Customers expecting to cash in on a widely anticipated price war among home appliance retailers were disappointed to find that only a limited number of products were cheaper yesterday.

The war kicked off when Beijing-based promised to keep its prices at 10 percent below those sold at the offline retail outlets of its major rival, Suning, China's largest home appliance retailer.

Suning's online unit Yigou later responded by promising to adjust its prices according to 360Buy's product listings as soon as it found that its own prices were higher. Yigou customers who had paid more than they would have at 360Buy would be compensated, it said.

Other smaller players such as Gome and Dangdang, as well as Tencent's, also jumped in, afraid of losing customers seeking cheaper offerings.

But as of 5pm yesterday, out of the total of 117,000 items on six major online shopping sites, only 5,000 were cheaper than the previous day, according to data tracked by online price comparison site

And nearly half the refrigerators and air conditioners tracked by eTao were unavailable.

More expensive

According to eTao, 475 bulk home appliances sold at Yigou's site were more expensive than those of 360Buy while 297 were cheaper. Another 416 were the same price.

Prices at 360Buy were down by an average of 10 percent while Suning cut prices by 8 percent.

"I feel disappointed because the Sharp LCD television set I wanted to buy is not available on Gome's online shopping site while prices at 360Buy and Suning are higher," said Sherry, an employee with a local consulting firm.

360Buy chief executive officer Liu Qiangdong even said he would cut product prices to zero if the same item sold on Yigou cost 1 yuan, giving many consumers the false hope that they could pick up products for free.

Market watchers were not positive about the outcome of such a high-profile price war.

"In the long run, price cuts won't be as strong as expected and consumers won't enjoy much privileges," said Chen Shousong, researcher with Beijing-based Internet consultancy Analysys International.

Within a short period, it could be a sales boost but the overall market situation was not likely to change by merely offering sales campaigns, he added.

According to data compiled by the research firm, in the second quarter, 360Buy had a dominant 40 percent share of the domestic business-to-consumer market, followed by Taobao Mall in second place and Tencent's online retail unit.

Suning's Yigou was in fourth place with 3.4 percent.

Marketing expenses

The overall market remained vigorous, climbing 82 percent from a year ago in the second quarter to 98.8 billion yuan.

However, most players weren't able to turn a profit due to high marketing expenses to attract consumers.

Suning's earnings will not see significant improvement in the near future, according to Everbright Securities analyst Tang Jiarui. Tang said "its online shopping arm is very likely to suffer from losses as it expands to attract customers and catch up with other domestic rivals."

Who Voted for this Story




Copyright © My China B2B - Cloud Edition  |  Powered by My China B2B  |  Qiao LAB - Shanghai High-Tech & Business Incubator