L’Oréal handles pricing controversy in China following Double-11 promise

Just a week after  L’Oréal reached a record turnover of RMB 2 billion ($313.6 billion) during the Singles Day shopping festival, the brand found itself facing anger from customers and pressure from powerful livestreamers over the pricing of a mask product. 

After the Singles Day sales, consumers complained that—contrary to a promise the brand had made earlier—a L'Oreal mask bought during a pre-sale in livestreams by Austin Li and Viya cost 66% more than the same product bought during the 11/11 sale on L’Oréal's official Tmall store. Consumers who bought the product during the livestreams on October 20 paid RMB 429 (US$67), while the price from L’Oréal's official livestream on November 11 was RMD 257.70 (US$40). 

In October, L’Oréal had posted on its Weibo account that the Li and Viya livestream sessions would offer the best price of the whole year on the product. 

Li and Viya are China’s top two KOLs. They drove a combined RMB 20 billion (US$3.13 billion) in GMV (gross merchandise value) during the long hours of livestreaming on October 20. The troika of Estee Lauder,  Lancôme and L’Oréal stayed on top of Tmall's skincare and cosmetics category during the global shopping festival, and all of them did so in part by cooperating with Li and Viya.

As a clamour for refunds grew on Wednesday (November 17), both Li and Viya issued statements saying that they would suspend all cooperation with L'Oréal's Tmall flagship store until the issue was appropriately resolved. The two KOLs also called on consumers to wait for 24 hours. If the brand did not have a solution plan by then, the livestreaming teams said they would offer a compensation package for consumers. 

Austin Li (L) and Viya (R) statements on Weibo

Several hours later, L'Oréal sent out its first statement in reaction to Austin Li and Viya’s statements and apologised to consumers. The brand said the difference in prices was because of the complex calculation of coupons on the platform during the shopping festival. L'Oréal said it would investigate the incident and cooperate with government agencies to settle the disputes. 

On Thursday, L'Oréal posted a second statement explaining why some consumers enjoyed a lower price; L’Oréal offered a limited amount of RMB 200 coupons that consumers could use when they spent RMB 999 ($156) or more in November sales. The brand's statement said it will provide an extra RMB 200 ($31) coupon for consumers who spent RMB 999 but did not get the discount during the Singles Day presales, from October 20 to 31. L’Oréal also offered other compensation coupons for consumers on Tmall who bought the same mask but did not reach RMB 999. 

L’Oréal statements on Weibo

Right after L’Oréal issued the second statement, it became another hot topic, with consumers debating whether the L'Oréal mask solution makes sense. As of this morning, the topic has been read by more than 41 million people on Weibo. Some media outlets also questioned the lowest-price mechanism used for Alibaba KOL livestreams, which lowered brands' profit margins. Neither Li nor Viva have made further comments.  

It is not the first time that L'Oréal has been accused of inaccurate advertising (see "L'Oreal on the defensive over false advertising case in China").

Meanwhile, the China Consumers Association issued a report on public opinion analysis and consumer rights during the Singles Day sales season. The report took L'Oréal Tmall flagship store as an example and quoted consumers’ complaints that the brand did not deliver the goods within 10 days after payment. 

L'Oréal is No. 1 on Campaign Asia-Pacific's list of APAC's top 10 skincare and cosmetics brands. But in the Mailand China market, it faces intense competition, and Estee Lauder remains the No. 1 skincare and cosmetics brand.