CRI听力:Luxury Goods Online

Many websites in China now sell luxury brand goods such as LV and Gucci. But many consumers question the authenticity of the products. Guo He, Director of Public Relations Director at the Chinese e-commerce platform Dangdang.com, explains.

"Those luxury goods sold on Dangdang.com are purchased from secondary dealers. But certainly there is a problem that some of these secondary dealers are not authorized by the luxury brands."

Guo He says although Dangdang purchases luxury items from unauthorized secondary dealers, the company always carefully checks the wholesale channel and documentation of the sellers to ensure the items Dangdang sells are authentic goods.

"For these luxury goods manufacturers, there is a problem to be dealt with. That is how to avoid the profit conflict between online outlets and offline franchise stores. Actually, we hope that we will also be authorized by the manufacturers and follow the pricing policy as authorized dealers."

Usually, luxury brands require authorized dealers to keep the sales prices of luxury items above a certain level to maintain their profit. But unlike franchised stores, online sellers provide higher discounts because their operations costs are lower. Therefore, they post a threat to the conventional pricing schemes of franchise stores. Furthermore, online sellers are not under the control of manufacturers, as they have a wide range of wholesale channels.
 
In the past when some luxury brands tried to gain a foothold in e-commerce, they found they were not as competitive as the online retailers. That's why they accuse the online platforms of not being authorized dealers and question the authenticity of their products.

In recent years, more disputes have occurred between luxury companies and online retailers. Profit is the reason behind the disputes.

Statistics indicate that the online sales volume of luxury items reached a record high of 10 billion yuan in 2011, a 68-percent increase over the previous year's figure. The amount is expected to increase in the coming years by about 30 percent. By 2015, it is estimated to exceed 37 billion yuan.

This is probably the reason behind such fierce competition in the luxury goods business. There are currently more than 10 e-commerce platforms specialized in China that sell luxury items, while other online shopping websites such as Taobao.com have also set up luxury webpages.

For CRI, I am Zhang Wan.