E-commerce sector cannot ignore lingering woes

Singles' Day results point to long-standing issues as well as new breakthroughs

The recently elapsed Singles' Day was a banner occasion for tens of millions of Chinese consumers, as well as the country's broader e-commerce industry. Of course, chief among the beneficiaries is Alibaba Group, the e-commerce giant credited for turning a tongue-in-cheek take on Valentine's Day into the biggest single shopping day in the world in recent years. According to reports, Alibaba recorded 278 million orders valued at 57.1 billion yuan ($9.32 billion) on November 11, up a staggering 57.73 percent from a year earlier.

These results look all the more impressive when put into context. Back in 2009, when Alibaba first started developing Singles' Day as an observance synonymous with steep discounts and mass online consumption, the company recorded turnover of just 52 million yuan on the day. Looking abroad as well, US retailers spent $2.9 billion globally online on Black Friday and Cyber Monday last year, according to reports citing figures from ComScore, a US-based Internet analytic company.

Alibaba's results during China's e-commerce bonanza should give Wall Street investors another reason to cheer after the company's $25 billion IPO. Looking beyond the headline figures though, the situation gets complicated. For one thing, the 57.1 billion yuan total notched earlier this week excludes returns and cancelled orders. About 25 percent of merchandise ordered during last year's Singles' Day was eventually returned, according to media reports which cite Shen Zheyi, an analyst at research company Gartner Inc.

Deceptive tactics designed to inflate sales present another potential problem. It's reportedly that some online vendors have been used fake shopping accounts to rack up fallacious transactions in the past. Such behaviors can boost a seller's profile - and artificially inflate turnover figures on platforms like Tmall and Taobao. Indeed, Alibaba's vice president Yu Weimin said Alibaba has uncovered about 10 billion yuan in fraudulent sales involving some 1.2 million sellers in 2013, according to media reports.

Sales of fake, counterfeit and knock-off items may leave another dent in Singles' Day sales once the dust settles. In the past, reports say that consumers have complained about Alibaba and others to local authorities because of fake goods sold on their platforms. As many consumers can surely attest, online prices that look too good to be true turn out to be counterfeit items.

For China's online shopping platforms, fighting fakes has long been an uphill battle. In the case of Alibaba, for example, reports say that it could take more than a week to resolve a claim of counterfeit good sales. To maintain growth and credibility with China's increasingly savvy consumers, more work will have to be done to stamp out cheap, low-quality knock-offs being sold as genuine goods.

Of course, all of this is not to suggest that the latest Singles' Day sales results are entirely overshadowed by looming risks and hidden dangers.

For example, Alibaba's achievements in mobile e-commerce - an area widely seen as the next big frontier in online shopping - represent a definite bright spot.

Sales made through mobile devices are said to have reached 24.3 billion yuan on Singles' Day, representing 42.6 percent of Alibaba's overall turnover that day as well as a 450 percent increase over the previous year.

Two other big retail names, jd.com and Suning Commerce Group Co, scored big in mobile e-commerce as well. Nearly 39 percent of Suning's Singles' Day orders were reportedly made via mobile devices.

All in all, Alibaba and its peers have many good reasons to celebrate the recently concluded Singles' Day. But the day's stunning achievements should not distract from the problems which continue to affect the country's largest e-commerce platforms. All players must address issues such as fraudulent vendor behavior and counterfeit good sales in order to maintain a competitive advantage over the long term.