Tagged: Tmall
China’s Online Luxury Retail Scene is Lagging Behind Its Global Counterparts
Although consumers in China are largely responsible for the high growth in the global e-commerce luxury goods market, online luxury retail in China itself is experiencing poor results.
A report from nasdaq.com says that luxury brands are still at the “toe-dipping” stage when it comes to e-commerce and few have direct e-commerce sites. In addition, online sales in China forms only 3% of total sales in China, compared to 12% in the U.S.
While there have been efforts to profit from China’s potential e-commerce boom, most have had mixed results. Nasdaq.com refers to the recent closure of Coach’s first online flagship store on Tmall, one of the most well-known retail web sites in China, within a month of its launch, as an example of a possible failure.
Reasons cited for the lack of progress in this area include the higher prices of luxury goods in China compared to elsewhere, counterfeiting and the consumer perception that online sites offer mostly marked down items.
Read more at Why aren’t luxury goods selling online in China?
China’s e-commerce top dogs: a brief primer
China’s e-commerce market has grown at a hair-raising rate of 120% annually since 2003, but its recent growth has been staggering. In the third quarter of 2012, its B2C market Gross Merchandize Volume (GMV), or the total sales dollar value for merchandise sold, surged almost 50% to a record $46.2 billion.
What global e-tailors wanting to capitalize on this growth curve should know about the nature of this e-commerce success, however, is that the majority Chinese e-shopping activity still occurs on major online marketplaces instead of directly on retailer web sites; this is something that is somewhat unique to China in today’s market.
For many, the advantages of online retail marketplaces include immediate access to thousands of online customers, built-in branding and marketing features from the marketplace provider, as well as quicker, and in some cases, lower cost time to market than an independent e-commerce venture. If you’re looking to break into the Chinese e-commerce market, here is a quick introduction to China’s major retailers, based on iResearch.
1. Tmall
Tmall, one of the two market leaders in the B2C sector, is an online retailer managed by the Alibaba Group. It is spun off from Taobao, and is officially launched in 2008. Dominating the market with 54.6%, it is likely to remain in the near future.
Image courtesy of Tmall
2. Buy360
Buy360, the second major online retailer in China, owns 21.8% of the B2C sector. While buy360 is still trailing Tmall, it has steadily increased its market power over the years. From Q1 2010 to Q3 2012, its market share increased from 16.6% to 21.8%. Moreover, it is one of the largest online retailers for computer and electronic products.
Image courtesy of Buy360
3. Dangdang
Dangdang is now the largest online bookstore in China since its debut in 1999. But it also sells a wide variety of merchandise, ranging from household products to clothing. Though it only holds 1.3% of the market, it is being watched closely as E-commerce China Dangdang Inc is listed on the New York Stock Exchange (NYSE: DANG).
Image courtesy of Dangdang
4. Newegg China
Newegg China originates from its successful USA counterpart and features high-technology products. It is well-known for its computer hardware and software. But with slightly over than $1.2 billion GMV in China, it controls only 0.8% of the entire segment.
Image courtesy of Newegg
5. Amazon China
Amazon Inc, the world’s largest online retailer, acquired joyo.cn in 2004 and underwent a series of name changes to Amazon China today. In order for Chinese customers to access the web more easily, Amazon has another domain, z.cn, which points to the original site, amazon.cn. Despite its established branding all over the world, it holds only about 3% of the China e-commerce market.
Image courtesy of Amazon China
6. Vancl
Vancl, a leading fashion apparel retailer, embarked on an e-commerce path in 2007. Since then, it has become one of the highest-earning online shopping sites in China, despite only having a market share of 1.8%.
Image courtesy of Vancl
7. Suning
Suning.com originates from Suning Appliance which is one of China’s leading electrical appliance chain stores. Since 2010, Suning has expanded to offer online shoppers a wide range of goods that are far beyond home appliances and electronics. It has a significant amount of market power relative to the smaller sites, as shown by the 4.2% it retains of the market.
Image courtesy of Suning
8. Buy.qq
Tencent Holdings boast of a large QQ instant messaging user base that its creation, QQ Buy, can tap on and benefit from the branding. Like Tmall and buy360, QQ Buy focuses on well-known brands and labels. It also has a comprehensive 3C (computers, cameras, cell phone) product section. Including the other B2C platform, 51buy, Tencent owns 4.5% of the e-commerce market.
Image courtesy of QQ Buy
9. 51buy.com
51buy.com was fully acquired by the Tencent Holdings in 2012. While 51buy is in direct competition with QQ Buy, Tencent has announced that it will integrate the backend platforms of both sites in the latter half of 2013. In addition, 51buy and QQ Buy will unify the product orders, customers’ accounts and the payment systems. However, the respective branding and operations will be left untouched.
Image courtesy of 51buy
The mobile shopping market in China is in a similar situation with Taobao drawing off the majority of the market share. In 2012, that number stands at 80%. 360buy only has 5.8%; dangdang has 2.5%; Vancl has 1.8%; Amazon has 1.3%; the other sites share the remaining.
Image courtesy of China Internet Watch
Many Online Retailers in Asia Now Offer Physical Pick-up Services
As convenient as online shopping can be, sometimes coordinating the receipt of purchases can be a hassle, especially for shoppers who are not at home during standard delivery hours in the day.
In Asia, online-only retailers have started introduced services similar to UK e-tailer ASDA’s “click and collect” by tying up with bricks-and-mortar chains to give their customers the option to pick up their purchases from the stores of their choice.
Amazon China, who started pick-up services at FamilyMart, a chain of major convenience stores, in Shanghai earlier this year, expects that this will “ensure the timely delivery of products and allow customers to collect their purchases on their own schedule.”
The e-commerce site also plans to launch 100 pick-up sites to cover the major city areas as part of its first wave of expansion. It has also introduced this service in Japan, where FamilyMart is a major chain as well.
In Hong Kong last September, QQ Buy also began offering pickup services, partnering with over 1,200 participating retailers in Hong Kong, as does Tmall, a major China online marketplace. The service has been reported to be available in 580 convenience stores across five major cities – Shanghai, Beijing, Jiaxing, Hangzhou, and Wuhan.- as of October last year.
Singapore is a recent entrant to this space but it has done it in a big way. In May this year, Qoo10, a fast-growing online marketplace, made news with a new 7-Eleven partnership that allows customers to pay and collect their online purchases. Although essentially a collection service feature, Qoo10’s primary aim is to offer cash payment option for its customers. It noted that this move would increase the proportion of Qoo10 shoppers who use their non-credit card options, which includes PayPal, by 10%. With the introduction of this service, Qoo10’s Southeast Asia business division head, Asil Turk, also hopes that Qoo10 “will hit the one million member milestone.”
Zalora, a large online fashion e-commerce site run by the world-famous Samwar brothers, is another new 7-Eleven partner in Singapore. They have citing logistics and customer issues with third-party delivery services as one of the reasons for their new cash-on-collection offering for their customers.
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