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How and why do boutiques and influencers buy and resell items made in Asia?

We take a look at an issue that has got many people exercised online.

BUYING ITEMS ONLINE is a common practice in 2018. But a recent trend has seen companies able to buy in bulk from Asian-based websites and then sell the items at a marked-up price to Irish consumers.

In the past week, there has been renewed discussion about reselling from Asian sites, with one anonymous Instagram page sharing stories of people concerned they had bought resold and marked-up items from an Irish boutique.

PastedImage-50108 Source: Ali Express

The website at the heart of this reselling discussion is the hugely popular Ali Express, which is part of the Alibaba group. This group was founded in 1999 by Jack Ma, who is China’s richest man. Ma is often called the ‘Jeff Bezos of China’, and with good reason – his group knew that the internet could be harnessed to help small Asian companies reach a global audience.

PastedImage-24482 Source: Ali Express

The website was originally known for selling items in bulk. Because of the wide range of products Alibaba offers – from homewares to beauty products – people across the world began to purchase their cheap products to resell at a marked-up price. Some get involved in a process called ‘dropshipping’, where sites have products shipped directly to the customer.

There are multiple videos, websites and blogposts online that show people how to buy and resell items from Asian websites:

PastedImage-17814 Source: Google

PastedImage-30853 Source: Reddit

PastedImage-70378 Source: Quora

But in recent years, consumers have cottoned on to the low prices, meaning that customers and companies are buying from the same site.

This is because where sites like Ali Express find a niche is in following fashion trends. For example, if you had your eye on Valentino’s studded heels, but couldn’t fork out over €700 for them, you can upload a photo to the Ali Express app and see if there are any similar shoes available:

PastedImage-45860 Source: Ali Express

This also means that boutiques who follow the same trends might also be buying their items online, so customers are able to compare prices.

All of these elements have been raising eyebrows, particularly when high-profile influencers are selling products through their own companies which appear to have been bought wholesale online.

PastedImage-51456 Source: Ali Express

But what is this reselling practice, is it legal, and what can you do if you experience a problem with it?

A former fashion insider who worked designing clothes for British high street brands explained to TheJournal.ie that if you want to buy from such sites it’s a case of ‘buyer beware’. But she said that what is happening is not unusual and that the clothes we buy in high street stores are often made in similar factories.

She explained of Ali Express: “When people are buying from [companies I worked for] we are selling things made in factories to order. Ali Express is cutting out the middleman, like Asos [although they are vastly different].”

There are other UK-based websites that work directly when smaller producers and offer items priced cheaper than those you’ll find on the high street. Without having to pay rent or other bills, they can cut costs but get quality items to customers. These offer more high-end products than the likes of Ali Express.

She said that you can buy individual items or multiple items on such sites, with multiple items often meaning a discount. The boutiques or shops can then sell these items at a marked up price – something which is typical of the retail business.

PastedImage-15812 Source: Ali Express

Why are shops marking up products? For one thing, that’s just the business model – shops need to pay rent and bills, and making a profit. “You are paying the shop for the opportunity to go in and view the dress and see the dress,” she added.

You would be livid if you knew how much high street stores paid for items and marked them at. Mark-ups happen all over the place – from the man who sells the thread to the whole way along. Ali Express cuts out overheads: retail space, marketing department, sales person, electricity bill.

She said that when it comes to these sites, you get what you pay for – and you’re not necessarily getting a bad deal. But you should also be aware that you might be buying a product in a boutique that did originally come from a reselling site.

“What you should look for is quality, and online you usually get what you pay for,” she said.

“Some things take eight months, some take eight weeks. You are not buying off AliExpress, you are buying off a supplier. Some are premade,” she said of how long it can take to receive an item bought on the site. When it comes to assessing how good a potential product could be, she urged caution.

It’s like an eBay sale – would you buy an iPhone from someone who uses stock photos or has a poor description, or somebody who has nice shiny pictures and a really good description? Have your wits about you.

‘Reselling is not new’

Here in Ireland, some influencers have been involved in buying from Asian sites and selling them on via their own companies. But Kirstie McDermott, the founder of Beaut.ie and Frillseeker, told us that the idea of reselling “is in no way, shape or form remotely new” .

“The cash and carry or trade fairs would have been where your traditional corner/independent shop went to buy items at trade prices, and then sell to retail – at an RRP [recommended retail price] though, not just a figure plucked out of thin air,” she said.

“[Today] you can pick up incredibly cheap items from Wish or AliExpress and resell them in your online or physical shop, and Bob’s your uncle. That’s very appealing to, say, a boutique womenswear business which can add in trend-led handbag or costume jewellery lines and really maximise the profit on them.”

