A major clothing retailer from the U.S. claims that the China-based Alibaba has punished it for failing to ink an exclusive deal with its e-commerce portal Tmall.
The U.S. company says that its sales dropped dramatically in the wake of the dispute.
- According to the Associated Press, which broke the news, the U.S. firm’s initial plan was to partially register its rise in online sales on Alibaba’s digital platform.
- The U.S. company had hopped the Chinese company’s popularity would help boost its sales.
However, the China-based e-commerce giant insisted on an exclusive deal. When the U.S. clothier refused the deal and inked an agreement with Alibaba’s rival JD.com, the relations between Alibaba and the U.S. firm turned sour rapidly.
Tmall reportedly actively prevented the U.S. retailer from selling all its products across the portal. The news was confirmed by two executives of the U.S. company, which refused to be named.
Other U.S. Clothing Retailers Have Been “Punished” by Alibaba
Also, the company’s ads disappeared from the Chinese company’s sales showrooms while its merchandize mysteriously dropped to the bottom of the search results on the website. As a result, the sales of the U.S. company, which is extremely popular in the United States, dropped 10% to 20% over one year.
One of the brand’s executives noted that the company’s products were barely visble on the website and lost prominent position. The executive who asked not to be identified agreed to speak on the condition of anonymity.
That’s a clear manipulation of traffic. That’s a clear punishment,
the U.S. executive told the AP.
Surprisingly, it is not the first time a U.S. brand is punished for failing to comply with Alibaba’s strict rules. Five other major retailers complained about being punished by the Chinese e-commerce behemoth for refusing to ink exclusive deals. All companies are extremely popular overseas but rely on the Chinese market for growth.
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