Reborn in 08, a heretical cultivator starting a business

Chapter 141: With a million-dollar store closure, Paipai.com is finished!

Over the past ten days, more than 30,000 sellers on Paipai.com have closed their stores every day, and people are protesting their rights every day!

Xu Tiannian held on to the end, refusing to back down, hoping to weather this storm.

Although some merchants will be lost, Paipai.com can transform and become profitable!
However, more and more people feel that Paipai.com simply cannot survive.

Even the board of directors' attitude has changed.

On the 13th, the board of directors still firmly supported Xu Tiannian's aggressive commission-based pricing strategy, believing that Paipai.com could overcome the growing pains and achieve profitability.

When Baidu Youa launched on the 15th, the attitude of some major shareholders changed, and they felt that the future was uncertain.

By the 20th, more than 20 merchants on Paipai.com had closed their stores, and nearly half of the shareholders had changed their attitudes.

By the 25th, more than 40 merchants on Paipai.com had closed their stores, and most shareholders felt that Paipai.com was in danger.

Some even advocated immediately stopping commission collection to quell the merchants' anger!

Therefore, Tencent held another board meeting and made a decision on the matter.

Chairman Ma looked at Xu Tiannian with a somewhat complicated expression.

At this point, Xu Tiannian had lost the spirited and ambitious demeanor he had a month and a half ago.

The firm resolve and determination of half a month ago are gone.

All that remains is vicissitude and fear.

He knew that the board meeting would decide whether Paipai.com would stop charging commissions.

It will also determine his future and prospects.

If he doesn't stop taking commissions and continues to implement his transformation plan, then things will be fine.

Xu Tiannian still has a chance to turn things around and become the president of Paipai.com.

If Paipai.com successfully transforms itself after its growing pains and becomes something like Taobao Mall, Xu Tiannian could also become a legendary figure.

Despite everyone's skepticism and belief that he was crazy, he persisted in his original aspirations and relentlessly pursued reforms, ultimately leading to the success of Paipai.com and its profitability!
It's absolutely legendary.

Once Paipai.com is successful and profitable, he can advance further and strive for the position of group vice president.

Even the position of Tencent's future CEO successor.

However, if the transaction fails, Paipai.com will stop taking a commission.

That would not only end the commission-based payment issue, but also Xu Tiannian's future and development.

Let alone taking any further steps, Xu Tiannian might even be dismissed from his post.

Then it's all over.

Xu Tiannian felt that this possibility was very high, extremely high.

And getting bigger and bigger.

As a result, Xu Tiannian was unable to sleep at night during this period, feeling extremely anxious and fearful.

Chairman Ma sighed, but he was also very optimistic about Xu Tiannian's reforms.

However, the situation did not develop as expected.

He had no choice but to say, "Xu Tiannian, I'll give you five minutes."

Xu Tiannian felt a sense of gratitude.

Chairman Ma hasn't given up on himself yet. He's giving himself five minutes, which is his last chance to persuade the major shareholders!
There's still hope for a comeback!

Xu Tiannian took a deep breath and began to speak:

"Chairman, shareholders, the current situation is causing you all distress, and for this I express my deepest apologies."

"But I don't regret it!"

"Throughout history, all changes have come at the cost of blood and tears, and Paipai.com is no exception."

"If Paipai.com continues to offer free services, there is only one outcome: its demise."

"We don't have enough funds to keep us profitable and we've been losing money every year!"

“It’s unrealistic to use the money earned from other businesses every year to subsidize Paipai.com and compete with Taobao.”

"Therefore, taking a commission is the only option."

"Not just for me, but also for Paipai.com."

"I believe that even if the shareholders were in my position, they would still take a commission. This is the only way out for Paipai.com."

The expressions on everyone's faces became complicated, but they had to admit that it was indeed the case.

Without commissions, Paipai.com will lose money every year and will eventually go bankrupt!
If it were them, they would most likely also aggressively demand commissions.

"Admittedly, the closure of 50 sellers' stores seems like an unacceptable and enormous loss."

"But I want to ask everyone, what kind of businesses are these that resist even commission rates and are even closing down?"

"These are all freeloaders who take advantage of our Paipai.com platform services but don't want to pay a single penny of commission. They're all counterfeit sellers who don't even want to pay a deposit!"

"These low-quality, free-selling counterfeit goods sellers are a cancer, a cancer on Paipai.com's quality upgrade."

"If Paipai.com wants to get rid of its counterfeit goods image and achieve quality upgrades, it must eliminate this cancerous tumor!"

"So, while the closure of these 500,000 sellers may seem like a huge loss on the surface, it's actually a necessary but painful but necessary reform!"

"This is the core of our Paipai.com transformation."

