JD.com to Shutter C2C E-commerce Platform Paipai by Year-end
JD.com, 11/10/15
Beijing-based B2C e-commerce platform JD.com (Nasdaq: JD) announced today through its official account on Tencent's WeChat mobile messaging app that its C2C e-commerce platform Paipai.com will cease taking new orders from December 31, 2015, and will be officially shut down by April 1, 2016.
The Paipai team will be merged into other JD.com departments and concentrate on mobile social e-commerce and other businesses. Beginning today, Paipai will no longer accept new sellers. Sellers on Paipai can apply to transfer to JD.com, and approved sellers are eligible for incentives if they join within a year.
JD.com stated that a reason for the Paipai closure was since individual C2C sellers were not required to register at their local Administration for Industry and Commerce department, this made them more difficult to supervise. Additionally, the cost for sellers of breaking the law and selling fake goods was negligible.
According to JD.com, its GMV will be negatively affected by this decision. JD.com expects to lose annually a RMB 11-digit sum in potential transactions and a substantial amount of advertising income.
JD.com explained in its statement that "Over the 18 months since we inherited Paipai.com, we have had considerable success in reducing the level of counterfeits on the platform. However, we ultimately determined that in China, the online flea market, or C2C, model of working with unregulated, unlicensed sellers presents too many risks to customers and legitimate retail partners. We are closing Paipai.com because we believe the C2C e-commerce model in China is incompatible with our commitment to providing only authentic, high quality goods. Even though the site was not part of the JD.com core business, we felt this was an important move if the site could not match our standards for authenticity and quality. JD Mall’s success demonstrates that the challenge of counterfeiting in China’s e-commerce market can be addressed through a commitment to upholding the highest business standards, prioritizing long-term success over short-term gains. Others in the industry may believe that there are acceptable levels of infringement that can exist on an e-commerce platform, but we believe that level should be zero. While our group GMV will be affected, the impact on our financial results is expected to be negligible.”
Editor's Note: For more information on this topic, please see "JD.com Re-launches Paipai C2C E-commerce Site," MD 7/17/14 and "Tencent Acquires 15% Stake in Jingdong," MD 3/10/14 issues.
Keywords: e-commerce Paipai Internet C2C Tencent 0700.HK JD.com JD
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