Alibaba Sues Companies for Questioning Singles’ Day Results

By Casey Hall

SHANGHAI — China’s largest e-commerce company, Alibaba, is suing two Chinese companies for 10 million yuan, or $1.6 million, each.

The suits were filed in two separate Shanghai courts on Nov. 25, with the filings claiming the companies spread false and damaging information about Alibaba’s Singles’ Day sales results on their WeChat accounts.

The posts in question from the Evening News media outlet, and the Fujian Yi-hong Big Pekoe Tea Co. Ltd., claimed that of the 91.2 billion yuan, or $14.26 billion, in sales raked in by Alibaba on China’s one-day shopping extravaganza on Nov. 11, 57 billion yuan, or $8.91 billion, worth of those goods had been returned, the equivalent of more than 60 percent of all purchases.

When contacted by WWD, Alibaba did not have rate of return statistics on hand and declined to comment further, citing the pending legal action.

There has been no shortage of conjecture surrounding the Singles’ Day sales numbers cited by Alibaba and other e-commerce players in China, with commentators pointing out that sales figures are unaudited and easily manipulated.

“Alibaba are well-known in the Chinese market for pressuring their vendors to place fake orders. I have a lot of customers here that work with Tmall and do the 11/11 promotion who receive calls from the Tmall sales guys telling them to buy their own products, to ensure the sales records are broken each year,” said Patrice Nordey, chief executive officer of Shanghai-based
digital inception agency Velvet.

“The sales numbers are still incredible, but they are certainly overestimated,” he continued. “I don’t know whether it’s by 10 percent or 15 percent, but for sure they aren’t as large as published.”

According to Angelito Tan, cofounder of RTG Consulting, the large number of returns from Singles’ Day isn’t a huge surprise. After all, limited-time discounts encourage impulse purchasing and China’s consumer protection laws allow for buyers to return goods bought using e-commerce without having to give a reason.

Though Tan believes a larger percentage of returns might have a more nefarious origin, pointing to the recent proliferation online of “shua dan” (which literally translates as “swipe bill”) operations.

“This is a scam where unscrupulous sellers use technology and/or contract fake customers to buy products for the sole purpose of increasing their sales statistics and rankings,” Tan explained.

“These are fake transactions as money never changes hands, and I suspect accounts for a high percentage of the total returns,” he said.

Source: WWD