China's furniture stores wage war with online retailers

Large scale malls on the mainland are insisting on regulations for e-commerce websites

PUBLISHED : Tuesday, 05 November, 2013, 3:50pm
UPDATED : Thursday, 07 November, 2013, 11:03am

In an effort to prevent brick-and-mortar furniture stores from becoming mere showrooms for products that are purchased online, a coalition of mainland retailers has launched regulations to combat competition from internet sellers.

The regulations were written in a memo by members of the China Furniture Association Market Committee, a group encompassing nineteen of the mainland’s large scale furniture malls, including Redstar Macalline, JSWB and Ayd, business news portal Tmtpost.com reported.

The creation of these regulations comes right before November 11th's celebration of Single's Day, one of the largest e-commerce sale days of the year, where numerous online platforms such as Tmall.com and Taobao.com compete for customer attention with increasingly lavish promotions.

“We cannot let furniture malls gradually transform into offline storerooms that simply exist to allow customers the chance to test out products in person before buying them online,” the memo read. “We cannot let ourselves, the dealers and distributors, become mere offline porters.

“When manufacturers come up with sales and promotions for e-commerce sites, we request that they inform physical retailers and other key partners as well so that prices may be adjusted both online and in stores at the same time.”

The memo also outlawed news of online sales by popular e-commerce websites from appearing on in-store advertisements.

Once all-in-one stops for home appliance buyers, furniture malls like Redstar Macalline and JSWB have suffered in the face of stiff online competition. With the ease and relatively low cost of selling products on the internet as opposed to shipping them to a physical store, many furniture manufacturers in China are shifting out of the brick-and-mortar space altogether, preferring to organise deals with online retailers.

“When you compare physical stores to online shopping platforms, the maintenance and staff costs required to run a website is much lower,” furniture industry analyst Jiang Yufeng told reporters from Southern Metropolis Daily. “Furthermore, many sellers who display their wares on [customer-to-customer sites like] Taobao.com do not need to pay direct sales tax to the government, which gives them a considerable price advantage.”

Despite this reality, the collective nature of the China Furniture Association Market Committee’s memo may enact changes in manufacturer behaviour.

“If it were only Redstar Macalline that were calling for these regulations, not much would happen,” an unnamed furniture merchant told Southern Metropolis Daily. “But now that all of these big large scale furniture malls are banding together, it’s bound to make the manufacturers and e-commerce sites a little embarrassed.”