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Three mainland retailers probed over promotional strategies in price war

PUBLISHED : Thursday, 06 September, 2012, 12:00am
UPDATED : Friday, 08 May, 2015, 9:12am

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Beijing launched an investigation into a high-profile price war on electrical appliances amid complaints from consumers that they were cheated by three mainland retailers.

The National Development and Reform Commission (NDRC) found in a preliminary investigation that Jingdong Mall, a top online retailer formerly known as 360buy, Suning Appliance and Gome Electrical Appliances had all raised their original prices before conducting promotional activities last month to lure consumers, according to Xinhua.

The NDRC is continuing to probe the activities, while Jingdong said in a statement yesterday that it had been actively co-operating with the investigators and would respect the findings.

Liu Qiangdong, founder and chief executive of Jingdong, said on his microblogging account on August 14 that the e-commerce company would promote sales of all its electrical appliances with zero gross margin.

This was followed by Suning and Gome, which promised to offer the same products at lower prices than Jingdong's.

The price war whetted buying appetite of thousands of mainland shoppers who later found it to be only a marketing strategy.

The NDRC found that the retailers either fabricated the original prices before offering discounts or told customers that the appliances were sold out although there was stock in the warehouses.

The commission's random inspection of 15 appliances sold by the retailers during the price war showed they still enjoyed a gross margin of 4 to 22.43 per cent.

According to Chinese law governing pricing, the three retailers could be fined several hundred thousands of yuan after the investigations are completed.

 

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