The online shopping industry is going through a period of
fast growth and turbulence with fierce competition. Major
players compete to gain a controlling share of the market in
all aspects. Common promotional activities including price
discounts and shipping cost reductions are widely used to
gain customers. As one online shopping mall takes initiatives
on sales promotion, competing firms follow very shortly.
Automatic price comparison system is adopted by top players
to offer best prices among competitors and modify
automatically online price to a comparable level if rivalry
companies reduce their prices. Due to the intense price
competition, online buyers are swayed by lower prices with
relatively low brand loyalty.
Online fashion has had a ‗budget‘ reputation from the
beginning. But there are significant costs for online retailers
in logistics and the costs of handling returns. These increased
costs will have a high impact on the retailer‘s low margin,
high quantity business model. Also, the average delivery
costs, to be paid by the consumer, can easily be as high as, or
even higher, as the price of a single piece of budget clothing
[3]. Consequently, clothing manufacturers and retailers must
establish a good feedback system and improve levels of
supply chain management, logistics, product identification,
standardization and automation.
Different from traditional channels, e-commerce appeals
as a significant move to target more customers for Chinese
apparel industry. Table II shows the revenue of several major
apparel online retailers in China from the year 2007 to 2009.