Less than 15 days before the “D11”, the online shopping frenzy, two of China’s main E-commerce platforms are now involved in a legal fight over whether it’s fair or not to make online merchants “pick sides”.
JD.com claim that Alibaba has tried to force its merchant partners to sign exclusive cooperation agreements for the right to sell their products on its e-commerce platforms, which include Taobao and Tmall. Agreements which therefore mainly prevent vendors from selling their goods on JD.com and other E-commerce sites.
Should 11/11 vendors pick sides this year?
According to Alibaba, yes, it’s “Normal Market Behavior”…
According to JD, these agreements are a real “abuse” of Alibaba’s market-leading status. Following what they ask Jack Ma’s company to pay over 1 billion RMB (around $142 million) in compensation, but also to cease the practice, and issue a formal apology.
Requests that have been declined by the Chinese giant as they denied the illegality of these actions.
So far, there has been an official filing, and the case should be heard at the Beijing Municipal High People’s court. But no date has been set up yet.
On Monday, Wang Shuai, a marketing executive at Alibaba, gave his opinion on the subject. He considers that the practice of “choosing one of two” is “normal market behavior” guaranteeing “good money crowds out of the bad”.
He justified himself, putting forward that as they spend a huge amount of money for their vendors in advertising and subsidies, they can only collaborate with brands demonstrating the most “sincere” willingness to cooperate.
Last June, the home appliance maker Galanz also accused Alibaba, but this time of blocking traffic to its products, following a previous collaboration with the rival platform: Pinduoduo, during the “618” online shopping festival.
The D11, also called Double 11 shopping festival or Singles Day, is held every year on November 11th. It’s the world’s biggest online shopping event, generating revenue of nearly $31 billion last year.
With such news, the double 11 should follow fierce competition this year. War is coming in the online shopping world! Should we expect bigger discounts than the current big ones? It could be an interesting way to drag more customers…
We’re up for that! Jack Ma, if you read us…
As a company and with the Double 11 coming very soon, what does that mean for you?
Keep in mind that the D11 is perceived as the singles day in China. During this special event, millions of people are spending a lot of money to buy a lot of products.
For online stores, it’s like digging a gold mine in a day. Some shop makes the equivalent of 2 months sales in just 24h…
For physical shops, it’s a bit more complicated. They also make some sales, but almost nothing compared to what happened in the digital world. Moreover, Chinese people spend so much money on E-commerce platforms, that they can’t buy anything else in the following weeks. Meaning a loss of money for physical stores.
In both cases, the return to normal is like waking up after a hangover. It needs time to recover.
What should you do?
- Increase your production capacity upstream and prepare your stock
- Increase your promotion on Social media and let people know what good opportunity they’ll get from you
To do so, you’ll have to prepare huge discounts (some products are 90% off…). Make an announcement on your Weibo and Wechat account, communicate and interact with your community, Tease them, make some pre-sales order. You can also use KOL to spread good news on your brand!
For example, a couple of years ago a company spend 2 million RMB on the Chinese “Justin Bieber” to promote their brand. A simple endorsement that brought them +18 million RMB sales in 1 day. Which is a pretty good ratio, isn’t it?
So, ready to party and make millions of sales in a day?
We are the Chinese Gentlemen. Call us GMA.
- Expert on the e-Commerce market
- Expert on Digital Marketing in China
- Our mission? your success
Do not hesitate to contact us with any questions or inquiries.