Yesterday, Tesla Motors Inc (NASDAQ:TSLA) started selling its Model S sedan online in China through Alibaba Group Holdings Ltd (NYSE:BABA)’s Tmall platform. However, the recent incident of data tampering at Tmall, a B2C website, could hurt the company’s reputation. Alibaba reportedly manipulated its online data about pre-order figures of the newest 4G Smartisan T1 smartphone.

Will Data Tampering Hurt Alibaba Group Holdings Ltd Reputation?

Alibaba inflated the number of pre-orders

According to Forbes, the number of pre-orders shown on the web page was three times higher than the actual numbers. A Tmall programmer manipulated the figure by setting a multiplier of three in the code. That means, for every order placed for the 4G Smartisan T1 smartphone, users who visited the webpage came under the impression that three times as many devices were sold.

Alibaba wasted no time issuing an apology. Tmall’s Electronics department apologized through its Weibo account. However, things took an ugly turn when another Weibo post, reportedly from Alibaba’s chief marketing officer, started circulating on social media. The post claimed that it was not the original data generated by the system. The data was tweaked manually. That’s a manipulation; the company should present only real data to its customers.

Alibaba’s ‘starvation marketing’ strategy

Exaggerating pre-orders is what many in China call “starvation marketing.” Higher figures create a sense of scarcity, which induces anxiety among consumers. They think they should buy it before it goes out of stock. Alibaba fired two people directly responsible for the manipulation. It demoted an unnamed executive. By now, many Chinese media outlets are praising Alibaba for its wonderful sense of accountability. Of course, they consider it an isolated accident.

But there is more to it than what happened on Tmall. One person who worked as an intern at Alibaba recently wrote a post on Chinese Q&A site Zhihu.com that may raise eyebrows. This guy was a front-end engineer working on the webpage of a mobile lottery game. The page had a “Like” button to show how many users had “liked” that particular page. To the intern’s surprise, Alibaba product manager told him to cook up a number. When he suggested sticking to the actual numbers, the project manager rejected him.