China’s e-commerce market sees at least 89 platforms close in 2022 amid Covid-19 controls, fierce competition, weak spending
- 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
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.
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.
China’s e-commerce scene is a battlefield as hard up consumers look for deals
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.
Chinese e-commerce firm Eachnet.com to close operations after 23 years
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.