China is still in the early stages of consumption of luxury goods, luxury goods with Chinese characteristics, architecture, fashion is more important than the classic, the brand is more important than popularity. At this stage, balanced “real goods” and “real price” and “brand” and “flow” and decided the luxury e-commerce company to survive.
Fly hot spot for investment
Luxury e-commerce, electronic business field is becoming the next hot investment, and that the hot spot seems to be quite tricky. First, the Chinese luxury goods sales in 2010 reached $ 12 billion and more than 20% growth rate, in terms of potential market size or market growth rate, China’s market in the territory of the global luxury goods sales are increasingly important, and even luxury brands have become the preferred market. Second, the main Chinese luxury consumer groups aged 18-39 years old, and a high degree of popularity in the population of Internet users ages of 10-49 years of age, two groups have considerable overlap. Third, the international luxury brands in China have a high degree of consumer recognition, and now the store in the country concentrated in central cities Beijing, Shanghai, Guangzhou and first-tier cities, second-tier cities, low permeability, e-commerce and physical stores have a strong complementarity between.
Luxury goods e-commerce in China only two years of history, but still goods net, only the product will be, serves network, excellent public network, Fifth Avenue and other pioneers, have been tens of millions and even billions of dollars of venture capital. Boom, there will be more competitors enter the market, I believe that one can see the traditional department store business, distribution of resources with strong brand dealers, foreign counterparts, domestic e-commerce leader in the different figure. Many different backgrounds, different strengths of the competitors enter the market, and their different understanding of the industry, luxury goods e-commerce industry will bring a different business model.
Of course, there have been doubts the voice of luxury e-commerce development prospects, one of the main point is the combination of luxury and e-commerce is correct? Luxury goods in the international community is defined as “a people’s survival and development needs of the range, with unique, rare, exotic features such as consumer goods”, the internationally recognized high-end luxury goods including clothing, jewelry, luxury yachts, private jets etc., are a small minority who can afford consumer goods; and large e-commerce is characterized by the lowest places. Consumers in the luxury brand’s physical store, buy only the product itself, but also shopping environment, emotional needs, distinguished service additional experience, brand history, advertising, marketing, service, product design, high prices, creating a common This subtle consumer sentiment; and e-commerce buyers and sellers to complete transactions online, without meeting, online shopping a grocery and a luxury of the process is no different. When the delicate luxury and niche-oriented online shopping event of the civilian population, whether there is damage to the value of a luxury?
Despite the lack of controversy, but can not stop the power of business and PE investment in luxury online shopping enthusiasm. China Electronic Commerce Research Center report shows that the next two years the size of China’s luxury goods e-commerce sales will exceed 20 billion yuan. This is undoubtedly a very seductive market.
Luxury Electric’s business model
In the early stages of luxury consumption in China, the local characteristics of luxury goods consumption structure, is more important than fashion classic, the brand is more important than popularity. At this stage, balanced “real goods” (sales is the real brand) and the “real price” (as opposed to a physical store of similar merchandise discount), “brand” and “flow”, determines the survival of luxury e-commerce company of space.
At present, the luxury e-commerce company, to sell luxury brands commodity-based lifestyle, including accessories, cosmetics, leather goods, clothing and other categories, purchase channels to buyers, buy, sell mainly in three ways. Power supply channel is a luxury most important business resource providers, is currently well-known brand manufacturers can achieve very little direct authority.
According to McKinsey study, to luxury consumption accounts for the proportion of household income, luxury consumers in China can be divided into four categories: core buyers, consumer model, fashion enthusiasts, the middle class achievers. These four very different people, the economic capacity of the first two categories of high, more choices in the overseas consumer or consumer store in the central city; fashion enthusiasts, the pursuit of the middle class brand, fashion-sensitive, with some spending power, a luxury The main target group for e-commerce products.
For these four consumer groups and its own supply channel, the domestic luxury e-commerce company erected several different business models.
- Sell “fashion.”
To well-known brand products are sold mainly by foreign buyers to buy goods in the domestic sales, product and store seasonal merchandise OTC time is insignificant, the main selling-price goods, a high proportion of new products, selling is “fashion.” The big difference at home and abroad a luxury, mainly because of tariffs and prices of different brands in various countries. China 15-25% (cosmetics and liquor up to 50%), import duties and luxury taxes and other costs, have led to higher domestic retail prices of luxury goods origin. Buyers into the goods, while maintaining sync with fashion trends, there are certain price comparative advantage, this type of website success and failure. At the same time, such sites often distinguished service to create a sense of membership, which will store the luxury consumer experience to online; regularly or irregularly at the ceiling limit of buying, you can meet the characteristics of luxury goods – impulsive consumption.
June 2011, the Ministry of Commerce spokesman said in public that will further reduce import tariffs on luxury goods, a trend that these companies will bring new opportunities and challenges.
- Sell “brand.”
Well-known brands of merchandise to season, stock products, compared to regular-priced items have an attractive price, and more for accessories, bags, cosmetics and other popular features were less obvious. These wires business, selling a “brand”, they targeted people, is affordable to buy a beloved, coveted brand names in the middle class and fashion lovers.
Such luxury discount website, most are not official channels and pricing of goods, mainly through the supply of buyers or consignment obtained. The hands of buyers from overseas dealers buy inventory, including last season, the shelf or in part, the new stock of goods. Rely on hand picking products to buy and the bargaining power of individual choice, the main challenge is less stable supply channels, products can not be replaced after the buyout, website brand, product repeated high probability. Transfer cargo consignment method places the way overseas sales, financial pressure is small, but long delivery time, affect the consumer experience.
Accessories, luggage products, as opposed to clothing, high liquidity stocks, financial pressure is relatively small, overseas supply channels and more diversified luxury at this stage a good business e-commerce website starting point.
