The Fall of Online Fashion Retail in 2024
In 2024, numerous online women’s fashion retailers closed amid soaring return rates and shrinking profits. The crisis reflects deeper industry issues including unsustainable business models, quality control problems, and changing consumer behavior.
The women’s fashion e-commerce industry in China is experiencing an unprecedented crisis in 2024. Over 40 established online retailers, including major names like “Wu Huanxi’s Wardrobe” and “Fan Zhiqiao,” have shuttered their operations. This wave of closures signals fundamental problems within the industry that go beyond simple market fluctuations.
The crisis stems from several interconnected factors. First, traditional online retail models have become increasingly unsustainable. The industry’s previous success relied heavily on social media traffic and influencer marketing, but these channels are now saturated. Store owners find themselves caught in a vicious cycle where declining organic traffic forces them to increase marketing spending, while profit margins continue to shrink.
Quality control has emerged as another critical issue. The pressure to maintain rapid turnover while keeping costs low has led many retailers to compromise on product quality. The “impossible triangle” of maintaining low inventory, fast shipping, and consistent quality has proven particularly challenging. Manufacturers struggle to balance quick turnaround times with quality assurance, especially given the shortage of skilled garment workers in China.
The return rates have reached alarming levels, creating a significant financial burden for retailers. Some stores report that up to 70% of items are returned, with costs falling entirely on the merchant. This phenomenon is partly driven by what industry insiders call “fitting room shopping,” where customers order multiple sizes and colors with the intention of returning most items.
The relationship between platforms and merchants has also become increasingly strained. While platforms push for customer-friendly policies like free returns, the associated costs often make it impossible for merchants to maintain profitable operations. Insurance fees and shipping costs eat into already thin margins, forcing many retailers to either compromise on quality or exit the market entirely.
Looking ahead to 2025, industry experts remain pessimistic about a quick recovery. The current crisis appears to be a structural correction rather than a temporary downturn. The market is moving toward a more rational model where consumers are increasingly price-conscious and quality-focused, making it difficult for retailers operating on thin margins with questionable quality standards to survive.
The industry’s transformation has also impacted the entire supply chain. Factory owners report significant reductions in orders, with some longtime manufacturers choosing to exit the market entirely. This upheaval suggests a fundamental restructuring of China’s online fashion retail ecosystem rather than a cyclical downturn.
The experience serves as a wake-up call for the entire e-commerce fashion industry in China. Success in this new environment will require retailers to fundamentally rethink their approach to quality control, inventory management, and customer service rather than simply competing on price and marketing spend.