How to Fulfill China’s Hunger for Luxury Discounts

on September 18 2014 | in Digital Trends | by | with No Comments

china luxury, ecommerce, outlet malls, o2o

China’s e-commerce sector continues to evolve at a rapid pace.

As online shopping becomes more popular, Chinese consumers are increasingly viewing the Internet as an opportunity for discounts. While this can be a boon for companies with a strong online presence, it means that luxury brands, whose products are often expensive, must alter their approach if they are to succeed in this type of market.

One company that has recently renovated its online presence is the Asian e-commerce platform Glamour Sales Holding Ltd., which specializes in flash sales of discounted luxury and fashion products. They recently named Chinese actress Sun Li as their brand ambassador and shortened their domain name, an increasingly common practice among e-commerce platforms in China today. The company also has a more aggressive media campaign in the works, targeted at first- and second-tier Chinese cities.

According to Thibault Villet, Glamour Sales’s co-founder and chief executive officer, these new efforts are directed toward fulfilling a growing demand for discounted luxury goods in the country. An increased number of online shoppers who use their mobile devices to purchase goods has also provided the brand with an incentive to alter their approach.

“What has been changing the game is the development of the smartphone in China,” Villet said in an interview with Women’s Wear Daily. “We see huge growth from mobile shopping with 45 percent of total revenue in August coming from purchases via our mobile apps. We think it is really changing the game.”

Villet identifies crucial opportunities for the Chinese luxury market:

Outlet malls. Chinese consumers who once considered luxury with paying top price are now looking for deals. “Affluent Chinese shoppers have increasing brand awareness while seeking greater discounts,” Kenny Sim, portfolio manager at TIAA Henderson told The Wall Street Journal. Outlet malls hope to woo these shoppers, “who typically avoided brand-name stores in China because of high prices and high taxes, and went abroad for their designer handbags and shoes.”

Discounted e-commerce sites. As far as e-commerce is concerned, China is a “platform market,” which means that consumers are most likely to shop on a domestic platform, though they may do research on their purchase first on an international brand’s official website. Foreign e-commerce players often have difficulty localizing their services for Chinese consumers. However, consumers also “overwhelmingly look for deals online,” and are more likely to pay full price for luxury items if they are abroad or buying directly from international retailers. Chinese e-commerce platforms must therefore provide shoppers with ample opportunities for deals if they want to ensure their continued success.

O2O. Even in a country that is drifting so strongly toward online shopping, it is still important for luxury brands to maintain strong offline presences. The key to success may lie in online-to-online (O2O) strategies, or using social media and mobile technology to “drive consumers to make purchases in brick-and-mortar stores or vice versa.”

Third-tier cities. Consumers in third-tier cities often have less developed taste in luxury than those in first- and second-tier cities, and so are often still willing to pay full price for goods. Knowledge of each city’s particular market can prove enormously profitable for brands who may be reluctant to offer discounts.

 



image credit: cnbc

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