She said that it is very easy for consumers to find out that this is happening, but that some influencers are ”selling what is often very below-par or designer knock-offs at massively inflated prices”.

No one has any objection to anyone running a business or making a profit but there really are ways to go about it.

She said she believes “some – not all – influencers [are] just playing fast and loose with every single way they conduct their businesses”.

McDermott said that with a bit of research and digging, people could find reputable trade suppliers, or partner with a distribution company in Ireland.

“The stark reality is that vertical production – whereby you control every aspect of a product’s creation from design to prototypes to manufacture, marketing, distribution etc – is not a reality for any small business, nor is it a reality for many very large businesses as it doesn’t make economic sense. It costs millions,” she said.

Of necessity, brands will look to get the best base price so they can maximise their profit, and that will involve going to a third party with production facilities or a pre-made product, to make it and re-badge it for you. It happens in all sectors: food, fashion, you name it. Where blogger brands often get it wrong is they buy the cheapest, they re-badge it badly and they market it poorly – so it looks cheap, and feels cheap. Then they deny they’re doing it at all, which fuels the notion that there’s something wrong with the practice.

Kirstie added that the proliferation of cheap products feeds into the problem of fast fashion.

“We need to begin to understand that people’s time costs money, that hand-crafted items from our local designers will cost more than something from a high street shop – often a great deal more – but that there is a reason for that,” said McDermott.

She said that the message for influencers being received from the Irish social media sphere at the moment “is the only way to do that is to be as honest as possible”.

What’s it like shopping on Ali Express or similar websites?

We asked some Ali Express customers how they found the process. Here’s what they told us:

I was very wary and skeptical at first. It was a phone for my mother, and it was cheaper to buy it online from China, and it was not available in Ireland at a reasonable price. I did a lot of research on the seller. The quality was decent, and was exactly as described. The money goes into a kind of escrow-account, so they don’t get paid until you have received the product and state that you’re happy with it, so they’re keen to ensure that the customer service is good, otherwise you could lodge an objection and they don’t get a penny. Would I buy from AliExpress again? Sure, if I wasn’t in a rush for something.
The quality was very good – considering the price. I’ve only ever gotten smaller items like phone cases, and screen protectors though, so nothing major. I would be annoyed if I was shopping in town though and found out that the stock was all sourced there, cause the % markup would be astronomical considering how low the prices are on site.
Quality wise because it’s from Ali Express, I know what I’m getting so I wouldn’t hold it up to as a high a standard as other stuff. However if I bought something from a shop and it turned out to be from Ali Express I’d be pretty pissed off. It’s actually quite a good service but you generally have to wait 1-2 months for what you ordered… The clothes were hit and miss due to sizing. I once ordered a jacket in a medium and it would probably have fitted a 10 year old child at best. If I ever needed a refund I tended to get it.

What can you do if you run into issues?

We asked the Competition and Consumer Protection Commission (CCPC) if it has concerns about such sites, but it said that its statutory role – enforcing general consumer protection legislation – prevents it from commenting on business practices and whether something could be a potential breach of legislation.

But it did say that prices for goods and services sold in Ireland are generally not controlled by law.

“Businesses are free to set their prices once this is done independently and the price of products and services are displayed. It is then up to the individual consumer to decide what good value is and what they are prepared to pay.”

It added that consumer protection law requires that goods or services sold by a business to a consumer must be of merchantable quality, fit for the purpose intended, and as described.

There are specific obligations on businesses when they sell goods and services online or over the phone.

The CPPC also said that if a consumer buys something either online or from a shop and they are unhappy they should deal with the business from whom they purchase the goods. If a consumer feels that they have been provided with misleading or false information we would ask that they contact the CCPC.

The Consumer Rights Directive only covers consumers when they buy from businesses based in the EU, “so it is important to check the geographical address of any business before making a purchase online”, said the CCPC.

Can the advertising watchdog do anything about this?

We asked the Advertising Standards Authority of Ireland about its role in the issue. It said that with regards to influencers, any complaint received by the ASAI would be investigated under the area of Misleading Advertising.

For example, a marketing communication “should not contain claims – whether direct or indirect, expressed or implied – which a consumer would be likely to regard as being objectively true unless the objective truth of the claims can be substantiated”.

“It’s not for ASAI to comment on the standard business practice of products purchased in bulk and then being re-sold. If an ad makes a claim about its provenance which a complainant feels is misleading they can make a complaint here,” it said.

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