To what extent is an online retailer responsible for the advertising and prices on its site? Well, that depends on its business model… and the terms and conditions.
DO YOU SHOP online? If you haven’t tried it, you’re not a dinosaur – online shopping accounted for only about 1% of the country’s overall retail last year. This might pale in comparison to the business conducted inside physical stores, but retailers are investing heavily in e-commerce, because not doing so means being left behind.
A World Wide Worx (WWW) study from last year said that, for the first time since the dawn of e-commerce in SA, online retail was expected to remain below R900 billion. By 2020, the researchers forecast online sales will double.
Arthur Goldstuck, WWW’s managing director and principal analyst for the survey, noted: “While 1% represents a very small proportion of overall retail, it is also a psychological barrier for investment in e-commerce initiatives by physical retailers.
“The number also masks the extent to which a number of major retailers have exceeded the 1% online mark by a substantial margin, compared to the vast majority that are not yet close to this mark, if they have an e-commerce presence at all.”
Another 2016 study, by Effective Measure, found consumers were attracted mostly to the convenience: time-saving, the ability to access product reviews, special offers and price comparisons are the four main reasons for shopping online. Yet 37% of this study’s 12 000 respondents said they prefer to touch and feel before purchasing, while 53% of respondents said they simply did not trust online payments.
That trust can be eroded by what consumers construe as misleading advertising. Max Venier wrote to me about his issue with Takealot, which promotes itself as “SA’s favourite online store”.
After noticing a daily deal for a 5L Blaumann stainless steel bin, Venier questioned how Takealot could claim the bin was discounted by 79% when it was nowhere near that.
He complained to Takealot, asking: “Can you please explain how the item on your daily deal – the 5-litre Blaumann stainless steel bin – can be discounted by 79% from R1 199 to R249, but on your normal catalogue, the 20-litre Blaumann stainless steel bin is R399 (not discounted).
“I believe this is totally unethical and misleading, and should be reported. This is in total contradiction of your responsible disclosure report.”
The response from Takealot was wholly unsatisfactory: “Thank you for your patience while your query was being escalated. Please note that the item is sold by a third-party seller and Takealot has no say in the prices they set for their listings.”
Venier wasn’t convinced: “It’s sold on the Takealot platform. Surely you, as Takealot, should ensure your responsible disclosure that you promote is applied, or do you let third-party sellers dictate and mislead Takealot subscribers/ buyers? I feel the consumer is purposefully misled with fake high discount percentages of totally over-inflated prices which the net amounts to the normal selling price.”
Such corporate Takealot 1 on 2 on BMW 1 on Absa 1 on FNB of Home 2 on Dept Affairs Global 1 on VFS Post Office 2 on SA Agents onRental 3 Tenants 2 on speak and promises of “escalation” are enough to get anyone riled. So I asked Julie-Anne Walsh, Takealot’s chief marketing officer, to explain.
“(We always strive for) honest, simple and direct communication of our pricing, discounts and product information… We’re in the process of reaching out to Mr Venier to explain the results of our investigation into his complaint, as it’s now clear to us that our first explanation did not give him all relevant information, and we will address this internally with the team members involved.
“To start, a quick explanation of how our prices are set and displayed on the Takealot website: On each product information page, the list price (LP) and selling price (SP) are set manually and the percentage saving is calculated from these two amounts and displayed automatically. This system works identically for our own lines of products, where the information is provided by our suppliers, and also for thirdparty sellers.
“The LP shown in SA 1 on Loan Finder 3 on Loan Legal Lifestyle 1 on Vodacom 2 on 1 on MTN Bank Standard 1 on Select Imperial 1 on Life Liberty 1 on Bank African 1 on Fridge Dare 1 on AA respect of deals and other discounted goods is the recommended retail price (RRP) suggested to us by the supplier of the relevant product. Where the supplier has not provided an RRP, an estimate may be provided. Where a product is offered for sale by a third-party seller, the LP may be provided by the third-party seller.
“The LP is therefore essentially based on the RRP of the product, provided to us by our supplier or the seller. While our sellers must include an SP, they are under no obligation to include an LP in the product information that they provide to us. On January 23, 2017, our product listing for the 20-litre Blaumann bin did not include the item’s LP – only the SP of R399, and therefore reflected no discount. The seller has since confirmed with us that the correct LP of the 20-litre bin was R1 999.
“By comparison, our product listing for the 5-litre Blaumann bin, as featured on Daily Deals on the same day, included both the LP (R1 199) and the SP (R249), thus reflecting a discount of 79%.
“The LP being included on one product (the 5-litre bin) but not the other (the 20-litre bin) created an incomplete picture of the range’s comparative discounts on that date. The effect was Mr Venier thinking the LP on the 5-litre bin must have been inflated and the resulting discount overstated – when in fact it was due to an omission of any LP on the comparative product (the 20-litre bin).
“Takealot has informed the seller of the issue and recommended that all items in that range must include list prices in future.
“The seller has confirmed that the omission was accidental. It’s worth noting that it is not beneficial for a seller to omit an LP when the resulting discount is so significant; in the case of the 20-litre bin on this day, 80%. Following this, the seller swiftly updated the product listing of the 20-litre bin to include the LP.”
Walsh then explained that Takealot does hold sellers accountable for accurate product-related information on the site. “Sellers should make sure that the information they put on the Takealot website is accurate, and in our seller agreement with them we oblige them to ensure this. Non-compliance with the seller agreement is taken seriously and can result in disciplinary action and, in critical or persistent cases, swift removal from the Takealot seller portal.”
That’s good to know, especially for people who are not comfortable with online shopping.
The seller swiftly updated the product listing