By CHENG Lu

CHEN Wei has a popular store on Tmall. Last year, when he applied to become a VIP account, he got a call from Alibaba. “The account manager said, very matter-of-factly, that I was not to sell on other websites. If I already had a store somewhere else, I would have to close it before getting onto their VIP list.”

This is called er xuan yi (for me or against me), once a common practice in e-commerce. To enjoy a favorable treatment, sellers would have to cut ties with other platforms, or at least not do promotions there.

Since 2015, Alibaba and JD.com have been pointing the finger at each other for having started the practice. Then Pinduoduo joined in. Sellers, especially those that were modestly successful but not big enough to bargain with large platforms, were pushed around. A consumer electronics seller told Jiemian News that when he tried to open a store on Pinduoduo, he was told to shut down the Tmall store, which was generating 10 million yuan (US$1.6 million) every year.

Regulators remained mostly quiet until late last year when they looked into Alibaba. In April, the company was fined 18 billion yuan (about US$2.8 billion, 4 percent of its 2019 revenue) for er xuan yi. Pinduoduo was also fined. 

To some extent, the antitrust crackdown has shifted the balance of power between sellers and platforms. This year’s Singles Day events were different from previous years. Not only could they do promotions on more than one platform, but account managers, once surly and hard to reach, are now courting sellers so that their own platforms have the best selections and lowest prices.

“Almost every day before November 11, some platform would reach out and tell me about its special programs and special functions. They would ask what my goals are and make recommendations, ” Chen said. “Some even recommended influencers.”

“They still offer special benefits if you go exclusive,” he said, “which can be very attractive.”

For e-commerce companies, competition for popular brands is getting subtler. Most sellers except the largest only have time and resources to focus on one platform, so platforms offer all kinds of benefits and deals to be chosen.

The style of platforms matters too. Tmall is good for clothes, cosmetics, and personal care products. JD.com has the largest selection of electronics. Pinduoduo is the go-to place for cheap products.

David Liu, a Pinduoduo executive, said in May that it was making good progress in onboarding big brands, though some efforts backfired. In July, Pinduoduo sold five heavily discounted Teslas without informing the carmaker. Tesla was furious and refused to deliver. A few other brands, including Apple, Nintendo, and Dyson, couldn’t dissociate themselves from Pinduoduo fast enough.

Without “er xuan yi,” platforms will have no one but themselves to blame for not having the sellers they want.