Home appliances retailers launch price war
August 27, 2012 Category Retail, Weekly
Competition in the home appliance industry is heating up as major retailers Suning Appliance, Gome Electrical Appliances and e-commerce player 360buy wage a new round in their price war. 360buy’s Chairman and Chief Executive Liu Qiangdong said the retailer would make zero gross profit selling big-size home appliances over the next three years. 360buy cut prices of television sets, refrigerators, washing machines and air conditioners, making sure they would be cheaper than what was being offered by competitors Suning and Gome. Suning.com guaranteed its prices would be lower than those of 360buy, while Gome’s website promised to offer “the cheapest price in history” for home appliances. Dangdang and 51buy also joined in, pledging to adjust their prices. Shares of some retailers fell as investors worried the price war would further erode their bottom lines. “This round of the price war will be a turning point for the home appliance retailing industry,” said Zuo Yingjie, Market Expert who runs Beijing-based online shop All3C.com. “360buy started the war because it knows Suning and Gome’s weakness very well. The two traditional retailers have higher costs running their bricks-and-mortar shops although the operating efficiency of these shops is lower than online stores.”
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