TikTok owner ByteDance, whose Douyin short video app has emerged as a popular e-commerce shopping platform in China, will cut the guarantee deposit payable by merchants, in a move designed to keep existing sellers and lure new ones amid fierce competition.
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The deposit, held by the platform on behalf of sellers to cover potential costs such as refunds or penalties, would be capped at 5,000 yuan (US$695), a fraction of the previous maximum of 500,000 yuan. As a result, the deposit payable by existing sellers would be on average 75 per cent lower.
The sum would be based on the previous month’s gross merchandise volume (GMV), so the lowest level of 500 yuan would apply to online stores that sold less than 50,000 yuan in the previous month, Douyin said in a statement posted on its website on Thursday.
New merchants would be able to join the platform without initially having to pay a deposit. Once their paid orders exceed 200, or the total transaction value reaches 10,000 yuan, they must add the deposit.
The zero-deposit policy expands a pilot programme that started in February, which covered stores that sold certain types of goods. Douyin said the new policy would apply to all product categories.
The company said it wanted to help merchants “save money” so they could invest more in “expanding their business” through marketing and promotional activities to enhance their competitiveness.