Bundle sales fallout forces Ctrip to reassess business practices

Updated 2017-10-16 09:34:53 Global Times

It's nothing new to hear about Chinese customers falling into the trap of Ctrip, a platform that recently came under scrutiny from the Chinese public after well-known actress Han Xue complained she became the victim of its bundle sales tactics.

When purchasing tickets on Ctrip, which claims to be the world's third largest online travel agency, many Chinese customers said they paid more on the platform than the official price shown. Buttons for selecting additional services were always placed in conspicuous positions, and difficult to avoid if customers don't pay proper attention.

In a post on her Sina Weibo last Monday, Han Xue warned others to check carefully before they make orders on Ctrip. A picture Han posted shows that Ctrip added a 38-yuan-hotel coupon to her flight ticket basket, priced at 1,530 yuan.

Han's post struck a responsive chord. It was liked by 260,000 Weibo users and received nearly 40,000 comments as of press time.

Saving itself

After a huge public outcry, Ctrip responded twice in a week in a bid to save itself from further bad publicity.

Ctrip said Thursday that customers are able to select "normal reservation" which excludes additional services from customers' ticket selections.

The platform now offers clearer information on detailed services, making it simpler to select and cancel additional charged services, Ctrip said in its statement, Tencent reported.

Ctrip's self-regulation also serves as a call for other major travel agencies to monitor their services. Bundle sales are common among China's online travel agencies, Cao Lei, the director of e-commerce think-tank 100ec.cn, said.

China's online travel agencies have received the greatest number of complaints among domestic public services platforms, according to data collected by 100ec.cn. At least 10 travel platforms have received all kinds of customer complaints, it said.

Bundle sales have become a mechanism for online travel agencies to redeem costs, since the current policies have led to a curb on their profits, Cao explained.

Major domestic airlines stopped charging commission fees in June 2015. Currently, flight ticket agencies only earn around 10 yuan per ticket sale. At the same time, they are burdened with costs from transactions, manual work and technical maintenance, Nanfang Daily reported.

When agencies struggle to earn money from selling tickets, they turn their attention to other products.

However, Liu Simin, vice president of the Tourism Research Institute of the China Society for Future Studies, told the Global Times that Ctrip and other travel agencies are trying to be more creative by offering customized services.

While it's a trend that's worth encouraging, agencies need to make clear what their optional services are, Liu added.

Su Haopeng, vice dean of the Law School at the University of International Business and Economics in Beijing, told the Global Times that bundle sales are illegal and violate customers' right to know, according to China's Law on Protection of the Rights and Interests of Consumers and Anti-Unfair Competition Law.

'Self-defeating'

If bundling services are unclear or make it inconvenient for users to make selections or cancellations, it contradicts the idea of "customers first." In the long run, users will lose trust in the business, which will further reflect on its profits, Jin Liwen, the marketing director of Continuum in China, a consulting company based in Boston, said to the Global Times.

But she added that there is no conflict between user experience and commercial profits. "As an important factor for building brands, good user experience will increase brand value and profits," Jin said, adding that in the short term, service design programs might raise costs for businesses, but long-term profits and competitiveness are inevitable.

In the U.S., flight ticket purchasing websites normally place additional services options in prominent spots and allow users to make their own choices, Jin said.

For Ctrip, and other Chinese OTAs it is necessary to acknowledge how to balance the relationship between profits and user experience, she added.

If businesses don't know how to strike this balance, they face the risk of closing down, Liu told the Global Times.

The market will decide its destiny, Liu said, and customers will turn to other platforms if Ctrip fails in its user experience.

"Ctrip has many competitors out there. The platform hasn't got a monopoly on the domestic travel market," he added. According to online news site, leiphone.com, China has more than 27,000 travel agencies that help Chinese tourists book flight and train tickets.

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