- Photo: SCMP
SHANGHAI: A small business in China has been devastated by the potential loss of 30 million yuan (US$4.2 million) after an employee accidentally labelled some of its washing machines with the wrong prices, triggering a buying spree.
Little Swan Dongshan Franchise Shop, which also has a brick-and-mortar outlet in Jixi county, Anhui province in southeast China, apologised and asked customers to withdraw their orders, Red Star News reported.
More than 40,000 orders were placed with its online shop in about 20 minutes on the evening of August 28.
Little Swan is a leading domestic washing machine brand and customers had spotted the extremely low prices at the franchise shop.
The shop said it was an error made by one of its workers who misunderstood the preferential rules of the shopping website Tmall, operated by Alibaba Group, owner of the South China Morning Post.
It stood to lose 30 million yuan if it fulfilled the orders because the original price of the products amounted to 70 million yuan, but customers only paid 40 million yuan due to the mistake.
A customer, surnamed Wang, said she learned about the dramatic price drop via social media on August 28.
She bought three machines online, including two that usually sold for 1,699 yuan (US$240) each but were priced at just 299 yuan. And another that should have been 2,499 yuan but was labelled 439 yuan.
Wang said that after seeing the store’s apology statement she immediately followed its appeal and cancelled her orders.
According to the shop’s statement, the majority of customers purchased multiple machines and placed their orders “in a professional way”. This suggests that the orders were likely made by businesses aiming to profit, rather than individuals merely looking for a bargain.
The company acknowledged that, “Due to the misunderstanding, we made a significant mistake. We recognise that this issue has caused confusion among the public and has seriously disrupted the market.”
“We feel deeply guilty and upset.”
Little Swan Dongshan Franchise Shop said it has only six employees and has made minimal profit in the past few years amid the economic slowdown.
“Tens of thousands of orders and tens of millions of yuan are astronomical figures for us. We feel sincerely sorry for all the affected customers,” said a statement from the company.
“We humbly beg you to understand our difficulties and to agree to withdraw orders. We will refund you as fast as we can.”
The company also released a video of the member of staff who made the pricing error.
“I am deeply sorry for my blunder. By the time I realised it, 20 minutes had passed,” she said.
“I cannot afford to cover the losses even if I sold everything of mine.”
The local market supervision authority said it is investigating the cause of the incorrect pricing by the shop.
Zhao Liangshan, a lawyer from Shaanxi Hengda Law Firm, told news portal The Paper that if a company intentionally mislabels prices to gain online visibility or boost sales, it is obligated to fulfil the order.
Conversely, if the pricing is due to an error, the company can petition the court to annul the purchase contract, allowing it to refund customers without the necessity of delivering the goods.
“The company must present compelling evidence demonstrating that it has indeed made a genuine mistake so that the court will be persuaded to rule in favour of cancelling the purchase contract,” Zhao stated. - South China Morning Post
