By CHENG Lu, SHE Xiaochen
It’s not uncommon for influencers and e-commerce sites to stop brands from selling at lower prices elsewhere. But in a market where buyers are more price-Sensitive than ever before, such terms can lead to trouble.
Austin Li, the biggest e-commerce livestreamer on the Chinese internet, is having a terrible start to his Singles Day season, the annual online shopping spree that started in late October and spans over to November 11. The incident, at first, had nothing to do with him.
Hauswirt, a home-appliance maker, accused JD.com of forcing deep discounts on its products and refusing to pay the promised reimbursement. The e-commerce giant, in response, played victim too. But is it so very difficult for platforms like JD.com?
Blame Austin Li, said colossus. He won’t let partnering brands be offered at lower prices elsewhere. And in fact, the PR continues… it’s illegal.
This is a reference to Alibaba’s “do-not-sell-elsewhere” terms that led to an 18.2 billion yuan fine two years ago. This may well be true, but is it any of JD.com’s business? And what, exactly has the once and future lipstick king got to do with the price of food mixers?
Austin Li has no such contract with Hauswirt, a fact confirmed by the company. But online personalities are quick to scent blood in the water, and zeroed in on the tasty bait.
Xiaoyangge (110 million followers on Douyin), said brands often withdraw from his channel because Austin “forces them to.” Then WANG Hai, who made his name by exposing online fraud, accused Li of selling fake jade. Netizens rushed to take sides, threatening to cancel one thing or another.
Austin Li, the much-troubled e-commerce mastermind and serial apologizer, didn’t respond to requests for comments. Nor apologize.
A mystery screenshot, reportedly part of a contract with Austin Li, has been circulating online and seems to be every bit as bad as JD.com claims. The terms are pretty clear, even if the provenance of the screenshot is not.
It shows that if the brand offers lower prices on other sites, it will become liable for a customer reimbursement equivalent to five times the price difference, a penalty of 2 million yuan, and will be responsible for all expenses associated with the breach of contract.
Legal or not, such terms are not uncommon in the industry. According to a consumer startup that once worked with Xiaoyangge, his contract is much the same, but with only a 1-million yuan penalty. Large e-commerce sites almost all have similar terms. It’s not a secret.
Most brands interviewed, however, view influencers’ price guarantees more sympathetically than those imposed by giant platforms. Brands willingly agree to their terms, they say. Being on Austin Li’s channel can greatly boost their reputation and kickstart a new brand.
“Big platforms charge so much for promotion these days. To be discovered, a consumer startup’s best hope is to work with a big influencer, if it doesn’t have a ton of money,” the founder said.
What makes Austin Li’s competitors so eager to dethrone him is that he is so influential that he can secure the most inventory and the best prices even with excruciating terms.
“If a brand has a hundred items, Austin Li gets 70. The rest of us get 30,” Xiaoyangge claims.
In fact, Li seems to be almost immune to the real world. Just last month, he attacked a follower for not “working hard enough” to buy a 79-yuan eyebrow pencil. In the aftermath of the gaffe, competing influencers tried to poach the tainted Li’s clients. They received a universal, categorical “no.” For many brands, it’s Austin or nothing, and the reason is more than simple: he sells more.
Low price guarantees are an extremely touchy issue. For this year’s Singles Day sales, everyone is single-mindedly focused on one thing and one thing only – price.
Taobao, Tmall and JD.com all vow to offer “the lowest price across the entire internet.”
Meanwhile, brands, already squeezed on margins and more cost-sensitive than ever before, are less keen on swallowing losses in exchange for bigger market shares.
Even Austin Li, who now struggles to sell high-end products, is compelled into the race to the bottom. When customers are tight on money, no one, it turns out, is invincible.
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