"At the same time, many high-quality brand merchants actively paid deposits and cooperated with commission collection, which greatly increased the profits of our Paipai.com."

"Although we are not yet fully profitable, if things continue like this, Paipai.com can break even in the fourth quarter."

"We aim to achieve profitability in the first quarter of next year!"

As soon as he finished speaking, a murmur arose among the crowd.

Those who were originally determined to stop taking commissions and even to dismiss some of Xu Tiannian's shareholders have begun to waver.

As Xu Tiannian said, all reforms involve growing pains.

However, it's unrealistic for Paipai.com to continue losing money year after year without taking a commission.

It doesn't matter if the sellers who close their shops are low-quality sellers; it might even be a good thing.

But the major shareholders weren't so easily fooled, and soon someone countered:

"If all the sellers closing down are low-quality, free-selling counterfeit goods sellers, then the impact is indeed not significant, and it might even be a good thing. But how can you be sure that all 500,000 sellers are like this? There are also many high-quality sellers among them who are closing down because of commission fees, right?"

Xu Tiannian nodded: "Indeed, this commission-based operation is like chemotherapy. During chemotherapy, a large number of cancer cells are killed, but some normal cells are also damaged. This is unavoidable."

Similarly, for the sake of Paipai.com's quality upgrade and healthy development, necessary setbacks and sacrifices are inevitable. The process is painful, but the result is positive!

Then, another major shareholder spoke up:
"Okay, since you've used chemotherapy as a metaphor for your current actions, that's quite apt. But the results of chemotherapy are sometimes good, leading to gradual recovery. In many cases, it also fails, not only failing to cure the cancer but also accelerating the death process."

"Xu Tiannian, what makes you so sure your chemotherapy will be successful? If it fails, it will accelerate Paipai.com's decline, or even bankrupt it!"

Upon hearing this, everyone was shocked, but upon closer reflection, it was indeed true.

Historically, most reforms have either failed or resulted in certain death.

Xu Tiannian nodded: "Chemotherapy can indeed fail and hasten bankruptcy. But our direction is correct, and it's not aimless. On the contrary, there are many cases we can refer to."

"In 2007, in order to upgrade its quality, JD.com shut down its C2C business, resulting in the loss of 100,000 sellers."

"For a company as small as JD.com, losing 100,000 stores at once is a devastating blow, with unimaginable consequences."

"But they persevered, withstanding the pressure of losing 100,000 sellers, and built their own logistics this year, laying the foundation for quality e-commerce."

"In 2000, Amazon began raising commissions, leading to numerous seller complaints and store closures. The impact was similar to what we are experiencing now. Amazon CEO Bezos's situation is also similar to mine today." "Faced with shareholder complaints, Bezos persisted in raising commissions. Although some sellers left, six months later, the ARPU (Average Revenue Per User) of the remaining sellers increased."

"Our transformation at Paipai.com is exactly the same as that of JD.com and Amazon."

"The result was the same."

"The number of sellers will decrease, and ARPU will increase."

"As we all know, low ARPU + high user volume is the key to economies of scale. Take Paipai.com as an example, it has high GMV, but its profit is negative."

"High ARPU + low user volume is a high-end positioning. For example, Taobao Mall is also the goal we at Paipai.com are pursuing in our transformation!"

"Only by focusing on the high-end market and increasing ARPU can we achieve profitability."

"What JD.com and Amazon have already accomplished, we at Paipai.com are doing, and we are confident we can succeed!"

The shareholders exchanged glances and couldn't help but nod in agreement.

It must be said that Xu Tiannian's speech was very successful.

We've avoided discussing commission rates, right? Let's directly analyze Paipai.com's situation, the motivations for commission rates, the possible outcomes, and the goals they want to achieve!

They even cited the success stories of JD.com and Amazon, which greatly increased shareholders' confidence.

Subsequently, a vote was held on the resolution to suspend commission collection, with four votes in favor, five votes against, and three abstentions.

The application failed, but the commission-based promotion continues.

Xu Tiannian breathed a long sigh of relief, and his eyes, hidden beneath his messy hair, brightened a little more!
Chairman Ma said earnestly, "Tiannian, the direction is right, but whether you can achieve the set goal depends on how you operate."

"Understood." Xu Tiannian nodded.

Soon, Xu Tiannian began making a big move.

The next day, all sellers and buyers on Paipai.com received a notification letter:

[Dear Paipai.com sellers/buyers, Paipai.com's collection of security deposits and commissions is aimed at weeding out inferior sellers and retaining superior ones.]

Eliminate sellers of inferior counterfeit goods and improve the overall quality and image of Paipai.com.

We are not bothered by sellers who are unwilling to pay back some of their deposits; we are responsible to our consumers.

