Online Shopping Craze in China – Is It an Opportunity for Fashion Brands Globally?
4 March 2015
Author: Sui Wang, market specialist
The well-established e-commerce model is now proving to be a popular channel for luxury fashion goods in China. Overall, Chinese are addicted to online shopping and since 2009, online transactions completed by Chinese consumers have been increasing by 70% yearly. In 2013, Chinese consumers spent nearly 7.5 billion GBP on overseas websites.
In order to approach online shoppers in China, luxury fashion e-tailers - such as Net-a-Porter and street chic fashion e-tailer ASOS - launched Mandarin versions of their websites in 2013. British high street brands Topshop and Miss Selfridges, which already have physical stores in China, are now also selling online in China via local fashion e-commerce website ShangPin.
Consumers in China are presently spending 6.4 times more on overseas purchases when compared to 4 years ago, and experts believe that sales will keep growing. Furthermore, e-commerce is quickly spreading to smaller cities in China where there are fewer branded stores but rising consumer appetite for fashion-forward goods.
Another interesting online shopping behaviour is what Chinese call 'Haitao'. The concept of Haitao is that amateur buyers purchase foreign goods from abroad on behalf of local Chinese consumers. Consumers pay the foreign retail price, plus a 10-15% service charge. Even so, the total cost is still lower than the retail price in China, where the import tax on cosmetics is 40% and 30% on clothing and watches. In 2013, Haitao transactions were worth more than 72.4 billion GBP, while sales on luxury goods in China in the same year totalled 27.4 billion GBP. Haitao is definitely affecting sales in physical stores, but the question is whether Haitao is becoming mainstream for Chinese consumers in the long term.
To summarise, what is it that fashion brands could offer to engage Chinese consumers? Price difference is not always the key factor. Product choice and accessibility is crucial and often appreciated by Chinese consumers. Further, these consumers want to be treated as special clients; they expect a personalised experience - to receive gifts on birthdays or anniversaries and get invitations to private events and fashion shows. Learning from the big players and finding the right platform from which to engage local consumers should be the starting point for every brand newly entering China. In addition, managing and building relationships with consumers is the key factor in developing your brand in China.