E-COMMERCE

China’s top online cosmetics seller apologises for fake goods sold on its website

PUBLISHED : Tuesday, 29 July, 2014, 4:10pm
UPDATED : Tuesday, 29 July, 2014, 4:44pm

China’s leading online cosmetics seller apologised on Monday after a media investigation revealed that a third-party store had sold fake luxury products through its website.

New York Stock Exchange-listed Jumei International Holdings, which operates the Jumei.com platform, said it had shut down the offending store and removed all of its products from sale.

“We sincerely apologise to all customers who bought from the supplier and will provide non-conditional product return services,” the company said.

Jumei added that it is still investigating how the seller was able to provide complete product authentication and customs certificates for the counterfeit products.

Jumei International Holdings stock dropped 4.18 per cent to US$30.28 (HK$234.7) per share on Monday in the wake of the news.

Technology news portal tech.qq.com reported on Monday that a store on Jumei.com had sold Chinese-made counterfeit watches and fake luxury brand clothes. Brands whose goods were copied and sold on the platform include Armani, Hermes and Burberry, the report alleged.

The report highlighted the widespread sale of counterfeit goods on Chinese websites.

It said the offending retailer had forged dozens of product certificates and sold fake goods to a number of leading online retailers, including China’s second largest shopping site, JD.com, and Amazon.cn.

The revelation prompted JD.com to remove similar products from its website.

“The sale of fake goods is a common problem faced by all e-commerce sites that allow third parties to sell on their platforms,” said Doug Young, a financial journalism professor at Fudan University, who blogs about China’s internet.

“It’s hard for the platform operator to ensure the quality and authenticity of goods offered by these third-party merchants, since there are often hundreds or even thousands of such merchants on many such platforms.

“Jumei is a much younger company and has much less experience in the business. So it’s not really a huge surprise that it is still trying to figure out ways to ensure that fake goods aren’t sold on its platform by third-party merchants.”

Jumei.com was launched in 2010 with its business focused on group-purchases of genuine cosmetic products but later expanded its products to female luxury goods. The total revenue from products sold on its website topped 6 billion yuan (HK$7.54 billion) last year and it raised US$245 million in its New York IPO in May.

Jumei said it screened goods sold on its website “with the highest standard and most strict process” and promised “they are 100 per cent genuine”.