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Jun
2015

Luxury E-Commerce September 2014

New regulations enhance luxury consumer confidence in e-commerce

On 15th March, a new consumer Law ‘The Protection of the Rights and Interests of Consumers’ formally took effect. According to clause 25, consumers have the right to return the products they have purchased (except for customized products) within seven days from receipt without needing to explain the reasons why. Officials have explained that the regulation also applies to the online luxury goods purchases, although the returned goods should be in good condition and the return shipping costs shall be borne by the consumer.

In China there are always other interpretation of the rules and Chinese luxury E-commerce companies have their own regulations related to the return of goods. For example:

  • Zouxiu.com support ‘return without reason within 7 days’, except for beauty products, gold and other precious metals products, gems, clocks and watches
  • Amazon.com support ‘return without reason within 7 days’, except for clocks and watches of a value higher than 500 RMB, and jewelry costing more than 300 RMB
  • 5lux.com and JD.com claim that ‘return without reason within 7 days’ does not apply to luxury goods
  • As an international company, the Burberry Tmall store allows ‘return without reason within 15 days for unused product’

“The JD.com (NASDAQ:JD) return rules are based on its interpretation of the new law. Because of the peculiar nature of luxury goods, it is unlikely to be able to apply the ‘return without reason within 7 days’.” Ms Li, a member of the customer service team at JD.com said. The common argument given by most of the Chinese luxury e-commerce websites is that luxury goods are expensive which means they are a higher risk, and therefore any damage caused during the return process could mean that returned stock may possibly cost the business money. Also, some products are directly shipped to the purchaser from overseas, which makes the transport process in the case of returned goods more complicated.

Some of the e-commerce websites are also concerned that luxury consumers in China have a far less mature attitude when compared to those in western countries, and that there are consumers who buy a luxury bag online, carefully use it for one or two days and then return it. Although the returned goods may look just like a new one, there may be minor damage that will affect the re-sales value. This will undoubtedly bring great risk for the websites themselves.

On 22nd September, Liu Min, the Secretary-General and spokesman of China Consumer Association said luxury should be treated the same as other goods in terms of the return policy. Luxury goods and other products should all be included in the new law.

In the official announcement of the return policy to protect consumer rights and interest it was made clear that due to the high price of luxury goods, if there are quality problems or damage in during initial transit and if consumers cannot return or replace the item, consumer rights and interests will be greatly affected.

One additional value of the new law is that often online shopping may lead to issues where the real products are not the same as picture on the website or not suitable because of wrong sizing, but the overall quality is without defect. On this occasion in the past, the store would not allow consumers to return or replace the goods. So the legalization of ‘return without reason within 7 days’ for luxury goods can certainly better secure the interests of the consumer.

Yu Jun, the Director of the Complaint Department of the Protection Commission of Consumers’ Rights and Interests in Chongqing is quoted as saying that “Although the ‘return without reason within 7 days’ policy has been advocated, the clauses are not perfect. What need to be improve should includes the standards of judgment of what should or should not be returned, whether the damage is accidental or not, and whether as a result the return is malicious or not.”


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