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Low-priced inferior appliances will fade out of e-commerce channels
In recent developments, Alibaba has announced the retirement of all products under the "Wonderflower" brand on its Tmall and Taobao platforms. This decision follows a joint initiative launched by Alibaba in early January to detect counterfeit and substandard goods. The investigation revealed that all batches of gas water heaters from Guangzhou Sakura were found to be unqualified, with other products such as electric water heaters, range hoods, and disinfection cabinets having an alarming 76.7% failure rate. Despite these quality issues, Guangzhou Sakura managed to maintain high sales performance online.
According to Ovi data, in 2014, Guangzhou Sakura sold 266,000 range hoods, 351,000 gas stoves, and 161,000 water heaters online, ranking among the top three in each category. This success can be attributed to the company's low pricing strategy—products were priced at only 30% of the industry average or even lower—which resonated well with online shoppers who prioritize affordability over quality.
So why does e-commerce often become a breeding ground for substandard products? First, the national regulatory framework is still incomplete. As e-commerce grew rapidly, it was challenging for the government to establish comprehensive regulations in time, leaving gaps in oversight that allowed poor-quality products to thrive. This "bad money driving out good" phenomenon has led to market chaos.
Second, e-commerce management models are not yet mature. While China's e-commerce sector has expanded significantly, the management systems have not evolved at the same pace. In the early stages, many platforms lowered entry barriers to attract traffic, leading to a flood of low-quality products.
Third, many suppliers lack strong brand awareness. While e-commerce brought a surge in orders, companies failed to invest in long-term improvements, focusing instead on price competition. This short-sighted approach has resulted in poor product quality.
In 2015, the year marked as the first year of e-commerce regulation, the industry began to see more structured oversight. After years of growth, e-commerce had become a major driver of economic development. The Chinese government started drafting legislation, forming a legislative outline and initiating formal work on e-commerce laws. This signaled a national commitment to improving the sector and eliminating substandard products.
At the same time, consumer awareness of brands has increased, prompting e-commerce platforms to take stronger actions against counterfeit goods. It is expected that 2015 will be a pivotal year for e-commerce, with stricter regulations and improved market order becoming the new norm.
The kitchen and bathroom market on e-commerce platforms is set to grow significantly, leading to a comprehensive reshuffle in the industry. With nearly 500 companies operating in this space, the rise of e-commerce giants like Alibaba is pushing out low-quality suppliers, accelerating the process of market consolidation.