Tips to avoid penalties

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2 Seller penalties ensure quality of service in Lazada What is penalty and why Lazada charge it? Lazada charge penalties to seller with aim to: Provide best quality service to customers Increase repurchase rate and revenue Improve seller performance Fraudulent behaviors such as selling counterfeit products are serious offenses and Lazada will apply high penalties and terminate the repeat offenders. Penalty amount? Penalty amount will be varied from VND to VND depending on the seriousness of the offenses and even off

3 Type of penalties Product Defective Good Any goods faulty or damaged, except for the case of manufacturer's fault which is not detected by the seller at the seller's best effort. Expired Good Any goods delivered exceeding half of the shelf life of the goods as from the manufacturing date of the goods to the expiry date of the goods. Wrong Good Any of the quantity and attached items of the goods delivered to the customer is not in accordance with good specified in the order and/or listed on Lazada. Missing product instruction Product not contain Vietnamese instruction for customers Used Good Any goods sold including any sign of usage which is verified by Lazada. Misleading Description Any of the description of the goods delivered to the customer is not in accordance with goods specified in the order and/or listed on Lazada. Prohibited Good The seller uploads and offers goods that are forbidden in compliance with the laws. Legal Counterfeit Product Any goods confusingly using similar trademarks or service marks on or in association with similar goods or be considered fake. Infringed Good Goods bearing a trademark that is identical to or substantially indistinguishable from the legally protected trademark for the same goods, without the approval or oversight of the trademark owner.

4 Type of penalties Seller Initiated Cancellation The Order has to be cancelled because out of stock/ wrong price Orders Late RTS The Order has to be cancelled due to seller fails to update order status to Ready to Ship Wrong Packaging The packaging does not meet the requirements mentioned in the packaging paragraph for the category of goods. Contact with customer within confirm order Seller contact with customer due to other reasons Ready to ship but cannot ship Order change to Ready to ship but cannot transfer to 3PL Not contain Invoice from Seller center when packing Product delivery without invoice printed from Seller center Using diferent way to delivery order Seller using different ways in contract to delivery Attach promotion information in package Seller attach other promotion brochure for offline selling or other partner in package

5 Product Example How are penalties Defective Good Any goods faulty or damaged, except for the case of manufacturer's fault which is not detected by the seller at the seller's best effort. - Customer return good due to the good is defective or damaged - Lazada QC specialist confirms the good is defective - Work with most trustworthy suppliers - Conduct strict quality control with frequent sample testing Expired Good Any goods delivered exceeding half of the shelf life of the goods as from the manufacturing date of the goods to the expiry date of the goods. - Customers return good due to the good is expired or the expiration date is not clear or missing - Lazada QC specialist confirms the good is expired Expired goods can be harmful to human body, especially for Health & Beauty category - Check the product life carefully before processing the orders - Make use manufacturing date or expiration date is visible on the goods or packages Misleading Description Any of the description of the goods delivered to the customer is not in accordance with goods specified in the order and/or listed on Lazada. In website Product delivery - Customers return good due to the good is not the same as listed on website or stated in the order - Lazada QC specialist confirms the seller delivered wrong good after investigation - Pay extra attention when packing the orders, especially during high volume campaign days - Rechecking of the items packed in the boxes delivered to the customers

6 Product Example How are penalties Missing product instruction Product not contain Vietnamese instruction for customers - Customer return good due to product not contain Vietnamese instruction for customers - Ensured to attached Vietnamese instruction in package - Provide instruction video, images in product description in website Used Good Any goods sold including any sign of usage which is verified by Lazada. Misleading Description Any of the description of the goods delivered to the customer is not in accordance with goods specified in the order and/or listed on Lazada. - Customer returns good due to the good is used or seal is broken - Lazada QC specialist confirms the good is expired - Customers return good due to the good is not the same as description in website or cause misunderstood - for example: watch was design in Korea but produced in China. Product should be descripted as made in Korea - Rechecking of the items packed in the boxes delivered to the customer - Make sure there is no broken seal before packing the good and ship out - Ensured product description in website match with reality product - Check carefully product information in website

