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Web's A New Venue for Premium Brands

Industry News 03:09:45PM Jan 29, 2012 Source:SMM

SHANGHAI - If Tong Keyi gets lucky, she'll sell a 95,000 yuan ($15,040) second-hand Hermes Birkin bag or a 17,000 yuan Chanel vintage bag for each posting on her micro blog.

Most days throughout the past six months, the 22-year-old student has had such "luck".

"I am selling bags at the rate of two or three a day," said Tong.

After a continuous and aggressive series of store openings in China, many international premium brands wonder whether to venture into the country's e-commerce market.

Web stores are widely believed to be a hotbed of knockoffs. Yet the online luxury business has seen a striking boom.

A report by iResearch, a domestic Internet research company, found that in 2011, online luxury sales grew 68.8 percent to 10.73 billion yuan.

"Selling things online is largely, or perhaps only, based on reputation," said Tong. She's decided to turn the business that can bring her 500,000 yuan a month into a full-time job after graduation or even before.

Tong said all of her bags are bought from vintage stores in Japan with the help of her friends. No counterfeits are allowed.

Wang Hao, founder of the 3-year-old luxury e-retailer Meici.com, sees massive market potential. "The international luxury brands are coming up against limits for further expansion in China, as land prices are escalating in first-tier cities.

"Meanwhile, services and brand awareness lag far behind in second- and third-tier cities," said Wang, a former advertising employee. "E-commerce is perfect to fill the gap."

Meici.com had sales in the past year of 100 million yuan, five times the level of 2010. It now has a membership of 1.2 million people.

It sells 30 luxury brands such as Gucci, Burberry and Hermes at a discount that Wang describes as "the price of Hong Kong" - meaning that the flight ticket to the tax-free shopping destination could be saved.

Though there is no breakdown of the type of customers using the website, nearly 70 percent of its orders are delivered to office buildings all over China.

The average value of each transaction at the website is 5,200 yuan.

Wang said he thought that rampant "fakes" sold online would actually be helpful, as savvy customers would value honest websites like his that offer real products at a discount.

Glamour Sales is another popular website. A marketplace for a wider range of brands - 600 in total, ranging from DIESEL to Prada - the site was founded by Oliver Chouvet and Thibault Villet, a former president of Coach China.

Inspired by the French shopping website Vente-Privee, the two French entrepreneurs launched a similar one in Japan. Building on the success of that operation, they brought their model to China in 2010.

Tian Feng, president of Chaumet China, told China Daily that 2011 was just the beginning of digital marketing for the 230-year-old French jewelry maker. "We've been receiving quite a number of orders in our Paris headquarters from well-off Chinese fathers who want to buy diamond tiaras for their beloved daughters," said Tian.

"Therefore, it may be time to tap the latent potential" of the market, he said. Others are "tapping" more vigorously. Bag producer Coach, for example, an entry-level luxury name to many Chinese shoppers, just opened an online store on Alibaba's Tmall.com in December.

Other brands like Dolce & Gabbana and Bally have put China on their online map, seeking cooperation with Yoox.com, a global e-retailing partner for fashion and designer brands.

"Luxury e-commerce in China is still in its infancy. It is more about generating excitement and increasing 'mind share' than encouraging spending," as Bruno Lannes, partner at the global advisor Bain & Co, put it.

A report co-released by the international communications agency Ruder Finn and Asian market research institution Albatross Global Solutions found that websites have become the second-ranked major source, after fashion magazines, for Chinese shoppers to acquire luxury information.

 

Web's A New Venue for Premium Brands

Industry News 03:09:45PM Jan 29, 2012 Source:SMM

SHANGHAI - If Tong Keyi gets lucky, she'll sell a 95,000 yuan ($15,040) second-hand Hermes Birkin bag or a 17,000 yuan Chanel vintage bag for each posting on her micro blog.

Most days throughout the past six months, the 22-year-old student has had such "luck".

"I am selling bags at the rate of two or three a day," said Tong.

After a continuous and aggressive series of store openings in China, many international premium brands wonder whether to venture into the country's e-commerce market.

Web stores are widely believed to be a hotbed of knockoffs. Yet the online luxury business has seen a striking boom.

A report by iResearch, a domestic Internet research company, found that in 2011, online luxury sales grew 68.8 percent to 10.73 billion yuan.

"Selling things online is largely, or perhaps only, based on reputation," said Tong. She's decided to turn the business that can bring her 500,000 yuan a month into a full-time job after graduation or even before.

Tong said all of her bags are bought from vintage stores in Japan with the help of her friends. No counterfeits are allowed.

Wang Hao, founder of the 3-year-old luxury e-retailer Meici.com, sees massive market potential. "The international luxury brands are coming up against limits for further expansion in China, as land prices are escalating in first-tier cities.

"Meanwhile, services and brand awareness lag far behind in second- and third-tier cities," said Wang, a former advertising employee. "E-commerce is perfect to fill the gap."

Meici.com had sales in the past year of 100 million yuan, five times the level of 2010. It now has a membership of 1.2 million people.

It sells 30 luxury brands such as Gucci, Burberry and Hermes at a discount that Wang describes as "the price of Hong Kong" - meaning that the flight ticket to the tax-free shopping destination could be saved.

Though there is no breakdown of the type of customers using the website, nearly 70 percent of its orders are delivered to office buildings all over China.

The average value of each transaction at the website is 5,200 yuan.

Wang said he thought that rampant "fakes" sold online would actually be helpful, as savvy customers would value honest websites like his that offer real products at a discount.

Glamour Sales is another popular website. A marketplace for a wider range of brands - 600 in total, ranging from DIESEL to Prada - the site was founded by Oliver Chouvet and Thibault Villet, a former president of Coach China.

Inspired by the French shopping website Vente-Privee, the two French entrepreneurs launched a similar one in Japan. Building on the success of that operation, they brought their model to China in 2010.

Tian Feng, president of Chaumet China, told China Daily that 2011 was just the beginning of digital marketing for the 230-year-old French jewelry maker. "We've been receiving quite a number of orders in our Paris headquarters from well-off Chinese fathers who want to buy diamond tiaras for their beloved daughters," said Tian.

"Therefore, it may be time to tap the latent potential" of the market, he said. Others are "tapping" more vigorously. Bag producer Coach, for example, an entry-level luxury name to many Chinese shoppers, just opened an online store on Alibaba's Tmall.com in December.

Other brands like Dolce & Gabbana and Bally have put China on their online map, seeking cooperation with Yoox.com, a global e-retailing partner for fashion and designer brands.

"Luxury e-commerce in China is still in its infancy. It is more about generating excitement and increasing 'mind share' than encouraging spending," as Bruno Lannes, partner at the global advisor Bain & Co, put it.

A report co-released by the international communications agency Ruder Finn and Asian market research institution Albatross Global Solutions found that websites have become the second-ranked major source, after fashion magazines, for Chinese shoppers to acquire luxury information.