When on-line shopping needs an off-line presence
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E-mail CNTV, July 31, 2014
Three or four years ago there were plenty of web sites in China specializing in luxury products. Most are gone now, having disappointed their customers or frightened off the luxury brands they were dealing with. But there are still some ambitious sites that are getting around the problem by either reshuffling their products or by taking their online sales offline.
Unlike traditional B2C luxury sites, Secoo.com started out with second-hand luxury as its main product in 2008. Since it collected its products from individuals, Secoo hired a staff of jewellery and luxury goods appraisers to verify their products were genuine, and offered shoppers a choice to actually go to a store to look at what they were buying.
Yan Yisheng, a partner at IDG Capital Partners invested 10 million USD in Secoo.com in 2010. To her, Secoo's use of an appraisal team and its offline shops that exhibit thousands of products were the major reason for her investment 4 years ago, and she thinks this is also the reason for Secoo's current success.
Secoo is not the only web site which has turned the businesses around. Shen Ya and Hong Xiaobo founded Vipshop.com in 2008, when their noses sniffed an opportunity for a flash sale model in China. The original goal was to set up a premium website, but meager sales quickly had them shifting weight to mass-market brands of clothing, cosmetics and accessories. Now they manage a hybrid model of time-limited in-season discounts and off-season overstock clearance. Vipshop's total net revenues went up 125% year on year to more than 700 million USD in the first quarter in 2014. The company listed on the NYSE in March 2012, and its market value has grown 40 times in the past 2 years. It's now worth 10 billion USD.
Just like luxury brand owners, VIPShop and Secoo both understand that luxury shopping is about a luxury experience, not just a luxury product. And that's in accordance with branding experts like Pai Ting. She points out a brand itself plays a major role in customer communication.
With the luxury market developing so fast in China, it's not really a question of whether or not to go online -- it's more matter of how to go online. Chinese luxury consumers are on average significantly younger than their counterparts in other countries. And since that's true, it's important to do the luxury business in a younger way even if it takes you a little while to figure out how to do it.
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