Dumping in eCommerce: What It Is, 7 Examples, and How to Protect Your Business

What Is Price Dumping in eCommerce and Why Should You Care?

In eCommerce, price dumping is the practice of a company selling its products online at a price below its cost of production. The goal is to eliminate competition and dominate the market. This isn't a temporary promotion to clear out old stock; it's a sustained strategy aimed at driving other sellers out of business so that, once a monopoly or dominant position is achieved, prices can be raised without opposition.

This practice should concern you for several critical reasons:

• Margin Erosion: Competing against below-cost prices is a losing battle that will crush your profit margins.
• Product Devaluation: Artificially low prices can damage the perceived value of a product or even an entire category in the eyes of the consumer.
• Loss of Market Share: If you can't match these prices, you will likely lose customers and your position in the market, which can lead to business closures and job losses.
• MAP Policy Violations: For brands, dumping by an unauthorized retailer can destroy their MAP (Minimum Advertised Price) policy, damaging their brand image and their relationship with the rest of their sales channel.
• Sales Channel Distortion: Similar to issues caused by the grey market, dumping creates chaos that harms business partners who do play by the rules.
   

7 Examples of Dumping That Directly Affect eCommerce

To understand its real-world impact, let's look at how dumping manifests in the digital space with concrete examples.

• Predatory Pricing on Marketplaces (e.g., Temu, Shein)

Asian giants, thanks to ultra-optimized production and logistics models and, at times, strong financial backing, can offer products at prices that are unattainable for local sellers. This is an aggressive market penetration strategy designed to wipe out the competition.

• Stock Liquidators on Amazon

A third-party seller on Amazon who needs cash fast might decide to sell their inventory below cost. Often, the goal is to secure quick sales to win the Amazon Buy Box, even though this aggressive tactic distorts marketplace pricing and affects all other competitors.

• Official Dumping and Subsidies in Online Food Sales

A country might subsidize the production of a certain food product. Its producers can then export it and sell it online in other countries at a price that local producers, without those subsidies, cannot compete against. A clear example was the complaint filed by Californian producers against Spanish black olives, whose prices were only possible due to EU subsidies.

• The Freemium Model in Software and Digital Services (SaaS)

Offering a free version of a software perpetually can be considered a form of strategic dumping. The goal is to create a massive barrier to entry for new competitors by capturing a large user base that may eventually convert to paying customers.

• Social Dumping in Fast Fashion Production

This involves brands that manufacture goods in countries with lax labor regulations, very low wages, and poor social protections. This allows them to drastically reduce their production costs and sell online at prices that companies manufacturing under ethical conditions cannot compete with.

• Brand Dumping to Conquer a New Online Market

An established brand in its home country decides to expand into a new market through its eCommerce store. To gain market share quickly, it sells its products online at a lower price than it offers in its own country, absorbing initial losses to eliminate local competition.

• Anti-Dumping in Action: Tariffs on Chinese Goods

The U.S. and the European Union have imposed tariffs on numerous Chinese products, from solar panels to electric bikes, after proving they were being sold below their production cost thanks to state subsidies. This directly affects eCommerce businesses that base their model on importing these items.
 

Types of Dumping: Identify Them in Your Online Competition

Although the effect is similar, the intent and origin of dumping can vary. Recognizing the types will help you better understand the threat.

Predatory Dumping

This is the most harmful form and is considered malpractice. Its sole intention is to drive competitors out of the market to establish a monopoly. The company is fully aware that it is taking short-term losses with the expectation of recouping them handsomely once it has full control over pricing. This is unfair eCommerce competition at its worst.

Official Dumping

This occurs when artificially low prices are made possible by tax exemptions or direct government subsidies from the product's country of origin. The company isn't necessarily trying to be predatory, but the result for local competition is the same, creating a clear market distortion.

Social Dumping

As seen in the fast fashion example, this happens when a company can sell at low prices because it benefits from negligible labor costs derived from permissive laws or labor exploitation in the manufacturing country. This artificially lowers its cost structure compared to socially responsible companies.