In a strategic shift, leading Chinese e-commerce giants Alibaba Group Holding and ByteDance are stepping back from aggressive price wars to foster a more sustainable online shopping ecosystem. This move marks a significant change in the competitive landscape of China’s e-commerce sector, which has been dominated by price-cutting tactics.

Douyin, ByteDance’s popular short video app in mainland China, announced a refined pricing strategy during an internal meeting. Wei Wenwen, president of Douyin’s e-commerce division, stated that the platform would no longer pursue absolute low prices. Instead, the focus will be on offering “good items at good prices,” aiming to increase pricing power with a more refined approach.

This adjustment comes after reports, albeit disputed by Douyin, that the platform missed its gross merchandise value target for the first half of the year, partly due to the price war’s impact on overall sales. In response, Douyin has tweaked its product recommendation rules, removing labels like “the cheapest online” and providing more support to small and medium-sized merchants, including reduced commission fees for those selling groceries.

Alibaba, the owner of South China Morning Post, is also shifting its strategy. The company’s Taobao & Tmall Group recently informed merchants that it would decrease the emphasis on low prices for product exposure on its platform. In a bid to retain quality merchants, Tmall announced it would waive its annual software service fees, previously ranging from 30,000 to 60,000 yuan, starting September 1. Taobao, targeting small and independent sellers, has also revised its refund policies, granting merchants with good track records more control over refund requests.

This strategic pivot away from intense price competition comes in response to the aggressive strategies employed by budget-focused apps like Pinduoduo, which recently challenged Alibaba’s market dominance. Analysts believe these moves will enhance the overall competitive environment in China’s e-commerce industry, while Pinduoduo continues to leverage low pricing as a key advantage.