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Price war in e-commerce industry unavoidable: experts

By Liang Fei (Global Times)

10:12, November 12, 2012

An increasing number of online retailers have joined this year's Singles' Day promotion on November 11, after Tmall, China's largest B2C website, reaped huge sales during last year's promotion, but experts warned Sunday of the risks involved.

Statistics from a survey by China e-Business Research Center show that around 77.5 percent of 409 online retailers launched promotions on November 11 this year, and the promotion has been even extended to the week after November 11.

"There has been increasing competition for Tmall in the November 11 promotion. Tmall also launched new methods of promotion this time, aiming to consolidate its leading position in the sector," Chen Shousong, an industry analyst at Internet consulting firm Analysys International, told the Global Times.

Chen noted that price wars and more promotions in the online retail sector are unavoidable, as they have proved to be the most effective way for websites to attract users.

Wang Zhouping, an expert at China e-Business Research Center, said that over 90 percent of the e-commerce sites in the survey said they were also planning promotions on other important occasions, such as Christmas, the New Year and Spring Festival.

"But some online retailers have chosen not to join the promotion this time. For one thing, they can not afford such low prices; for another, they are afraid that to do promotions beyond their capacity could incur consumer complaints," said Wang.

Even for bigger e-commerce sites, offering such promotions can also involve a financial burden, since most of these websites are still making a loss, and it is difficult for them to attract more investment or float on the stock market, said Chen.

Promotions by e-commerce platforms could also mean downsides for shop owners. Essential oil provider Afu decided to close its store on as it said it was put under pressure by 360buy to join the promotion on November 11.

Such massive promotions can also affect user experience. During the first several hours of Tmall's Singles' Day promotion, buyers found it was difficult to make payments due to a system break down.

Some consumers have also complained that prices are not always lower.

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