AliExpress, one of the oldest and largest e-commerce platforms that ships products to India, has managed to evade the latest ban on 59 Chinese apps, a list that includes three peers Shein, Club Factory and Romwe.
Club Factory and Shein had earlier come under the government’s radar for allegedly misusing India’s duty-free gift channel and later mis-declaring the value of goods that were being imported.
AliExpress, which ships individual packages, had managed to keep a low profile despite allegedly using similar tactics.
“I am happy that the government has banned Club Factory and Shein, because they were consistently finding new ways to mis-declare goods,” said a senior Customs official. “But AliExpress ships products in individual packages through Post, which has been harder to track.”
Club Factory said in a statement that it follows all laws of the region and maintains the “utmost standards of user data security and privacy.”
Shein did not respond to ET’s detailed queries, while AliExpress and Romwe could not be reached for comment.
Statistics on the share of Chinese e-commerce players in India’s e-commerce market is hard to come by but data collated from multiple industry sources pegs shipment volumes at an estimated 10,000-15,000 a day for Shein and 50,000-55,000 a day for Club Factory.
AliExpress is estimated to service a lot more orders than its peers.
The sources said shipment volumes for each of these players was far higher before India scrapped the duty-free gifts scheme in December, and after interventions by the Customs department earlier in 2019 led to the seizure of imported goods.
Data from industry tracker Sensor Tower showed that Club Factory’s app had been downloaded 190 million times by Indians since the start of 2014, while Shein had 49 million downloads and Romwe 10 million downloads.
An industry executive who has tracked the rise of Shein and Club Factory said that the ban will aid e-commerce companies servicing the long-tail of low-value consumer goods which Shein, Club Factory and AliExpress had cornered.
The move would not necessarily net big gains for India’s largest e-commerce players such as Flipkart and Amazon. For instance, the average order value of products sold on Club Factory is about Rs 180-Rs 200, an industry source said. Moreover, returns are at about 40-45%.
The executive, however, added that the Indian vendors which these Chinese e-commerce players had signed up over the last year could face issues in recovering payments.
“Sellers and shipping partners have not been paid for a while now, and with this ban, they (Chinese e-commerce services) might just be able to hide behind the force majeure clause.”
Chinese e-commerce players had come under the scanner of the government after multiple trade bodies had accused these platforms of evading customs duties, making it harder for local vendors and manufacturers to compete with the low-priced goods they offered.
ET, however, could not ascertain if the move to ban Shein, Club Factory and Romwe, along with 56 other Chinese apps, was targeted at curbing e-commerce imports into the country.