Can electric dealers save luxuries?

The peak of luxury sales in China seems to have passed. China's luxury goods consumption amounted to 115 billion yuan in 2012, but growth was only 7%, compared with 30% in 2011, according to Bain report. At the same time, electric dealers have been surging in China's consumer market. According to China Daily's statistics, China's online luxury goods sales reached 1.6 billion U.S. dollars in 2011, up 69% year-on-year. The market is expected to grow at a rate of 30% a year in the next few years, with a scale of $6 billion trillion in 2015.

Luxury goods in China suffered a "cold spell."

LVMH said it would curb its expansion completely and would not continue to open stores in China's two or three-line cities. Italian brand Gucci also sent a similar signal: "The next few years in China's market strategy is not rapid expansion but consolidation." The first thing to do is to renovate and facelift existing shops, and then open new stores, but the speed must not be compared with the past few years. ”

"In the mainland market, the proportion of real consumption of luxury goods is not high, but the proportion of official acts such as gift consumption is higher," said Hu Zicong, partner of Wipp Consulting. In a climate of austerity, the purchase of luxury goods by official consumption has been greatly reduced, which is an important reason for the poor performance of luxury goods in China. ”

China's luxury goods consumption amounted to 115 billion yuan in 2012, but growth was only 7%, compared with 30% in 2011, according to Bain report.

Another reason for the decline in luxury sales is the change in Chinese consumer buying channels.

Hu Zicong analysis, luxury brands usually choose to open a shop in China's first-tier cities. In recent years, more and more first-tier city consumers have bought luxury goods directly to Europe, and the two or three-tier city consumers who bought luxury goods in a first-tier City have turned to Hong Kong to buy them, which has greatly affected the luxury brands that only shop in the first-tier cities.

At the same time, the influence of the electric business in the Chinese consumer market is more and more big. In recent years, China's E-commerce market has maintained an impressive 65% per cent growth rate, which is expected to reach $189 billion trillion by 2012, according to a new study of WIPP Consulting. The annual growth rate of the market is expected to remain at 29.1% per cent over the next three years.

Can electricity dealers be combined with luxury goods? According to China Daily's statistics, China's online luxury goods sales reached 1.6 billion U.S. dollars in 2011, up 69% year-on-year. The market is expected to grow at a rate of 30% a year in the next few years, with a scale of $6 billion trillion in 2015.

Can electric dealers save luxuries?

Online shopping is cheap?

Hu Zicong analysis, at present, most of China's electronic business platform is to promote its price advantage and convenient shopping experience, and most buyers are just to get a good price online. Thus, in the hearts of consumers formed a "net shopping equals cheap" impression. But luxury goods, especially the price of first-line luxury goods are rarely changed, and less attractive to consumers. "It's hard to make a profit on a luxury site if it's a discount. Because luxury brands in order to maintain their brand influence, the price is strictly controlled. ”

Shanghai Victory Human Resources Limited (kellyservices) consumer goods industry China's head of the region Yang Tingting also have a similar view. In her view, the combination of luxury goods and electricity dealers will not be in the mainland market in the near future blowout. "Consumers who are accustomed to online shopping have little demand for luxury goods, and consumers who buy luxury goods are more likely to buy from physical stores because of age and consumption habits." ”

But two of the experts interviewed are sure of the future development of the combination of electricity quotient and luxury goods.

Yang Tingting that the possibility of luxury brands trying to sell in China is not ruled out. If the development is good, luxury brands will not give up the power of the channel.

Hu Zicong Analysis, the luxury electric business platform to develop, its need to clearly position the value proposition in those "real luxury consumers", trying to save them all the way to the monopoly point of trouble, luxury network shopping platform can be a breakthrough. "For example, some young consumers, they will feel that the various services of luxury stores will bring them invisible pressure, and online shopping is not the pressure to easily browse their favorite luxuries online, and ultimately choose to buy." ”

Compared with the US and Europe, the average age of Chinese high-income earners is even lower, and these people are more interested in online shopping. Hu Zicong thinks, which luxury net buys the platform to be able to attract more such consumer, will occupy the advantage in the competition.

The channel is a problem.

Another problem that has plagued the development of the luxury-goods electric business platform is the channel.

In China, luxury brands rarely give online retailers distribution rights. So China's luxury sites have to buy from wholesalers in Europe, some even directly from overseas retailers. In the case of such a narrow and unreliable purchase channel, China's luxury website can only guarantee the supply of the season, not the hot money. More importantly, these sites often fail to provide a brand for all products.

For those who have access to the right to sell luxury goods online, they are also often limited by part of the product category, unable to provide all the products within the brand. Yang Tingting told reporters, generally speaking, a part of the electrical business is often just for the brand Digest inventory.

At the same time, after-sales service for products such as watches is crucial, the recognition of the brand for consumers to provide repair, maintenance and return of goods and services has become the key to measuring the success of such luxury sites.

For luxury brands, the threshold for entering the Chinese market is higher if they are built on a platform of electricity. "As China has a strict vetting system for the licensing of electric licences, it is not easy for luxury brands to obtain a licence." "This is one reason that has plagued the development of luxury goods dealers," Hu Zicong.

In fact, in foreign countries, there has been a better development of luxury electric platform. Yang Tingting introduced, many luxury website will provide direct purchase links, but its online purchase and physical store purchase price is basically the same.

But, influenced by issues such as tariffs, foreign luxury sites generally do not support Chinese consumers buying online, which also makes it impossible for Chinese consumers to buy luxury goods through foreign websites.

What are the advantages of electric business?

The existing electric business platform is difficult to obtain the brand authorization, the luxury brand from the build electric business platform is difficult to obtain the license in China. How does this dilemma combine luxury goods with electricity dealers?

Hu Zicong that the online shopping platform is an urgent need to reconsider what is really going to buy luxury goods on the Internet users, businesses also need to consider what kind of goods and online services can be compared with the luxury goods store services. "In fact, the profit point of the luxury electric business platform should be in the brand, not platform." Hu Zicong said that the combination of storefront and electric business platform, the formation of interaction is the development direction of luxury goods dealers.

He suggested that luxury brands could launch limited products designed for the electric platform, and that products purchased through the Electronic Business platform would be able to enjoy exchange, repair and other services in the physical store, and develop some services designed for the electrical business platform. "For example, through the Internet to their favorite patterns, names on luxury products." ”

Yang Tingting that the future of luxury goods in China from the establishment of a platform for electricity will be higher than with other electronic business cooperation. "It can use the brand's own appeal to attract customers, but also through the form of customer service cooperation with Third-party logistics development." Of course, brand manufacturers must adopt a differentiated strategy, the electric dealer sales and physical store sales are different, in order to attract consumer attention. ”