'China's relentless e-commerce price war leaves sellers struggling to make ends meet'

 Chinese e-commerce vendors are struggling for survival as sales growth slows, price pressure rises and shopping platforms compete with ever-more aggressive policies to attract increasingly cost-conscious customers.

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.com, 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.

One outcome is that enthusiasm for participating in sales festivals is noticeably cooling, Lu said, with the biggest - Singles Day, centred on Nov. 11 - a "risky" proposition.

"You have no idea how many products you will be able to sell, but you have to build stock for it," he said. "It's almost impossible to see explosive growth during a shopping event."

BUYER PROTECTION

As the impact of slowdown begins to be felt, vendors are raising their voices against the side effects of sales gimmicks.

During online shopping event "618" - stemming from JD.com's 18 June founding - the owner of womenswear brand Inman called on authorities to rein in platforms' "purchase return protection" policies which force sellers to bear the cost of returns.

Such policies started on PDD's low-price platform Pinduoduo in 2021 and proved so popular that others followed suit - at huge cost to sellers, vendors told Reuters.

"The return rate on e-commerce platforms is 60%," Inman founder Fang Jianhua wrote on social media. Before such policies, it was about 30%, he said.

https://finance.yahoo.com/news/chinas-relentless-e-commerce-price-013115648.html