Summary of Key Points
In 2026, a number of established online fashion brands that had been in operation for over a decade and possessed millions of followers (such as Taobao's "Jigugugugu Large Size Women's Clothing" and "Heiniunai" with tens of millions of followers) closed down, marking the complete failure of the traditional model based on influencer marketing, market procurement, and frequent new product releases. These brands once thrived on the benefits of high traffic volumes, but now face challenges such as soaring traffic costs, severe homogenization, high return rates, and increased compliance requirements, making it difficult to continue operating. The industry is undergoing a reshuffle, and in order to survive, businesses need to adopt a new approach that emphasizes "small but premium" products, targeted market segments, and more streamlined operations.
Detailed Analysis
1. Established Brands Overwhelmed by Costs
Many of the closed brands had impressive surface figures: for example, "Jigugugugu" had 4.67 million followers and generated 2 million sales orders annually, with 100,000 products selling out before its closure. However, their profits plummeted. In 2025, its revenue was only 390 million yuan (a third less than before), and in 2026, its profit was less than one million yuan. Coupled with hidden costs such as inventory depreciation and labor expenses, the brands were actually in the red.
Key Reasons:
- Traffic Costs Eating into Profits: In the early years, there was plenty of free organic traffic. Now, without investing in advertising, these brands would not be visible to customers. Advertising costs accounted for 30%-40% of their gross merchandise value (GMV), while their average customer spending was only around 50 yuan. After deducting costs for clothing, logistics, and after-sales services, there was little left for investment.
- High Return Rates: The industry's return rate increased from 40% to 60%-70%. Consumers would purchase multiple items in hopes of returning them if they didn't fit or didn't like them. The resulting loss of returned goods (due to washing, repair, etc.) and the cost of shipping insurance further depleted their profits. For instance, "Dacailaiye" had 20,000 unsold products waiting to be cleared when it closed down.
2. What Used to Be a Strength Has Become a Weakness
The core strategy of these brands was to procure goods from wholesale markets (without their own manufacturing or design capabilities) and release new products frequently at low prices to attract traffic. This approach worked during the period of high traffic volumes on platforms like Taobao and Kuaishou, but it no longer works:
- Severe Homogenization: Many brands sourced goods from the same suppliers, leading to rapid imitation of best-selling items and forcing them into price wars, which eroded their profits.
- Changes in Traffic Algorithms: Platform algorithms have changed, making free traffic almost non-existent. Brands now need to pay for advertising, but the low-price model is no longer sustainable given the high costs.
- Increased Compliance Requirements: The 2026 e-commerce tax reforms (such as the Golden Tax Phase IV and the Value-Added Tax Law) meant that many brands could not deduct costs from their purchases, leaving them with insufficient profits to cover taxes and forcing them to close down.
3. Do Big Influencer Brands Always Fail? Due to Uncontrolled Costs
Influencer-driven brands attract followers through the personal image of their creators (such as fashion bloggers or attractive individuals). However, growing larger often leads to financial difficulties:
- Expanding Teams and Rising Costs: As the team size increases from a few people to dozens, additional costs for design, logistics, live streaming, and models arise. Hidden expenses (such as content production and platform management) become substantial. Zhang Dayi noted, "The invisible costs are constantly rising; unless the influencer does everything themselves, it's impossible to make a profit."
- Cultural Clashes: Brands that initially differentiated themselves with unique styles (e.g., Korean or retro) either lose their appeal due to market saturation or become too generic, leading to fan loss.
4. Surviving in the New Environment
The industry is not without opportunities; it just requires a shift in strategy:
- Narrowing Focus and Targeted Markets: For example, after closing its popular brand, Zhang Dayi opened a new store called The Vever, focusing on high-quality, luxury-style clothing with a reduced range of products. This approach increased average customer spending and relied on the loyalty of its 130,000 dedicated followers for revenue.
- Adapting to New Traffic Channels: Luo Ge, an influencer on TikTok, uses short videos to showcase fabric details and styling techniques. She hosts a few in-depth live streaming sessions each month, avoiding low-price promotions and focusing on stylish, functional clothing, which has helped her stay among the top fashion influencers on TikTok.
- Streamlined Operations: By reducing the team size and involving the influencer personally in tasks like product testing and content creation, brands can lower hidden costs. Some owners have moved to smaller platforms like TikTok to operate more efficiently.
Conclusion
The online fashion industry always has potential, but the old model of relying on traffic to drive sales is no longer effective. Only by focusing on niche markets, maintaining customer trust, and controlling costs can brands survive the current reshuffle. In the end, only the most refined and well-managed businesses will remain.