Chinese e-commerce struggles amid economic slowdown

Chinese e-commerce faces survival challenges amidst slowing growth and increasing price pressures as platforms vie for cost-conscious consumers with aggressive sales tactics. The once-booming sector, characterised by extravagant shopping events, is now strained by a sluggish economy constraining consumer spending.

Lu Zhenwang, an e-commerce operator, predicts tough times, noting intense competition and dwindling profit margins across major platforms like Alibaba and JD.com, as well as for smaller businesses. Despite e-commerce’s significant role, accounting for 27% of retail sales in China, growth is expected to shift from double-digit to single-digit figures due to economic slowdowns.

Platforms’ aggressive sales strategies, such as high return rates and discount events, are under scrutiny. During the ‘618’ event, retailers like Inman protested against policies forcing them to bear return costs, leading to soaring return rates and financial strain. Such challenges exacerbate existing pressures, including high traffic acquisition costs and direct factory-to-consumer sales, cutting retailers’ profits.

E-commerce operators and analysts highlight that the industry’s landscape has fundamentally changed, with no foreseeable sales growth amid fierce competition and stagnant consumer incomes. Despite the challenges, platforms remain silent on these criticisms, leaving vendors to navigate an increasingly complex operating environment in China’s e-commerce sector.