Welcome! Thursday - Jun 22, 2017

Alibaba’s Tmall Said to Dictate Online Shopping Price as Competition Intensifies ——Vendors “Have Been Notified”: Tmall Prices Must Be the Lowest on the Web


tmall sales

 

Following many other high-end western brands, cosmetics brand Lancome launched its Tmall store this Tuesday. More and more international brands are flocking to Alibaba’s Tmall to take advantage of its huge user base, expecting great results from China’s No.1 e-commerce site. But some may be unprepared to deal with the challenges of cutthroat price competition on the marketplace. Not only are steep discounts and bottomless sales common tactics used by many local Chinese vendors, Tmall also relies heavily on such promotions in order to retain users and maintain market dominance.

 

Vendors “Have Been Notified”: Tmall Prices Must Be the Lowest on the Web

This week, Tmall vendors broke the news that Tmall demanded vendors’ products be priced lower or at the same price as all other e-commerce platforms for the same period, irrespective of ordinary or promotional pricing, otherwise the vendors would be penalized.

While there was no official announcement made by Tmall, one vendor said that: “We received the notification from Tmall employees over the telephone, and not through an open channel such as mail or public announcement. So we’re not sure if the price controls apply to all Tmall vendors, but several of the vendors around here also received the phone notification.” A vendor of women’s apparel revealed, “The Tmall employee who conducted the telephone notification only stressed that vendors must price their products at or below the price of the same products sold on JD.com and VIP.com.”

A person familiar with the situation claimed that Tmall has enacted price controls on vendors since December. If it is discovered that the price of a product in Tmall’s flagship store is higher than that on another platform, than the right of the product’s vendor to register to participate in sales promotions will be revoked for a month, and that chances to gain free traffic on Tmall will be cancelled.

While vendors could benefit from Tmall’s huge aggregated traffic, brands also need to be prepare to face cutthroat price competition given that steep discounts and bottomless sales are common tactics used by many local Chinese vendors. But more importantly, Tmall also relies heavily on such promotions in order to retain users and maintain market dominance. Particularly when Alibaba’s deal site Juhuasuan (聚划算) and other such sales channels are losing traffic to competitors such as JD and VIPshop, Tmall may be strengthening price controls over its vendors even to the point of daily monitoring. Other e-commerce companies have also enacted similar requirements during promotional events, but normally do not monitor and control day-to-day pricing.

In order to satisfy Tmall’s new rules, many vendors that received the notification said they planned to offer differentiated products across the various e-commerce platforms: “We’ll make changes to each product’s style and packaging so that each e-commerce platform can offer different products.”

By Luke Dodds.

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