Alibaba And JD Face Chinese Online Clothing Market Deceleration

China’s burgeoning online clothing market experienced a sharp slowdown in the second quarter. Yearly growth rates tumbled from over 70% just six months ago to a two-year low of less than 45%. If the sharp slowdown continues in the second half this year, it will have a substantial impact on the revenues and profits of China’s top online retailers Alibaba, JD.com and Vipshop.

According to the latest quarterly report by Analysys, China’s B2C apparel trade fetched a record of 208.9 billion yuan in the second quarter this year, an increase of 44.7% over a year ago. It was also higher than the 186.77 billion yuan registered in the first quarter.

Sales figures for each company’s second quarter are higher than that of first quarter because of two factors. First, most people buy winter clothes in the fourth quarter, in part preparing for the Chinese New Year. Secondly, the second quarter is the time to buy spring and summer clothing. To further stimulate this seasonal demands, different e-retailers have organized in recent years three promotions, namely on April 19, May 20 and June 18. These three days have become national “festivals” and are successful in driving the overall growth of online apparel market.

Online Clothing Sales Growth Rates Drop Nearly 30 Percentage Points

However, Chinese online clothing sales now experience a sharp deceleration. The yearly transaction growth rate tumbled from an all-time-high of 72.2% at the fourth quarter last year, to only 44.7 % in the second quarter this year. It was also the lowest growth rate registered in the last two years.