Online Fashion Mall Growth 'Warning'... December Contraction

[Asia Economy Reporter Yujin Cho] Online fashion malls, which had been achieving record performance despite the recession caused by the novel coronavirus infection (COVID-19), showed a decline last month.

According to the related industry on the 5th, the transaction amounts of major domestic fashion online malls such as Musinsa, W Concept, 29cm, and Hago last month either declined compared to the previous month or remained flat. A fashion online mall official said, "Although the December sales tally has not yet been finalized, reduced outings and warm weather affected the poor sales in December."

The industry believes that the decrease in disposable income due to the COVID-19 recession has begun to impact the online market as well. A female online fashion mall official said, "December is usually considered the peak sales season for the fashion industry, but last year was different," adding, "Strengthened social distancing measures at a level close to a daily shutdown and warm weather led to worsened sales, with some places experiencing a 20-30% plunge in December sales compared to the previous month."

During the COVID-19 spread, government social distancing upgrades led to a coupling phenomenon where fashion online mall sales soared vertically, but the recent situation has changed. On the 19th and 24th of last month and the 8th of this month, when social distancing upgrades were announced, this coupling upward trend was not maintained. Some say that the online market, which had been thriving by benefiting from the non-face-to-face trend, is now beginning to show dark clouds due to COVID-19.

The decline in online mall performance was already anticipated. Although the online fashion market has grown explosively in recent years, the number of companies struggling with poor profitability is increasing. This is because top-selling brands listed on the number one platform have been entering other platforms one after another, starting a 'lowest price competition.' Companies are eager to expand their scale by increasing the number of listed brands and expanding discount coupons, but this low-margin, high-volume sales strategy has caused profit margins to decline year after year.

As the COVID-19 situation prolongs, pessimistic forecasts for this year's performance are growing. The industry plans to recover performance through January event sales, but considering the quarantine situation, even this is difficult. A fashion industry official said, "The risk of raising social distancing to level 3 continues into January, leading to ongoing demand contraction," adding, "Even if the COVID-19 situation ends, it will not be easy for the industry to recover to previous levels."

This content was produced with the assistance of AI translation services.