Some of China’s leading fast-food delivery platforms will hike fees they charge to restaurants by as much as three percentage points, pushing commission rates to more than 20 percent in some cases.

The latest increases underscore growing pressure on platform operators such as Meituan and Ele.me to improve profitability. The hikes also mark yet another blow to China’s small- and medium-sized enterprises, many of which continue to struggle amid a cooling economy.

China’s food-delivery firms have battled for market share through subsidies, resulting in losses for big players including Ele.me and Tencent-backed Meituan-Dianping. Despite a sales revenue of over RMB 19 billion (around USD 2.8 billion), Hong Kong-listed Meituan Dianping reported a net loss of around RMB 2.5 billion in the third quarter of 2018

Michael Norris, strategy and research manager at AgencyChina, said the increased commissions signal that food-delivery platforms Ele.me and Meituan-Dianping are “getting serious” about improving operating margins.

Norris said that cost increases will likely be passed on to consumers. He added that vendors typically would reduce or modify discounts offered to consumers in the face of increased price pressures. He also noted that the amount of subsidies food-delivery platforms have given merchants in order to offer customer discounts has decreased over the past year.

Business owners report that their commission rates have increased from 16 percent to 17 percent since November 2018, sometimes requiring them to pay RMB 5 on orders of RMB 30. “The commission rate has grown from nothing in the beginning, to 10 percent later on, and finally to around 20 percent at the moment,” state-owned Xinhua News Agency (in Chinese) cited one merchant as saying.

Some businesses have received new agreements from food-delivery platforms in which commission rates have been increased by up to three percentage points. One Shanghai-based restaurant owner said his new agreement increased rates from 18 percent to 21 percent per order, according to Xinhua.

A spokesperson from Ele.me told TechNode that the commission fee has increased over the past year, in part, due to the economic slowdown. However, the company said the increases will not continue and it would work to lower them in 2019.

Chinese food-delivery service Meituan Waimai controlled nearly 60 percent of the food-delivery market in the first half of 2018, followed by rivals Ele.me at 36 percent and Baidu Waimai with 3 percent, according to data from analytics firm Trustdata.

Meanwhile, Alibaba’s Local Services Company, which was formed through the merger of Ele.me and Koubei, announced a national campaign dubbed “Warm Winter” on Jan 6. The Chinese internet giant promised to “continuously” lower the commission it charges merchants on both Ele.me and Koubei.

Additional reporting by Chris Udemans

READ: Multiple Beijing Late-Night Food Delivery Outlets Revealed to Be a Sham

Image courtesy of TechNode

More than 10 million users of bike-rental firm ofo have requested deposit refunds, with the company possibly owing in excess of RMB 1 billion (USD 145 million) to its riders.

On Tuesday, Dec 18, an ofo user posted a screenshot on microblogging platform Weibo informing them that they were number 10,000,001 on the refund waiting list. The screenshot was picked up by Chinese media outlet AllWeather TMT. As of 4 p.m. today, more than 11 million people have requested their money back.

An ofo spokesperson refused to confirm to TechNode the number of requests the company had received.

Riders’ deposits amount to either RMB 99 or RMB 199, with earlier adopters paying the lesser of the two amounts. However, earlier this year the company attempted to get all users to upgrade to the RMB 199 tier. If all users request just RMB 99, the company would owe around RMB 1 billion.

As of Dec 18 at 4pm, more than 11 million users had applied for refunds

The en masse requests follow users flocking to the company’s headquarters in Beijing to get their money back. Yesterday, more than 100 people lined up outside ofo’s office. They were instructed to leave their personal information, including banking details, and were promised refunds within three days.

The company then issued an emergency statement, saying all applications, either online or offline, would be collected and processed in order.

“There is no difference between on-site waiting or online application,” ofo said in the announcement.

Users subsequently began refreshing their position in the online refund queue and posting the screenshots to Weibo.

Last month, the company said its system for refunding users’ deposits was operating as normal, though the waiting period had been increased from 10 to 15 days. The company also encouraged users to transfer their RMB 99 deposits to online lender PPmoney to continue getting deposit-free rides. It later withdrew from the partnership.

Shortly after, users reported issues withdrawing their deposits in the ofo app, though the company denied the claims.

READ: China to Tackle Delivery Waste Crisis With New Green Standards

Photos: bikeforeverbluegear.com, Courtesy of TechNode