7 Legal Example How are penalties Prohibited Good The seller uploads and offers goods that are forbidden in compliance with the laws. Counterfeit Product Any goods confusingly using similar trademarks or service marks on or in association with similar goods or be considered fake. Infringed Good Goods bearing a trademark that is identical to or substantially indistinguishable from the legally protected trademark for the same goods, without the approval or oversight of the trademark owner. - Customer return good due to the good is defective or damaged - Lazada QC specialist confirms the good is defective - Customers return good due to the good is counterfeit - Lazada investigates and confirms the good is counterfeit - External parties (custom/brand etc) escalate and Lazada confirms the good is counterfeit - Customers return good due to the good is infringed - Lazada investigates and confirms the good is infringed - External parties (custom/brand etc) escalate - Check frequently updated prohibit item list in Agreement & Policy page - Pay attention to our policy update via - Review your assortment and remove all prohibit items - Lazada has zero tolerance policy on counterfeit products - Make sure that all SKUs from your shop come from authentic manufacturer - Clean up all counterfeit or replica SKUs from your shop - Lazada has zero tolerance policy on brand and trademark infringement - Make sure you are licensed to distribute products with internationally recognized trademark - Clean up all SKUs with unauthorized trademark elements

8 Order Example How are penalties Seller Initiated Cancellation The Order has to be cancelled because out of stock/ wrong price Hết hàng Sai giá - Orders are canceled by sellers for the following reasons: Out of Stock Sourcing Delay Wrong Price - Daily reporting to capture cancellations. - Update the stock regularly and precisely - Allocate sufficient stock to Lazada - Be careful of exchange rate when upload prices in different countries - Regularly check the price of all SKUs in Seller Center - Be extra careful when submit promo prices to Promotion Tool in Seller Center Wrong Packaging The packaging does not meet the requirements mentioned in the packaging paragraph for the category of goods. - Customers return good due to the package does not meet packaging requirement - Package received by Lazada sortation center does not meet packaging requirement (LGS only) - 3PL informs Lazada that the packaging is broken - Use proper packaging materials to avoid damages during shipment - Make sure to include all documents in packages - Don t use packages that promote Lazada s competitors

9 Order Example How are penalties Late RTS The Order has to be cancelled due to seller fails to update order status to Ready to Ship Ready to ship but cannot ship Order change to Ready to ship but cannot transfer to 3PL - Orders are canceled by Lazada due to late dispatch and order status not updated to ready to ship within 48 hours - Daily reporting to capture breach of SLA Order change to Ready to ship but seller cannot transfer to 3PL - Pay attention to the daily pending order sent by Lazada and process orders in time - Check Seller Center daily to process new orders promptly - Ensured package, attached all invoice and shipping label before transfer to 3PL Not contain Invoice from Seller center when packing Product delivery without invoice printed from Seller center - Customer complain due to product delivery without invoice printed from Seller center - All order need to be attached invoice printed from Seller center before transfer to 3PL

10 Order Example How are penalties Using diferent way to delivery order Seller using different ways in contract to delivery Seller using different ways in contract to delivery - Seller need to understand clearly way to delivery in contract to follow Attach promotion information in package Seller attach other promotion brochure for offline selling or other partner in package Contact with customer within confirm order Seller contact with customer due to other reasons Seller attach other promotion brochure (logo, campaign) for offline selling or other e- commercial partner in package - Customer complain due to Seller contact with customer due to other reasons - Seller provide only guarantee hotline in package. Not provide promotion offline campaign as well as advertise of other e-commercial partner - In case warranty have information of promotion, seller can use return label printed from Seller center - Seller contact with customer with only purpose of verify order - Seller mustn t contact with customer with other purpose especially encourage offline selling