[Update] So a day has passed since 360buy CEO declared price war with Gome and Suning, two leading brick and mortar electronic appliance retailers, who is winning so far? Surprise, surprise, it seems that Taobao, China’s No.1 C2C etailer who wasn’t even involved in the price war, is winning.
A poll by Sina Weibo showed that the vast majority of netizens thought the price war was nothing but another way of marketing and luring consumers to spend. Many, interestingly, mentioned that after comparing prices at 360buy, Gome and Suning with Taobao, Taobao beats all three.
Last evening, three Weibo posts by Liu Qiangdong, CEO of 360buy, China’s leading B2C ecommerce site, started something that may be the beginning of a messy price war among major electronic appliance retailers in China.
At 9:21 pm last night, Liu announced an executive decision on his personal Weibo account: “Tonight, once again I made the decision to sell big home appliance at 360buy at zero gross margins for the next three years. Within these three years, any employee found to sell at marked-up prices will be fired. Starting from today, 360buy promises to sell big home appliance at prices at least 10% lower than that of Gome or Suning [leading players in home appliances and 360buy’s major competitors].”
Twenty minutes later, Liu further revealed how his company is going to keep the promise of “at least 10% lower prices”: “From now, 360buy will recruit 5000 price intelligence agents to spy on Gome and Suning. Two agents per Gome or Suning store. When shopping at Gome or Suning, If someone finds that price at 360buy is not cheaper by 10% after checking prices on 360buy apps and if our price intelligence agents confirm the case, 360buy will lower prices immediately or give out coupons on the spot. 10% lower prices guaranteed. We welcome retired people to apply. Monthly salary no less than 3000 yuan. Application to firstname.lastname@example.org.”
It’s not a war if only one party is barking. Only minutes after Liu’s provoking posts, 国美电器, the official Weibo account of Gome, announced their counter strike: “[If 360buy sells at 1 yuan, Gome will sell at 9.5 cents] No bullshiting. Starting from 9am tomorrow, all products at Gome electronics and appliance stores will be 5% cheaper than those at 360buy.”
Then Suning fought back, too: “To sell at competitive prices is a basic promise we keep. Let me reiterate: Everything on Suning Ease Buy, including but not limited to home appliances, is cheaper than 360buy. If any netizen pays more at Suning than at 360buy, we will adjust prices immediately and reimburse the custom twice the amount of the price difference. Starting 9 am tomorrow, Suning will initiate the biggest sale in history. We will help CEO Liu to achieve his laying-off goals faster. Working hard together.”
Showdown at 9 am August 15
Was 360buy scared? Apparently not. Minutes after Suning’s attack, 360buy took out their weapon of mass destruction: “Starting 9 am tomorrow morning, all big home appliances at 360buy will be sold at cheaper prices than those from Suning, both online and offline. There will be no bottom line. If Suning dares to sell at 1 yuan, then 360buy will surely sell at 0 yuan. To those who plan to buy big home appliances, you will lose money if you don’t follow 360buy.”
Even Dangdang, China’s Amazon-like website focusing on books and gradually expanding to other product categories, jumped in. Li Guoqing, CEO of Dangdang commented via his Weibo account: “All mobile phone, computer and small home appliance products on Dangdang and products from Gome Dangdang flagship stores are ready for war. We welcome consumers to compare prices.”
Government part of the reason of the price war?
All kinds of speculations are floating in the air after Liu’s posts. But according to Liu himself, it seems that someone has used a bit of Guangxi: “Many people speculated about the reason of the price war, let me spit it out: I wasn’t angry when I heard rumors of 360buy was short of cash and selling cheap to Plusrite; I wasn’t angry when they [Suning?] messed with 360buy’s anniversary sales; I wasn’t angry when they hired PRs to badmouth 360buy; I wasn’t angry when they blocked suppliers from working with 360buy, but I am angry when they use connections from certain local governments to supress us! I will use legit strategies to defeat your backdoor conspiracies.”
What’s on your shopping list?
Netiznes don’t really care about who is who in the price war. Many are happily pulling up shopping lists. If these retailers truly meant what they said, consumers would be the ultimate winners. But not everybody is convinced. Many actually suspected that 360buy, Gome and Suning were working together to cheat consumers – they would mark up prices all together first. Some others, on the other hand, are just happy onlookers. lichmaycry commented: “Houses are more and more expensive and home electronics are cheaper and cheaper. Please 360buy, Gome and Suning, please invest in real estate.”