Robust demand from China is enticing more Western luxury brands to sell through online portals tailored to Chinese luxury consumers.
In 2017 Chinese shoppers made up 32% of the global luxury market, more than any other nationality, according to Bain & Company’s annual global luxury study. The Chinese market, which grew 15% last year, has become crucial to the luxury sector. Staking a claim to it has required building an online presence in China as well as cracking down on counterfeits. “Luxury brands are finally responding to the hard reality that their goods are being sold online in China, regardless of whether or not they authorize it”, said Liz Flora, Editor of Asia Pacific Research at L2.
E-commerce has been a major driver of retail sales growth in China for years. “Consumers in China got accustomed to making big purchases online much faster than the rest of the world – and luxury brands needed to start thinking more about how to take advantage. I think that’s what we saw happen this year”, said Xia Ding, president of JD.com’s fashion business. KPMG projects that as much as half of China’s domestic luxury consumption could come from online sales by 2020.
Two primary obstacles have stood in the way of Western luxury brands selling online in China: their own reluctance to tarnish their exclusive brand images, and the challenge of navigating the complex Chinese consumer market. Local e-commerce giants JD.com and Alibaba, as well as WeChat, have been keen to accommodate them on both fronts. This has led to the creation of specialist luxury platforms, which aim to replicate the luxury shopping experience.
“Luxury’s main concern is to ensure that nothing is lost in the quality of the online shopping experience”, said Flora. “This makes it important to incorporate omni-channel features like synchronized inventory or online appointment bookings, but these features remain limited among luxury brands in China.” Shopping trends suggest this could change in the near future.
In the past few months, brands such as Kering’s Gucci and LVMH’s Louis Vuitton have opened e-commerce stores to sell directly to Chinese consumers. American brands Calvin Klein and Ralph Lauren plan to increase their presences in the country. More recently French fashion label Saint Laurent, also part of Kering, announced it will start selling online in China, Reuters reports.
The French brand said it is partnering with Toplife, a luxury e-commerce platform JD.com launched in October, which offers premium services such as same-day delivery. Luxury Pavilion, a similar portal backed by Alibaba’s Tmall platform, was launched in August. It features high-end brands such as British fashion label Burberry.
