Is the "Refund only" function leaving the historical stage?

Recently, Taobao announced that it would optimize the "Refund only" function by upgrading the abnormal behavior recognition model for refund requests when goods have already been received. In the merchant scenario, it will introduce an "experience score" mechanism. For merchants with higher "experience scores", the platform will no longer actively intervene and force merchants to issue "Refund only".

In other words, the higher the experience score, the greater the merchant's initiative in handling disputes.

Coincidentally, Pinduoduo, which was the first to introduce the "Refund only" function, has also adjusted this feature. After the announcement of the new version of Pinduoduo's After-sales Service Rules on July 22, the platform will no longer intervene in "Refund only" services rejected by merchants within 36 hours.

Over the past year, "Refund only" has become the Achilles' heel of mainstream e-commerce platforms. It has become an integral part of the development process of e-commerce platforms, reflecting rapid changes in the consumer environment and e-commerce competition landscape, as well as the ongoing transformations and growing pains experienced by mainstream e-commerce platforms.

However, currently, platforms are continuously weakening the mandatory nature of "Refund only" to prevent its abuse and make it more moderate.

Policy-wise, the Provisional Regulations on Anti-Unfair Competition in the Network will officially take effect on September 1, 2023. Article 20 explicitly stipulates that platform operators must not use service agreements, transaction rules, or other means to impose unreasonable restrictions or conditions on transactions, transaction prices, or transactions with other operators within the platform.

Apart from policy factors, to understand why platforms are adjusting the "Refund only" function, we must trace its origins.

In 2021, Pinduoduo pioneered the "Refund only" function, aiming to improve user experience in after-sales situations involving mismatched products, substandard quality, or malicious fraud. In practice, when keyword monitoring detects disputes between users and merchants, the platform will automatically intervene and refund users directly without the merchant's consent.

It is understood that the "Refund only" function is most commonly found in orders with a single transaction value of less than 20 yuan.

This year was also marked by the strictest policy oversight during the Internet's downturn. Alibaba and Meituan were successively fined for antitrust investigations, and Didi's app was removed from app stores for over 500 days after its U.S. IPO, ushering in a new cycle for China's mobile internet enterprises. With a lack of new business expansion and intense competition, enterprises can only resort to internal competition.

Similarly, after 2021, due to a series of factors such as changes in epidemic prevention and control measures, geopolitical conflicts, and macroeconomic downturns, domestic demand remained weak, and the trend of consumption downgrading became increasingly apparent. Although consumer demand recovered somewhat after the easing of epidemic control measures, purchasing power remained insufficient.

Under the new market trends, Taobao, JD.com, and others have successively clarified their new strategic direction: price competitiveness.

The relentless pursuit of low prices is one manifestation of the internal competition among e-commerce platforms. However, as information between supply and demand becomes increasingly symmetrical, and channel prices become more transparent, heavy subsidies by platforms become a bottomless pit. Achieving extreme low prices becomes a long and difficult path.

Since prices cannot be driven down indefinitely, e-commerce platforms can instead focus on enhancing services.

Changes have already begun. Since 2022, Taobao and JD.com have required merchant customer service representatives to respond to consumers within three minutes, with slow responses leading to lower store ratings. Since mid-2023, JD.com stipulated that merchants who repeatedly fail to respond within three minutes would be fined 500 yuan.

The full implementation of the "Refund only" function represents the pinnacle of service enhancement.

In fact, the original intention of the "Refund only" function was to supervise merchants from the perspective of consumers, encouraging them to provide better products and services, ultimately protecting consumer rights. From Pinduoduo's perspective, this measure is "consumer-centric" and, philosophically speaking, stems from a belief in the inherent goodness of human nature.

However, the "Refund only" function grants consumers significant discretion, which also provides opportunities for those with malicious intent. Some media reported that a buyer initiated a "Refund only" request after purchasing a 220-yuan pet cat. The merchant drove 300 kilometers to find the buyer, only to discover that they were a sixth-grade student.

To prevent "wool-gathering" behavior, some merchants have organized themselves into "mutual aid societies" to prevent unreasonable "Refund only" incidents. However, disputes between merchants and consumers inevitably lead to legal proceedings, causing continuous controversies.

This year's 618 Grand Promotion was the first major e-commerce promotion after the implementation of "Refund only". The industry-wide return and refund rate was generally higher than previous years. In addition to "Refund only," there were various strategies such as "instant refund for unshipped orders," "mandatory shipping insurance," and "free shipping for member returns."

For platforms, healthy competition contributes to their development. However, constant price and service wars for short-term growth can ultimately drag the entire industry into an endless war of attrition, making it difficult to retain truly loyal consumers and merchants.

It's not just "Refund only" that's being adjusted; platform strategies are also evolving.

In addition to loosening the "Refund only" policy, Tmall has also announced that it will abolish its annual software service fee, effectively reducing operating costs for merchants. After more than a year of price wars, Taobao is starting to return to its strengths on the merchant side, creating a more optimized business environment and encouraging merchants to proactively upgrade their product and service capabilities.

Moreover, according to a report by LatePost, after determining that live-streaming e-commerce could not achieve extreme low prices, Douyin has repositioned GMV as its top priority, continuing to expand its scale and reinforce consumer habits, rather than prioritizing the price competitiveness goals set earlier this year.

Changes continue, and relentless internal competition alone cannot solve the current situation. E-commerce platforms must return to their core competencies. "Refund only" was only an interim function adapted to the initial stage of internal competition. However, after the initial intense effects wear off, platforms must find sustainable growth paths by leveraging their strengths. This is the true panacea for platforms.