Alibaba-backed food delivery service to waive commission fees in COVID-hit areas

 

SHANGHAI :Ele.me, a food delivery service backed by Alibaba Group Holding Ltd, said on Wednesday it will cut or waive commission fees for businesses in 87 areas affected by COVID-19 in China.

Ele.me said it would commit an initial sum of 20 million yuan ($3.17 million) to the effort.

The move follows a similar decision from rival Meituan, which said on Tuesday it would lower commissions for its merchants and cap fees at 5per cent for small and medium sized merchants facing operational difficulties.

China's southern Guangdong Province has been hit by a wave of COVID cases. The region borders Hong Kong, where infections have been surging since February.

Last month, Chinese regulators issued guidance for online food delivery platforms to reduce service fees to help to lower operating costs for catering businesses, in order to promote a faster recovery from the pandemic in the services sector.

The proposed policy wiped as much as $26 billion off the market capitalisation of Meituan, China’s dominant food delivery platform, on the issuing day. 

The market had overreacted to the government’s guidance, as the policy was not intended to target the platform economy, a Chinese state-run newspaper Economic Daily said in a commentary last week.

($1 = 6.3130 Chinese yuan)