China’s relentless e-commerce price war leaves sellers struggling to make ends meet as shopping platforms compete with ever-more aggressive policies and a domestic economy slowing down
China’s relentless e-commerce price war leaves sellers struggling to make ends meet as shopping platforms compete with ever-more aggressive policies and a domestic economy slowing down
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A once-thriving e-commerce industry punctuated by shopping bonanzas featuring galas and celebrities is bearing the brunt of a sputtering economy that has seen consumers all but tie knots in their purse strings.
While extreme discounting, influencer-led sales campaigns and generous returns policies did much to enrich the sector, those same practices by which vendors have to abide are now hurting those upon which the sector rests.
“The good times for e-commerce are over,” said Shanghai-based e-commerce operator Lu Zhenwang, who sells everyday items for small vendors. “This year there is fierce competition and I don’t think a lot of sellers will survive another three years.”
Profit margins are being squeezed at big platforms such as those of Alibaba and JD, but also at the thousands of small businesses which joined the e-commerce boom decade that started around 2013.
That boom has left e-commerce accounting for 27% of retail, with 12 trillion yuan ($1.65 trillion) of goods sold annually.
But as the economy slows, so does e-commerce, with the double-digit growth of recent years set to be replaced by single digits, showed data from Euromonitor.
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[One e-commerce shop owner] said major platforms, upon which vendors rely, should not use “consumer first” policies that add to the burden of businesses, many of which have to sell below cost to maintain high positions in search results amid multiple discount events.