We are happy to retain high-quality sellers who are willing to pay a deposit and take a commission.

Our unwavering commitment at Paipai.com is to work together to provide better and higher-quality services to our consumers!

—Xu Tiannian, President of Paipai.com

This notification letter quickly caused a huge uproar.

The online discussions have become quite fascinating:

"So Paipai.com's commission and deposit system is actually aimed at improving quality, which is a good thing."

"It's definitely a good thing for consumers. Take Sanniu before, for example. It went bankrupt and people didn't even pay their deposits, leaving them with nowhere to seek redress."

"Yes, I support Paipai.com's mandatory deposit requirement. Shops that don't pay the deposit should just be shut down. I wouldn't dare buy from them anyway."

"This upgrade of Paipai.com is a good thing, as it eliminates counterfeit merchants. I will be more willing to buy things on Paipai.com in the future. At least there is a deposit, so you can get compensation if you buy counterfeit goods. Unlike Taobao and Baidu, which don't have deposits, you can buy from them and they won't say a word."

“That makes sense. I bought San Niu on Taobao, and now no one is recalling it, no one is offering compensation, and they're not even taking back the deposit. The seller has just closed down and run away.”

"Support Paipai.com"

Hutong No. 1, a courtyard house.

Wang Junshan was still playing League of Legends with his friends. Shen Huaijin stood beside him, feeding him fruit and saying:

"Chairman, Xu Tiannian's letter of notification seems to be trying to clear his name. I've seen a lot of online comments that seem to support Paipai.com and Xu Tiannian."

"Is this how Paipai.com is going to weather this crisis?"

"Can Xu Tiannian's one-size-fits-all reforms really succeed?"

"What are you thinking?" Wang Junshan laughed. "Do you really think those merchants are easy to bully?"

“Xu Tiannian’s statement is beneficial to the buyers, so they will naturally support it.”

"They avoid the important issues, disregard the interests of merchants, and even morally blackmail them by saying that merchants who do not accept commissions and deposits are low-quality counterfeit merchants, forcing them to accept deposits and commissions. This is really wishful thinking."

Shen Huaijin nodded: "That's true. In this day and age, those who can do business and achieve some success are not so easily fooled or even morally blackmailed."

"So, it seems we'll soon face a backlash?"

"Of course, let's wait and see. This crisis for Paipai.com could be fatal."

Wang Junshan laughed, then suddenly raised his voice: "Go! Wipe them all out!"

"Don't be a coward, unleash your ultimate!"

"Good job!"

"The whole team was wiped out, haha."

Shen Huaijin frowned slightly: "Is this game really that fun?"

Sure enough, online opinion quickly changed:
"Don't believe everything you hear. What's a deposit? I'd even pay double. The real problem is the exorbitant commission rates."

"That's right, we're just small sellers, focusing on low profit margins and high volume. The little profit we make from working hard from dawn till dusk is cut in half, making it impossible to continue."

"Exactly, we're willing to pay the deposit, but we can't stand the 5% commission. Our total profit is only 10%!"

"They take 5%, and my wife and I are better off working!"

"Paipai.com is disgusting. They're downplaying the real issue. The problem was clearly with their commission rates, but they're blaming us for being low-quality, counterfeit merchants who don't pay a deposit. It's outrageous."

"This is trashy Paipai.com. They're slandering us like this. We're even less likely to pay them. I'm quitting."

"I won't do it either!"

For a time, online opinions were divided into two camps.

Many users feel that Paipai.com's actions are responsible, promoting the upgrading of merchants' quality and reputation.

However, the merchants felt that Paipai.com's actions were an attempt to downplay the seriousness of the matter and to frame and slander them.

Moral blackmail!
That's disgusting.

They decisively united, closed the store together, and protected their rights.

In various WeChat groups dedicated to protecting consumer rights, people are lining up to close their shops.

Unsurprisingly, the number of stores closing that day reached a new high of 70,000, more than double the previous number.

The number of stores closing on the second day reached a staggering 10.

On the third day, 15 stores closed!

On the fourth day, 20 stores closed.

In just four days, the number of stores closed exceeded 52.

Adding to the previous ones, that makes over 110 million!
What's worse is that this time, it wasn't just small businesses that closed down, but also many medium-sized and even large businesses.

Those that can achieve large-scale operations all have high investment, low pricing, and profit margins of less than 10%.

Previously, we didn't take commissions, and with low profit margins and high sales volume, we had a net profit of around 10%, which was no problem at all.

But now that the commission is 5%, the profit margin has dropped to 5%, making it difficult to operate, and many stores are closing down.

Looking at the number of Paipai.com stores that had closed down, compiled by the e-commerce department, Wang Junshan said calmly, "Paipai.com is finished!"

(End of this chapter)