[Part IV] How Businesses Fake Online Sales and Revenues Figures
The global economy is bad, no thanks to the Covid-19 pandemic. And the situation in China is not much better.
Many businesses, especially SME, are struggling to keep their heads above water. In many cities, people are encouraged toset up vending stalls on the streets, something the local authorities were dead against in the past—something that reflects on the state the economy is currently in.
As for big businesses, many are affected as well.
From personal observation, there are two European fashion brands I’m especially fond of, but this year, one of them has terminated its mainland offline business altogether; and the other one has reduced its three retail stores in Chengdu down to one, and all its garments are on discount as much as 40% all the time ever since early this year.
So, the economy is not looking good right now.
However, from what we have seen on the side of E-commerce, things seem to be working out fantastically. From live-streaming sales events to shopping festivals such as 618, there’re reports of sales volumes that cracked the 100-million-yuan mark all the time, and any number less than that is considered an anomaly.
Is the online business really soaring despite the viral disaster or is it because the statics we read of the online sales manipulated?
This article is going to show you why we cannot take the online sales revenues of businesses too seriously, and thus answer the above questions to a certain degree.
The Live Streaming Mirage
Zhao Yuanyuan, the man who used to be in charge of Taobao’s live streaming, posted this following message on his Weibo account:
“Nowadays, without reaching hundreds of millions of yuan in sales revenue, one would feel too embarrassed to write a live streaming show’s sales report? Do you really think it’s that easy to sell something? Did you pass your math exam? A car sold for a 1-yuan sniping price gets logged in with its full price, something sold half-price gets logged in with its full price. Pageviews are included as live streaming views. You are even more impressive than Baron Munchausen. Streamer cost + traffic cost + the cost of hiring bots and spammers + the lowest price anywhere... How much more does a business owner must pay? Be f****** respectful.”
All these above which Zhao Yuanyuan mentioned are just some very common yet unspoken rules of the E-commerce game. And among them, hiring bots and spammers to falsify sales revenues is especially infamous, and extremely blatant during the pandemic.
Although many E-commerce organizations, such as Taobao and Douyin, have been cracking down hard on platforms that offer such a service, these platforms are just like a hydra—cut off one head, two more grow in its place.
How does This work?
When you approach a platform that provides the service of falsifying your sales revenue, such a purpose can be achieved through either bots or spammers. But mostly spammers are preferred.
Because spammers are all real people with real user IDs, and they are scattered nationwide, so they come with higher credibility.
During a live streaming sales event, the spammers place orders on the item and make payments. After the live stream ends, the money spammers paid are refunded back to them.
Both the streamer and the business owner only have to report the numbers incurred during the live stream, so the refund doesn’t matter.
So if a streamer has sold more than 10 million yuan worth of products, even though half of the figure is a result of the spamming and is subjected to a subsequent refund, the streamer, and the business owner can still boast that they have reached 10 million yuan in sales revenue for this live streaming sales event, because the refund only occurs afterward, thus is not to be considered something a part of the live stream.
What’s more, service can also be tailor-made. The business owner can require a certain number of total orders to be achieved during the live stream, and also when different orders are placed.
For instance, a business owner usually prefers a wave of spammers to place orders at the beginning of the live streaming event, to create the illusion that the product is so popular that so many people want to buy it.
And the spammers can even write a 5-star comment of the product with pictures attached.
Why They Do It?
It is quite easy to understand.
From a business owner’s point of view, with many spammers participating in the live stream and contributinh to the atmosphere, it can fool the genuine viewers into thinking that the product is indeed highly sought for, therefore they are more likely to place orders.
In addition, the viewers in total and the sales revenue also make good advertising, not to mention getting the product and the online store a better ranking or a better exposure on the E-commerce platform.
From a streamer’s point of view, the appearance of spammers are also more than welcome, their fake orders can make a streamer’s streaming record look more impressive.
When a business owner is looking for a streamer to hire, they always look at that streamer’s previously streaming record, which includes how much sales revenue per live streaming event he or she can generate.
But the refund occurred afterward is not included on such a record.
However, this poses a big threat to business owners. They need streamers to sell things, to bring profits, but if they, unfortunately, hire a streamer with a false record, they may end up losing money instead of earning in a live streaming show.
The Bad Circle
Spammers obviously do more harm than good in E-commerce. They introduce the element of unfairness to a platform that advocates fair trade; they create false information on which business owners and customers rely on, and they even cause some businesses financial loss.
Yet in spite of all the negativities, their presence has been long and obstinate. They came into being ever since the emergence of E-commerce, and they evolve and develop as E-commerce changes, just as viruses evolve as the human immune system improves—they always find the way.
For business owners, they hate spammers, but at the same time, they depend on them.
Before the popularity of live streams, Taobao was where spammers were the most active, they came up with customer reviews (both positive and negative ones) so authentic that as a customer, or an administrator, it was hard to tell what you were reading about was true or false.
Business owners on Taobao had to hire spammers to boost their rankings and store exposures because most shoppers tended to shop at a store with a top-ranking, or the most positive reviews.
As a result, a business owner who did an honest business had no business to do, so they also had to turn to spammers for help. Everybody was playing dirty, so the dirty became the new clean, and clean became irrelevant.
Therefore, a bad circle was born, and spamming gets to survive and thrive in the gray area. And today, in the age of live streaming, they have found a new breeding ground.
The Cooked Numbers
So, because of spammers, the statistics we read of the online sales revenues are very likely to be false.
But even without spammers, many companies still “cook” their numbers before submitting their sales reports to the various platforms. And this has become an unspoken rule.
According to an anonymous source in Hangzhou who is in the furniture business, when a company submits the online sales report to the E-commerce platform, the figure is usually achieved by adding the real sales revenue incurred on the E-commerce platform to the sale revenue incurred in other channels, such as the offline sales.
For example, if a furniture company has sold 60 million yuan worth of dinner tables on Jingdong during the 618 Shopping Festival; meanwhile, it has sold another 40 million yuan worth of dinner tables at its offline stores, when it submits a sales report to Jingdong, it would also add the 40 million yuan offline sales revenue to it, just to boast that it has sold 100 million yuan worth of dinner tables on Jingdong.
So to answer the question at the beginning of this article: Is the online business really soaring despite the viral disaster or is it because the statistics we read of the online sales are being manipulated?
Based on what we have read every day, it does seem like online business is doing very well in 2020, especially in live streaming. But since offline businesses are suffering because of the pandemic, there’s no way the online businesses don't feel its impact.
It is also in most cases true that the online sales statistics we all hear about are manipulated to a certain degree, therefore cannot be fully believed.