China’s online luxury (e-luxury) market is set for an industry renaissance. China is on track to become the largest e-commerce market based on market share in 2013, and it is already home to the world’s largest online shopper population with 242 million. Furthermore, in addition to everyday purchases like clothing, cosmetics and books, Chinese online shoppers have already demonstrated that they are willing to make “big-ticket” purchases online such as automobiles.
At the same time, China’s traditional luxury market has reached a new level of maturity, which requires a different approach. Western luxury brands have executed well in tier-1 cities like Beijing and Shanghai; however, there is tremendous unmet demand in China’s lower-tier cities. Relying on traditional brick and mortar stores is a costly and time-intensive strategy for inland China expansion.
Thus, the online channel is the only viable way to reach these consumers today.
Western luxury brands will need to take time to understand what Chinese e-luxury consumers care about most – and what might discourage them from making purchases online. The most critical challenge is earning consumers’ trust. Retailers need to guarantee product authenticity and deliver a meaningful customer experience.
Right now, China’s booming e-commerce growth is converging on a luxury market facing an entirely new phase of development. The result is an unprecedented opportunity for e-luxury retailers and luxury brands with the proper business model.
China became the world’s largest consumer of luxury goods in 2012. Likewise, the nation will surpass the US to become the number one e-commerce market by market size later this year.
Retail e-commerce sales reached RMB 1300 billion (about USD $209 billion) in 2012, accounting for 6.1% of China’s total retail sales. The Chinese government views the development of e-commerce as critical to future economic growth. It supports ongoing improvements to China’s online shopping ecosystem, including development of online payment safety and logistics capacity. China’s e-commerce market will continue to grow at double-digit rates over the next 3 years.
China already leads the world in online shoppers with 242 million—equivalent to roughly 73% of the US population. This consumer population will continue to increase rapidly in conjunction with the overall increase in Chinese internet users.
E-commerce has already changed the traditional retail industry in China and the ways consumers prefer to shop. Luxury brands and retailers should consider e-commerce a vital component of their China expansion plans.
At the same time, China’s traditional luxury market has reached a new level of maturity, which requires a different approach. Western luxury brands have executed well in tier-1 cities like Beijing and Shanghai; however, there is tremendous unmet demand in China’s lower-tier cities. Relying on traditional brick and mortar stores is a costly and time-intensive strategy for inland China expansion.
Thus, the online channel is the only viable way to reach these consumers today.
Western luxury brands will need to take time to understand what Chinese e-luxury consumers care about most – and what might discourage them from making purchases online. The most critical challenge is earning consumers’ trust. Retailers need to guarantee product authenticity and deliver a meaningful customer experience.
Right now, China’s booming e-commerce growth is converging on a luxury market facing an entirely new phase of development. The result is an unprecedented opportunity for e-luxury retailers and luxury brands with the proper business model.
China became the world’s largest consumer of luxury goods in 2012. Likewise, the nation will surpass the US to become the number one e-commerce market by market size later this year.
Retail e-commerce sales reached RMB 1300 billion (about USD $209 billion) in 2012, accounting for 6.1% of China’s total retail sales. The Chinese government views the development of e-commerce as critical to future economic growth. It supports ongoing improvements to China’s online shopping ecosystem, including development of online payment safety and logistics capacity. China’s e-commerce market will continue to grow at double-digit rates over the next 3 years.
China already leads the world in online shoppers with 242 million—equivalent to roughly 73% of the US population. This consumer population will continue to increase rapidly in conjunction with the overall increase in Chinese internet users.
E-commerce has already changed the traditional retail industry in China and the ways consumers prefer to shop. Luxury brands and retailers should consider e-commerce a vital component of their China expansion plans.
