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| Local online fashion platform HIPHOPER posted a notice online that it will close its business as of Nov. 1. Screenshot from the HIPHOPER official website |
By Kim Jae-heun
Many online shopping malls, which sprung up earlier in the COVID-19 pandemic, are closing down as more people go back to offline stores and cut their online spending amid the economic downturn, the latest data showed Thursday.
According to data released by the Ministry of the Interior and Safety, a total of 73,100 online shopping malls opened in 2021. In 2019, about 65,000 new stores opened on the internet, followed by 83,000 stores in 2020.
The number of small business owners in the field increased explosively in the last two years due to the COVID-19 pandemic and government measures to stop its spread keeping people at home. Since it only requires a relatively small amount of capital to launch an online shopping mall here, many people in their 20s and 30s jumped into the fashion business.
However, as the number of related startups increased, so did their closures. The number of clothing-related shopping malls that have closed down nearly doubled from 11,200 in 2019 to 20,000 in 2021.
The rate of closures compared to that of new licensing jumped from 17 percent to 27 percent in the same period. In other words, when 10 shopping malls opened, three shut down. In particular, 9,170 out of the 14,000 online clothing shops that were set up since 2020 ― 65 percent ― went out of business as of September this year.
"As the pandemic has ebbed, people have started to go out and shop at department stores and shops on the street. We have seen fewer and fewer people purchasing clothing online as the government's measures against the spread of COVID-19 were eased," a local fashion firm official said.
As of the third quarter of this year, the transaction value of online shopping malls recorded 12.77 billion won ($8.97 billion), up only 5 percent from a year earlier. Considering that the growth rate in 2020 was 9 percent, the trend decreased nearly by half.
"Also, the rise of raw materials this year made it hard for business owners to secure price competitiveness. The increased number of newly opened shopping malls online also sparked severe competition," the official added.
The first-generation online shopping mall, HIPHOPER, decided to shut down its business last month. HIPHOPER's parent company, BABA Fashion, had attempted to sell off its internet shopping platform since August but it failed.
Another local online shopping mall, Imbly, also called for the suspension of its clothing business, due to declining sales.
Imbly founder Lim Ji-hyun posted a message on social media last week that she will temporarily stop selling clothing on the site.
