On double 11 of 2014, Alibaba’s transaction value exceeded RMB57.1 billion (US$9.28 billion) which created a new record. However, there is false prosperity behind Double 11 in 2014.
For some top brands by sales value on Double 11, their refund rate was higher than the average number of the industry. Take Handu and Jack Jones for example, their refund rate increased to 64.09% and 38.25% respectively. While the top brand in home appliance category, Haier complaint rate was 54.2% according to research of Netease.
Handu is a top clothing brand on the internet; its total transaction value was RMB279 million (US$45.36 million) on Nov 11 2014, ranking 6th. However, as of 23 Dec, its refund rate increased to 64.09% in 30 days, followed by Jack Jones with a refund rate of 38.25%. The average refund rate of clothing industry showed on Tmall.com was 10.09%, and Handu & Jack Jones’ refund rate were 5 times and 2.5 times higher than the industry average.
In 2012, some merchants’ refund rate was over 36% after Double 11 and the refund rate in clothing category was about 20%. In 2013, it worsened to as high as 40% while some merchants reported 25%. See a review of sales value on Double 11:2009-2013.
There were various reasons for refund. Take Handu as an example, the total transactions for refund were 180,681. Of which, 2,752 were for quality problems, 9,982 for “not receiving the goods”, 101,783 for no reason and 66,164 were for other reasons. Xiaomi’s 30-day refunds were 74,991 and 22,600 of which were the three reasons mentioned above.
The CEO of Taobao, Zhang Jianfeng estimated the refund rate after Double 11 would be in single digit percentage points.
Taobao and Tmall offer buyers refund insurance which normally costs about RMB1 or less; and buyers can get shipping cost of RMB5 to RMB10 covered if they decide to return the products. This insurance more or less contributes to the product refund.
Besides, large number of packages for orders on Double 11 as well as refund ones added huge amount of workload for China logistics market. Between 11 and 16 Dec 2014, the total number of packages was 540 million with an increase of 56% from the same period of prior year. Of which, the most single day packages during the period from 11 to 16 Dec exceeded 102.6 million with an increase of 57.8% YoY, which were 3.1 times more than on usual days in 2014.