The lesson from Pinduoduo's discount voucher disaster

January 23, 2019 09:03
Technology if not handled properly, can bring huge costs, as China's Pinduoduo has just discovered. Photo: Reuters

In less than three-and-a-half years since its founding, social e-commerce site Pinduoduo emerged as China's third-largest online shopping site, trailing only the Alibaba and platforms.

However, problems arose recently as some people exploited a loophole on the Pinduoduo platform and “stole” tens of millions of yuan worth of discount vouchers.

Pinduoduo’s yearly GMV (gross merchandise volume) is about 345 billion yuan. Combining social media and group online shopping features on one platform, the e-commerce player has been very successful in selling low-end products at deep discount.

Early this month, the e-commerce platform offered a batch of 100 discount vouchers. Some netizens then found a way to get unlimited number of such vouchers from the shopping site.

It's reported that people started to exploit the loophole midnight last Sunday. Even though Pinduoduo was able to fix the problem in about 10 hours, the time was enough for thousands of customers to feast on the system error.

In response, Pinduoduo has declared all these vouchers invalid, saying they were “illegally stolen”.

The company would only offer a 5 yuan voucher for each user as compensation. The matter has been reported to the police.

Pinduoduo refused to disclose the actual amount of the stolen vouchers, and only said it suffered around 10 million yuan loss.

Pinduoduo should be able to get away with that thanks to the disclaimer terms. But the blunder is set to tarnish its reputation.

In a similar case, Cathay Pacific offered first-class seats at a tenth of the original price due to an online ticketing error.

While online promotion is highly efficient and allows strong reach, technological risk as such can bring huge costs if not handled properly.

This article appeared in the Hong Kong Economic Journal on Jan 22

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist