Luxury brands riding on online interest
Updated: 2010-12-31 11:05
By Gan Tian (China Daily European Weekly)
A photographer shoots pictures for YOOX Group's online store. The Italian Internet mail order retailer entered the Chinese market in December, selling luxury brands such as Emporio Armani online. Provided to China Daily
Companies tap rich Chinese shoppers surfing for branded fix
More sophisticated Chinese consumers are surfing for luxury products on the Internet and a number of branded labels are ready to ride the wave.
Fashionista Cheng Lulu catches Milan fashion shows every week on the Internet. The 38-year-old wishes she could just drag a Louis Vuitton dress worn by the models in the show into an online shopping cart, click a button to pay for the item with her credit card and have it delivered the next day.
Cheng's dream could come true soon, following Italian Internet mail order retailer YOOX Group's recent announcement that it would enter the Chinese market.
YOOX is taking the first bite at this segment of the online market, after it helped Emporio Armani launch its Chinese online store last November. It will open another three to five mono-brand websites in the early half of 2011 and these might include Jil Sander, Dolce & Gabbana and Valentino.
Its own multi-brand online shop www.thecorner.com will also start operations soon.
"The demand is there, but there is no high-end quality. There is still a large gap in China at present: A lot of quantity, but it still falls short in terms of customer care and shopping experience," says Federico Marchetti, founder and president of YOOX Group.
Marchetti saw the opportunities presented by the fast-growing Internet and the demand of luxury products and founded YOOX in Italy in 2000.
The group's X and Y letters indicate human chromosomes and remind people of the word "luxury", while O looks like the number zero, reflecting binary elements. These elements combine to represent how the computer connects luxurious products.
"We opened this market from scratch, because nobody opened high-end fashion online in Italy 10 years ago. We have somehow created a market," Marchetti says. The highly profitable high-end e-commerce company now serves 67 countries.
Marchetti visited China in 2002 and thought that was not a very good time. The country was still working on its commercial infrastructure, with technology and services still inadequate.
But he thinks now is the perfect time, with the country more mature and customers getting more used to shopping online.
"In 2005, 8 percent of all Internet users lived in China. By 2015, that figure will be 20 percent," says Zia Daniell Wigder, senior analyst from Forrester Research, a US-based technology and market research company that advises global leaders in business and technology.
China is the second-largest market in luxury goods in the world after the US and it is expected to become the largest one within five years, according to the World Luxury Association.
A Forrester Research Asia Pacific Online Retail Survey showed that the size of the online retail market in China already hit $49 billion (37 billion euros) this year.
"Online stores certainly will have more collections, because they are worldwide," Marchetti says.
His group's latest moves include bringing its call center, storage and packing services into the Chinese mainland and it is set to offer much more personalized services for Chinese consumers.
A number of online shops have also launched services for consumers on the Chinese mainland. They include www.raffaello-network.com, an Italian luxury online shop, which charges an extra $44.8 (33.8 euros) for freight, and www.net-a-porter.com, a British online shop charging 20 pounds (23.5 euros) for shipping.
These high-end websites provide Chinese language services, but taxes are not included in their prices.
Chinese consumers purchasing products on www.raffaello-network.com can also use AliPay, the largest third-party electronic payments service provider in China.
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