- Online shopping guide sites were the hardest hit, with 32 of these platforms shut down to account for about 36 per cent of overall casualties in 2022
- The highest-profile e-commerce casualty last year was Eachnet.com, formerly a leading Chinese consumer goods auction site that was acquired by eBay
China’s e-commerce market saw at least 89 online shopping platforms closed last year, as the sector struggled with rigid Covid-19 control measures, fierce competition and weak consumer spending amid a flagging domestic economy, according to an industry report.
Online shopping guide websites were the hardest hit, with 32 of these platforms shut down to account for about 36 per cent of overall casualties last year in the world’s largest e-commerce market, according to a report published this week by retail data provider Linkshop.com, which is based in eastern Zhejiang province.
About 20 so-called comprehensive e-commerce platforms halted operations last year, the report said. Eleven social e-commerce sites and the same number of community group-buying platforms also ceased business.
The Linkshop report said 74 of the failed e-commerce platform operators never received external funding. There were eight start-ups that received an angel round of investment, while three managed to get Series A financing.
A number of the platforms that closed shop last year were once backed or funded by Chinese e-commerce giants like Alibaba Group Holding and JD.com, according to Linkshop. Alibaba owns the South China Morning Post.
Beijing-based online grocery platform operator Shihui Technology, which was founded in August 2018 and shut down last March, reportedly raised more than US$1 billion from investors led by Alibaba and various venture capital firms. Social e-commerce platform operator Dongxiaodian, which was backed by JD.com, closed in 2022 after more than two years of operation.
Among the e-commerce platform operators that went under last year, 28 were in business for more than five years and two survived for more than 10 years, the report said. While the average life cycle of these failed e-commerce businesses was from two to three years, Linkshop indicated that many have shut down only after a few months of operation.
While Covid-19 disruptions such as snap lockdowns widely affected all online retail businesses in China, the report said a number of the failed platforms were damaged by weakened cross-border e-commerce activities and mounting consumer complaints over online fraud, purchase of counterfeit goods and poor after-sales service.
The demise of dozens of e-commerce platforms last year reflects the increasingly brutal competition in the market, where there is widespread apprehension among consumers to spend because of the country’s sluggish economy.
Even the abrupt rollback of coronavirus control measures in China did little to boost enthusiasm for the Double 12 online shopping festival in December.
Both Alibaba and JD.com kept their final Singles’ Day gross merchandise numbers under wraps in November, as analysts indicated that the results were probably too bleak to be revealed in the wake of China’s economic slowdown.
The highest-profile e-commerce casualty last year was Eachnet.com, formerly a leading Chinese consumer goods auction site that was acquired by eBay. The Shanghai-based platform, which once had 70 per cent of China’s consumer online sales market, ceased operations last August after 23 years in business.
Another high-profile casualty was Mia.com, a once-popular online shopping emporium for baby-and-mom merchandise. The Beijing-based enterprise closed its main app last September because of weak consumer spending and a population crisis in China, where the number of births declined for the fifth consecutive year in 2021.
Of the nine cross-border e-commerce sites that shut down last year, Fengqu.com stood out because of its co-founder SF Express, China’s largest express logistics services provider.
Still, official data showed that China’s e-commerce industry has continued to grow. Last week, the Ministry of Commerce said overall domestic e-commerce sales reached 13.79 trillion yuan (US$2.04 trillion) in 2022, up 4 per cent from the previous year. Meanwhile, total cross-border e-commerce volume reached 2.11 trillion yuan, up 9.8 per cent from 2021. (Source: scmp.com)
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