An investigative report carried by Tencent’s tech news portal knocked more than 4 percent off Jumei’s share price Monday on the Nasdaq.
The report pointed out that a third-party e-commerce merchant, Xiangpeng Hengye, was selling fake cosmetics goods on Jumei’s online beauty products platform.
Jumei has been putting a lot of emphasis on the authenticity of goods, but that hasn’t prevented the online retailer from getting hit by fake-goods scandals from time to time.
Indeed, shady practices are difficult to curb in China.
According to Jumei’s protocol, the group scrutinizes third-party merchants’ business licenses, authorization certificates from relevant brands, and bills of clearance. But in the case of Xiangpeng Hengye, on top of selling fake items, it also forged authorization certificates from Armani, Burberry and Dior using Photoshop.
Jumei’s founder Chen Ou was furious when he saw the report on Tencent portal. He immediately stopped doing business with Xiangpeng Hengye, and there is even talk that Chen is looking at shutting down the third-party cosmetic online channel totally.
Most luxury brands still mainly focus on the traditional brick-and–mortar sales channels. However, a growing number of people are now opting to buy products online. This gives rise to an online demand-supply gap which counterfeit beauty product vendors are happy to fill.
According to a March report from the Authentic Cosmetics Alliance, a domestic alliance of hundreds of cosmetics brands, about 20 percent of cosmetics products sold online in China in 2013 were counterfeit.
Zhao Zhanling, a Beijing-based IT legal expert, said e-commerce operators need to devote more efforts to scrutinize the suppliers, not only before they set up a partnership but even after the business goes on stream.
“In order to pursue high profits, some merchants usually sell real products at the beginning but then start selling fake ones later,” Zhao told the Global Times.
To resolve the problem, Zhao has suggested heavier penalties. In China, the consequences of selling fake goods are not serious, which is why many merchants are willing to take the risk in search for quick and easy profits.
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