Alibaba’s local consumer service arm said on Thursday that it will waive commission fees for merchants listed on its Koubei platform, addressing a drop in business at establishments like restaurants, leisure locations, and supermarkets during the coronavirus (2019-nCoV) outbreak, according to a post on Koubei’s Weibo account.
Koubei is a platform designed to bring local businesses online, drawing new customers to brick-and-mortar shops.
For the entire month of February, commission fees will be suspended for businesses using Koubei. Merchants in Wuhan, the capital of Central China’s Hubei province and the epidemic’s center, will see their fees waived until March 31.
In many parts of China, people have been advised to remain at home to reduce the risk of infection. Retail business has been hit hard across the country.
The retail and dining sectors have been affected the most since the outbreak, said Ren Zeping, chief economist with China Evergrande Group, a major real estate developer. He said that over the Lunar New Year festival in 2019, retailers and dining establishments raked in more than RMB 1 trillion (USD 144 billion), though this year’s aggregate sales over the holiday has dropped drastically.
If the epidemic peaks in the middle of February, China’s economy may slow down to a 4% year-on-year growth rate in the first quarter, Ren estimated, adding that the situation—and hence business—may even deteriorate. In the first quarter of 2019, China reported 6.4% in its GDP growth compared to the previous year.
On Friday (Beijing time), the World Health Organization declared that the new coronavirus outbreak is a public health emergency of international concern, acknowledging that the disease represents a risk outside of China. This serves a notice to all United Nations member states. Some countries’ governments have partially closed their borders and canceled flights. Many airports around the world screen arriving passengers using infrared thermometers. Confirmed infections have surfaced in countries including the United States and Japan.
As of 4:30 p.m. on Friday, the 2019-nCov virus has claimed 213 lives. In China, there are nearly 9,800 confirmed infections, and more than 15,000 patients are suspected to be infected.
Alibaba Local Consumer Service Company, which was established after Alibaba merged food delivery company Ele.me and Koubei in October 2018, is implementing another four plans to alleviate pressure for clients that are going through hard times, in addition to the waiver plan.
Merchants that have paid annual fees for advertisements on Koubei will see a three-month extension of their contracts. Alibaba local consumer service arm will also pay for employee insurance policies covering pneumonia for their merchants on both Koubei and Ele.me. The company is also making its loan services more accessible to businesses that are facing a cash crunch. Also, any merchant that is offering services other than deliveries can have their online stores set up within one day after submitting their application to Koubei.
Ele.me, a food delivery platform of Alibaba’s local consumer service arm, announced on January 23 that it would cut or waive commission fees for its merchants in Wuhan gradually but did not provide details. Meituan-Dianping, a major rival in this sector, has not made comparable arrangements for businesses using its platforms.
Alibaba said in November that its revenue from local consumer services in the third quarter of 2019 was RMB 6.8 billion, marking a year-on-year increase of 36%. Platform commission, delivery fees, and charges for services on Ele.me were the main channels of income.
The report was updated on February 6 to include Ele.me’s policy.