Wednesday afternoon, the emerging beverage brand Yuanqi Forest, seeing the retail price of its products sold online at less than what it costs the company to produce the drinks.
The company quickly put out an ad pleading for users to get their money back. “A large number of super low cost orders caused by operational error far exceed our inventory, and the losses far exceed our affordability,” the announcement said.
The price of a 79 yuan ($ 12) can of sparkling water has been reduced to 3.5 yuan due to an incorrect preference setting in the company’s Taobao online store. The operational error caused the sales volume of this sparkling water to spike by 300,000 orders, and the store could lose more than 2 million yuan.
Lawyers have different opinions on this issue. Some lawyers have said that Taobao stores can cancel orders in accordance with laws and regulations. However, since the error is caused by the operator, the store must give some compensation to consumers who place orders normally. As long as the two sides reach a consensus through consultation, consumers will not be able to force traders to deliver the goods.
However, some attorneys said that if Yuanqi Forest cannot provide evidence to prove that it really is an operational error, the company cannot unilaterally cancel the order. If Yuanqi Forest does not deliver goods, it will constitute a breach of contract and may even constitute fraud.
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Yuanqi Forest has broken into the beverage industry with its nationwide celebrity brand of web-based drinks, apparently containing 0 sugar, 0 fat, and 0 calories. In a mid-2020 roundtable, it was valued at $ 2 billion. In the first half of this year, during a funding round led by Sequoia China, its valuation reached $ 6 billion.
A total of 140,500 users placed orders during the incident, generating orders worth tens of millions of yuan, the company said in a late night statement. The affected Taobao store suspended sales, and as compensation, Yuanqi Forest decided to send boxes containing 15 bottles of ice peach sparkling water to each user who placed an order.