Saturday, May 18, 2024

Chinese Shopping Platforms Phase Out Unpopular Presale Schemes

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Several leading Chinese e-commerce platforms are phasing out their presale schemes for the upcoming “618” Shopping Festival after receiving thousands of complaints from consumers, Beijing-based newspaper Securities Daily reported Friday.

Presale schemes allow shoppers to reserve an item weeks ahead of a shopping festival, paying a small deposit upfront and the remaining balance on the day of the festival.

The mechanisms were supposed to make China’s shopping festivals less chaotic and unpredictable — allowing consumers to lock in orders and merchants to get a clearer idea of how much stock they needed to prepare ahead of time.

But they quickly became highly unpopular, with consumers complaining that presold items regularly arrived late or were subject to last-minute price hikes.

As a result, China’s e-commerce industry appears to be moving away from the practice, with both JD.com and Tmall, two of the largest online platforms, announcing they will not be using presale schemes for this year’s “618.”

The “618” Shopping Festival was launched by JD.com in 2008 to celebrate the anniversary of the company’s founding on June 18. It has since become one of China’s most important shopping events — last year, total sales reportedly reached $111 billion, roughly five times more than what U.S. consumers spent during Black Friday.

This year, JD.com has announced that it will begin its “618” sales period on May 31, allowing consumers to purchase discounted items from that date onwards. Tmall, operated by Alibaba, has also confirmed that it will no longer offer a presale mechanism during the festival period.

“The decision by Tmall and JD.com reflects consumers’ preference for a simpler, more straightforward shopping experience, as well as their concerns about issues with the presale model,” Mo Daiqing, an online retail analyst, told Securities Daily.

Pressure has been growing for e-commerce platforms to change their presale scheme policies in recent months. Consumers had filed over 80,000 related complaints via tech firm Sina’s complaints platform as of May 9. In January, the China Consumers Association published a major report analyzing the problems with platforms’ presale systems.

The organization found that presold goods were often not being delivered as advertised. In many cases, merchants did not include promised extras, failed to deliver goods on time, or hiked prices without warning, according to the report.

Sometimes these price hikes could be dramatic. One consumer reportedly paid a deposit for a Siemens refrigerator, believing the final price would be just over 3,100 yuan ($430), but in the end the merchant actually charged them 4,500 yuan.

However, phasing out presale schemes could impact the overall sales recorded on “618,” which may create challenges for e-commerce players like JD.com and Alibaba.

Shopping festivals like “618” have become such huge events that they’re often used as a barometer to gauge the performance of companies, the e-commerce industry, and even the Chinese economy as a whole.

The 14.7% year-over-year increase in total online sales during last year’s “618” was widely interpreted as a sign of a “modest recovery” in Chinese consumer spending after the pandemic.

Notably, Alibaba is scrapping its presale mechanism on Tmall, but not on its flagship shopping app Taobao. Major brands, which mainly sell via Tmall, should not be affected too much by the move, analysts told domestic media. But smaller merchants are believed to rely far more on presales to reduce the cost and risk of participating in major festivals.

Zhao Lisha, a 29-year-old Shanghai resident, told Sixth Tone that she is relieved to see the back of presale schemes. She often makes purchases during “618,” but the complex terms and conditions merchants attached to presale goods made it hard to work out how much she would actually end up paying.

“That made shopping more challenging for me and diminished my interest in presale events,” said Zhao. She added that she began shifting toward shopping via livestream platforms last year, as the pricing was clearer.

These days, presale offers are no longer the only way to buy items cheaply, Zhao pointed out. Livestreamers are able to offer steep discounts by negotiating bulk orders directly with manufacturers, while group-buying platforms like Pinduoduo also offer extremely low prices.

Now that Tmall has canceled presales, Zhao said she was more likely to shop on the platform this year. “As a consumer, I want straightforward, transparent, and fair promotions,” she said.

(Header image: VCG)

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