China's luxury craze opens up new battlefields on the Web

The need for luxury goods to move online has become increasingly urgent, according to a study by KPMG, a consultancy, as the Chinese government's crackdown on profligacy and gift-giving has put the luxury industry in trouble.

KPMG launched a 10,200-person online consumer survey in China, where the average cost of buying luxury goods or high-end goods on the internet was 1,397 yuan, with one-sixth of respondents spending more than 2,000 yuan on online purchases. The investigators did not define what luxury or premium goods were, but let the online buyers of the survey read themselves.

Nearly three-fourths of respondents said they liked shopping online because it was more favorable and 55% of people liked shopping because it saved time. There are 47% of people said online can guarantee the purchase of European and American brands authentic licensed.

The KPMG report said Chinese consumer net purchases last year surpassed the US for the first time, with China's online shopping market expected to reach $540 billion trillion by 2015, accounting for 7.5% of total retail sales in China.

Cosmetics are the best-selling products on the Internet. 53% of respondents said they had bought cosmetics online. Women's and women's clothing were ranked second and third. Dalik, managing partner at KPMG China's Asia-Pacific retail and consumer goods industry, said cosmetics had a large number of shopping in cities without direct outlets. Chinese consumers are more likely to contact each other on social networks than Westerners, he says, preferring to look for fashion and shopping advice from friends or blogs.

Most luxury shopping deals are on third-party websites, such as Alibaba's Cat and Taobao, KPMG researchers say. One reason is that Western luxury brands are slower to sell direct to Chinese consumers on the internet, fearing that online sales will hurt their brand image and that customers won't feel the full brand experience without going to physical stores. Some brands are also deterred from setting up sales websites because of the high investment in logistics networks. Companies such as Gucci have already entered China's luxury-goods market through alliances with existing web-based companies. 2010 Yoox Spa became the first foreign company to launch a luxury shopping network in China.

In 2012 Niemann announced a partnership with China's Tesco website, saying it plans to build warehouses all over China so that consumers in remote areas can also buy its goods. But last year, Niemann said it would reduce the plan to direct shipments from the United States, mainly because of the overall poor market in the luxury markets.

But the KPMG consultancy says the market is so big that brands are unlikely to be overlooked for long. One reason, says Dalik, is that while online sales can help obscure brands to promote their products to Chinese consumers, Chinese consumers are increasingly pursuing niche products, especially those that have not yet been rolled out in large areas.

He expects more Western brands to build E-commerce platforms within the next two years. ' The brand is not willing, but consumers are keen on online shopping, ' he said.