Pinduoduo's strategy, which has effectively attracted loyal users and challenged JD.com and Taobao for market share.
Chen Hudong, an analyst at 100ec.cn, a market consultancy, observed that JD.com's recent initiatives reflect the company's response to the intense competition.
He attributed the company's decision to the thriving live streams conducted by its procurement and sales teams during the Singles' Day campaign, contributing to JD.com's efforts to remain competitive in the evolving e-commerce landscape.
Alibaba stock gained 3.4% last month versus JD.com at 3.9%.
Price Action: BABA shares closed higher by 1.48% at $77.24 on Thursday.
Also Read: Alibaba Stock Aligns with IShares China ETF Amid Central Bank's Economic Support Measures
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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