- Selling “popular.”
Some affordable fashion e-commerce site, goods often include well-known foreign brands and domestic brands, but luxury is just to attract attention and traffic signs, the focus of its sales in China more familiar to consumers of international brands and a large number of domestic second-tier the brand. Its brand names, product line length, new and more traffic, fast growth, management has the advantages of traditional offline business, there are many brands of distribution channels, logistics capabilities. The main challenge facing such sites, one well-known brands of luxury goods and non-platform operating in the same, the degree of overlap between the two consumer groups is low, difficult to manage the brand’s high; Furthermore, mid-priced electronic mall competition, Taobao is facing the impact of such websites.
The formation of the popular trading site accumulation effect, is an important form of the new economy – attention economy. Once consumers form used in this transaction type, similar competitors is difficult to win. Located in affordable fashion e-commerce sites, perhaps only the best twelve survive.
- Combination of online and offline.
Compared to the luxury goods store, e-commerce has the advantage of wide coverage, spread fast, information, features large, vivid detail the content without the constraints of time, spread its disadvantages mainly in the lack of sense of reality, questioned the means of payment security, logistics slow to respond, doubts the authenticity of such products. Online (Internet) and offline (store) the combination, but also some of the sites operating mode.
Some luxury fashion e-commerce companies, with the founding team for many years a luxury agent background, with a number of brands and traders to form a deep relationship of trust, can guarantee stable and reliable sources of supply, and supply of real and varied, the goods higher proportion of new products, the cost of getting goods competitive.
On the client side, they are large organizations with the depth of the domestic partnership, to achieve high-end consumer customer information and resources. Such as high-end customers for banks to offer a way, in a different city tour run luxury sale market, due to the quality of goods and customer spending power of the match, single-game sale market has very good turnover. Through on-site marketing, you can cost-effectively expand its own customer, the customer will be converted to line online members. E-commerce type sites, the first time generally higher costs of active clients, and with banks, real estate, airlines way, you can effectively solve this problem.
Brand, or fashion, it may be a common problem when consumers of luxury goods. With more fashion, the rise of luxury class e-commerce company, which can or will no longer be a second election issue. Members of the site and the sales volume accumulated to a certain stage, to build a diversified, multi-level structure of the brand agency, self storage, integrated logistics, is a luxury electric provider for further development. Traffic can bring a wide range of opportunities to develop more domestic and foreign new brands and new products. Popular, good supply chain, logistics and distribution of e-commerce platform are able to explore more business opportunities present unexpected. Well-known e-commerce and international fashion trends, luxury electric commercial enterprises, the domestic product, brand building, also will play a positive role.
Mode of operation of the dual-platform YOOX
Chinese investors are not only interested in deep luxury online shopping. It is estimated that online sales now account for the global luxury goods about 5% of total turnover. May 2011, the U.S. flash shopping sites such as Gilt announced the acquisition of Softbank’s investment consortium $ 138 million, post-investment valuation of about $ 1 billion. Cooperation with the luxury brands will be its proximity to the overseas luxury electric providers, the model should also learn from their domestic counterparts.
Benchmark for luxury electric field of business enterprise YOOX, has announced the end of 2011 China formally launched business operations. Currently, its main business website for a single brand and multi-brand online stores. Founded in 2000, YOOX, the beginning of the exhibition industry, the biggest challenge is to convince the well-known brands set up shop, so they believe that the Internet can either sell products, but will not affect the high-end luxury image. Initially, the brand has more doubts about this, the negative reaction, for which, YOOX chose to build online stores for the brands the way to fully show the physical characteristics of the shop. Cooperation of both sides in, YOOX and brands clear division of labor: YOOX responsible for technical research and development, legal, logistics, customer service, network marketing, part, brands are responsible for product and marketing-related parts, such as products, pricing, visual image and so on. YOOX network of sales from the brand to get a certain percentage of income, and sales and brand share the risk, take all the pre-operational e-business capital investment.
Network to provide high-quality luxury shopping experience YOOX mode, the equivalent of the luxury brands to move online store, its merchandise and the store with the price and distinguished service experience, fashion degree, online shopping convenience, not a less. Quality of service provided to customers is a core value of such sites.
Meanwhile, YOOX own multi-brand site, showcase products and non-famous brands brands of discount merchandise. Multi-brand site operators, so YOOX higher degree of autonomy, and sales of large, high gross margins, its annual sales to a single brand is about three times the official website. Luxury and affordable platform for independent operation of each commodity, so YOOX both luxury brands to bring quality, but also to bring the popular cheap fashion sales. Was in 2009 in Milan YOOX, in the current downturn in global stock market conditions, the market value in June 2011 to 8 billion euros in 2010 sales of $ 280 million.
Business investment is too hot luxury power?
July 2011, products yet received $ 50 million net investment. According to ChinaVenture’s statistics, in 2010, the Pan-luxury online shopping industry, the scale of the financing of the explosive growth since the year 12 cases of disclosure of financing, financing $ 108 million, far more than the sum of the past few years; the first half of 2011 financial disclosure Case 12, the total financing $ 283 million, the highest level. China’s new luxury e-commerce industry, the existence of an investment bubble?
Both brands sell fashion online shopping or selling the company to different supply chain channel, forming a variety of business models, each has a living space. Bag with a line of brand products, for example, several large domestic luxury site though at the same time introduced a time limit for the purchase of the brand’s activities, but the site was added to our products coincidence rate of less than 20%, reflecting purchase a wide range of channels, product differentiation, so that the site at this stage of the competition will not appear in products, services, homogenization, so that only a way to survive a price war.
This perspective, China, the world’s largest luxury goods market, the future of global Internet users than any other country, to understand e-commerce investments in the international fashion trends but also to grasp the team, under the PE’s sea of blue.
