Fashion e-tailer Net-a-Porter is amping up its global appeal: three new versions of its website – in French, German, and Chinese – will join the English edition this month. But all eyes are on Net-a-Porter’s Chinese website.
Few major Western e-tailers have made a foray into China’s online landscape, but Net-a-Porter may have picked the perfect time. The luxury retail market in China is going through changes this year with fewer new store openings. E-commerce is expected to be the land of major opportunity and brands are allocating more resources to this space.
Net-a-Porter has made it known that it wants more Asian customers – already one-third of Net-a-Porter’s clientele. It will add a new Hong Kong distribution center to reduce delivery time, an important feature for Chinese customers.
Senior vice president of Net-a-Porter Adrienne Ma explained to the New York Times, “The primary reason for choosing to open a distribution center in Hong Kong is because it’s a free port with strong courier networks, which will allow us to improve on our existing shipping service time period by around one day.” Ma added that the company will soon offer same-day delivery service in Hong Kong and next-day shipping to major Australian cities.
This third distribution center for the brand (with the others in New York and London), will offer a strong anchor to the Asia-Pacific branch of business. Unlike the other two locations, the Hong Kong facility will be staffed by 100 employees to fulfill orders, rather than an automated system, due to spatial constraints.
As Net-a-Porter continues to expand, its biggest rival remains Lane Crawford, who has been orchestrating online shopping in China for eighteen months. Lane Crawford benefits from a well-integrated business model: products ordered online may be picked up or returned in stores. It currently has distribution centers in place in Hong Kong and Beijing, and plans to open another (and a store) in Shanghai.
“From a business perspective, having a physical retail network has allowed us to move quicker online, maximizing our brand partnerships and using our distribution points enabling same-day delivery in Hong Kong and Beijing,” said Andrew Keith, president of Lane Crawford. Another distinct advantage of Lane Crawford’s is currency: they accept renminbi, while Net-a-Porter does not.
“On the whole, online shopping in China is still in its early stages, and has suffered some setbacks as several sites offering discount prices on designer goods had mixed in fake goods,” said Justin Huang, who founded Neeu.com as a source of luxury information. “The customers are wary of buying online, and international level e-tailers like Yoox.com and Net-a-Porter may have some advantage.” Huang believes that online retail is very important to Western designers trying to break into China, where setting up stores is very expensive.
Net-a-Porter, now thirteen years old, lost $40.8 million in the year to March 31, 2012, due largely to investments like the new distribution center. During the same period, its sales grew 55 percent.
photo credit net-a-porter