360Buy puts on its massive price war armor
Ah, weibo. Without you, life would be so dull! E-commerce CEOs would carry out their fights behind closed doors and all we’d see would be the lower prices. Thankfully, we don’t live in that world, so we got to see the mudslinging play out in real time when 360Buy CEO Liu Qiangdong launched an all-out price war on Weibo.
Offbeat China has a great rundown of the full exchange, and you should click that link and read it, but if you’re pressed for time, here’s the short version: Liu declared on his weibo that 360Buy would henceforth sell all home appliances at cost, and employees found marking up those products would be fired. He also announced the company would be hiring spies to check Gome and Suning brick-and-mortar stores to ensure 360Buy’s prices were lower and to hand out coupons to Gome and Suning customers to convince them to buy on 360Buy instead.
Needless to say, Gome and Suning were not amused. Gome announced via weibo that it would be selling all products at a lower price than 360Buy. Suning did the same. Then 360Buy fired back with its own promise to sell at a lower price than anyone else, even if it meant they were literally giving appliances away.
One day into the sales, it doesn’t seem anyone is actually giving away free refrigerators or anything like that yet. But the B2C one-upsmanship can only benefit consumers, who are understandably pretty happy with this apparent race to the bottom. In the time since the battle, Liu has been answering questions on his weibo account, and nearly all of them are related to this price war. He has said that he isn’t worried about Suning expanding the price drops into its 3C business because 360Buy could handle that.
Liu has also sought to set customers’ minds at ease when it comes to counterfeit products:
If you buy a counterfeit product from 360Buy, congratulations because you just hit the jackpot! You will get at least ten times what you paid back as compensation!
But perhaps the best summary of his attitude about this whole thing is this post of his, which reads:
All companies that lack competitive ability will die off sooner or later! If you choose to do a startup, you must constantly exercise your own competitive abilities!
Although it’s doubtful that anyone can survive giving away consumer products for long if it actually comes to that, it’s hard to see how 360Buy could come out of this incident a loser. Liu has undoubtedly raised his company’s profile and put the focus on prices. Suning and Gome may be able to compete in the short run, but in the long haul, the fact that they operate massive brick-and-mortar businesses in addition to online services means that they are going to have a very hard time keeping up with a mostly online business with (comparatively) low overheads and unrivaled convenience from a consumer standpoint. Who doesn’t prefer buying things from their couch to buying them in a store, especially in China where they often get delivered the same day you make the purchase anyway?
[via Offbeat China, Liu Qiangdong's weibo]
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