Lazada to be inspected soon

Lazada was the most complained-about e-commerce website in 2017

The Ministry of Industry and Trade (MoIT) has just issued several warnings that some multi-level companies offer very popular food products on the market with new forms of distribution. The warning calls attention to the risk that consumers may be cheated.

MoIT said that there are numerous fraudulent multi-level businesses that do not actually distribute anything. They remain only a network of sellers that get-by through continuous recruitment.

These companies usually deliver the wrong products, low-quality items or fake goods that are different from the advertisements on their websites. Sometimes they post fake prices or cancel a successful order without any explanation.

Their products have no labels and the companies cannot provide invoices, and food and functional food items are not preserved carefully to ensure quality.

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Based on these telltale signs of a fraudulent company, Recess Co., Ltd., the owner of e-commerce website Lazada.vn, is one of the companies that received the most complaints. In 2017, Vietnam Competition Authority (VCA) received a large number of complaint letters related to the quality of products and services of Lazada.vn, as well as delays in delivery, goods being different from the advertisements, delivering used/old items or the wrong articles, repudiating liability, cancelling orders, fake promotions and wrong prices, selling goods that are not in the inventory, and abandoning customers. By the number of complaints, lazada.vn has made customers very angry this year.

VCA worked with Recess and asked the company to resolve the complaints and explain its business process. The firm has resolved the complaints satisfactorily since then. However, “related to a large number of customer complaint letters on problems in Lazada’s business, VCA will collaborate with the relevant agencies to conduct an inspection of this company in the short time to come,” confirmed MoIT.

There are many e-commerce websites that use the same methods as Lazada. Last month, several customers claimed that they bought a large batch of phone cards on FPT Group’s Sendo.vn e-commerce platform, but all of these cards had already been used, while Sendo’s communication manager stated that the company is only a link in the supply chain, thus it would be important to allocate responsibility to all parties involved.

As a result, MoIT recommended customers to buy at the companies’ official websites or authenticated stores, not on intermediary websites. Meanwhile, in early May 2018, Lazada announced closing its office in Hanoi to focus its resources in Ho Chi Minh City.

Customers have to fend for themselves

As more and more multi-level companies are cheating clients, MoIT recommended customers to protect themselves. Customers should choose reputable, licensed e-commerce websites or organisations that have clear contact on their websites for purchase. They should carefully review the terms and conditions of warranty, return, refund, and delivery on the websites before making a purchase. Consumers should also be wary of strange websites or social networking accounts that advertise big promotion or sell products and services at special low prices.

According to MoIT, multi-level companies having the largest number of participants are Stella Ivy Cosmetic Co., Ltd. (also known as Oriflame Vietnam) with 371,547 members, accounting for 52.53 per cent of multi-level business officers nationwide, Amway Vietnam (11.18 per cent), New Image Vietnam (10.12 per cent), Herbalife Vietnam (6.21 per cent), and Tiens Vietnam Co., Ltd. (4 per cent).

The total sales of multi-level businesses in 2017 hit VND8 trillion ($352.4 million), rising by VND330 billion ($14.5 million) over 2016. Herbalife Vietnam reported the highest revenue with more than VND2 trillion ($88 million), making up 25.62 per cent of the total. Three other companies had revenue exceeding VND1 trillion ($44 million), including Oriflame Vietnam, Amway Vietnam, and New Image Vietnam. The revenues of the remaining companies are under VND500 billion ($22 million).

The revenue of multi-level businesses mainly comes from functional food (71 per cent), cosmetics (23 per cent), and home appliances, fashion clothing, and equipment and other items (6 per cent).