A new trend finding roots in China: the luxury rental center.
With both an online presence and brick-and-mortar stores, these boutiques are attractive to white-collar workers who want to taste the good things in life without breaking the bank, according to China Daily.
Handbag rentals are most popular. International rental sites like Rent The Runway and Bag Borrow or Steal have found popularity in China. But two Chinese e-commerce rental platforms think they can beat the foreign competition. While China’s rampant counterfeit market and lack of a party culture limits women’s need for constantly rotating accessories, the rental sites are confident that Chinese consumers will continue to “Westernize” – that they will be more likely to rent, and use the internet to do it.
Secoo.com, based in Beijing, just celebrated its fifth anniversary. It opened in 2008 as an online consignment shop and then experimented with rentals, making luxury items available to aspirational Chinese for a fraction of the cost – and for just several days at a time. Borrowers pay between 500 and 1,000 yuan as a deposit, and then rent one of the 120 bags available on the website for up to a month. The bags fall in one of two price ranges: less than 5,000 yuan and around 10,000 yuan. The most expensive is a very popular purple leather Louis Vuitton tote that retails for around 11,800 yuan.
“More than 50 of our bags were rented within the first day (of the service being launched),” recalled He Tingting, the marketing manager of Secoo. The site claims to have 600,000 registered members.
Not everyone is convinced of luxury rentals’ staying power. “This was more of an eye-catching promotion to boost the website’s viewers and perhaps membership than serious business,” said Zhou Ting, director of the Fortune Character Research Center. But He at Secoo insists they will pursue the rental business further. He called the rental promotion something “like the opportunity to sample food in a supermarket, to give customers the chance to have a taste first.”
Also in Beijing, four ambitious twenty-something entrepreneurs have recently set their prices for the new luxury rental business they launched in July.
“We’re targeting a younger clientele,” said Zhang Cheng, a 28-year-old former management consultant and one of the founders of Meikka.com. His customers are college students or new-grads-turned-office workers, ranging from 20 to 25. About 20 orders have been placed on the website so far, which Zhang said is close to their expectations. “There’s a lot of education to be done in the market and we’re asking for quite a large sum of money (as a deposit),” he acknowledged.
Zhang’s initial investment of 1 million yuan went mostly towards purchasing the second-hand bags that are being offered for rent. Of the fifty they have to offer, Chanel, Prada, and Dior have a prominent presence in the storeroom. Zhang and his team, hope their business will become a touchstone for the new luxury rental industry.
Li Rixue, founder and CEO of Secoo, explained the challenges facing rental companies this way: “You have to establish your credibility and the quality of your products and then set a price (for the luxury rental service) because it’s a new idea.”
Recently, Boston Consulting Group reported that online sales are just 3 percent of the luxury market in China, compared to 12 percent in the United States. McKinsey & Co predicted that by the end of 2015, the Chinese luxury market could be worth more than $27 billion, if e-commerce rises as expected.
photo credit: secoo