February 27, 2012

Net-A-Porter Buys Into Crowded, Contentious China Luxury E-Commerce Market

Company To Acquire Shouke Limited From Owner Adrienne Ma

Shouke's flash sales include brands like Marni and Shiatzy Chen

Shouke's flash sales include brands like Marni and Shiatzy Chen

A little over one year since its establishment by Adrienne Ma — daughter of Joyce Ma, founder of the Hong Kong multi-brand retailer Joyce — the Chinese e-commerce platform Shouke Limited is set to be acquired by the London-based online retail powerhouse Net-A-Porter, marking that company’s first major foray into the China market. As WWD notes today, following its purchase of Shouke, Net-A-Porter plans to launch a new website based in China this March, and open a distribution center in Hong Kong at an unspecified later date. Though details are scarce pending an official announcement expected this week, Shouke’s founders are expected to stay on-board following Net-A-Porter’s acquisition to run the company’s Asia-Pacific division.

While Net-A-Porter’s plans to move into the China market have long been expected — the country’s luxury e-commerce sales surpassed 10 billion yuan for the first time last year, and are projected to grow at a pace of 30 percent annually for the next several years — its status and reputation abroad don’t mean China will be an easy market. The members-only Shouke was only one of many well-capitalized luxury e-commerce platforms to spring up in China in the last couple of years, and the country’s lack of a clear leader in the segment presents both an opportunity and a massive challenge to Net-A-Porter.

Adrienne Ma is a former executive at the eponymous Hong Kong retailer founded by her mother Joyce

Adrienne Ma is a former executive at the eponymous Hong Kong retailer founded by her mother Joyce

To set itself apart, we’d expect to see Net-A-Porter leverage its relationships with designers and brands both large and small to host capsule collections not easily found in China, and not available to other online retailers there. Recently, Vogue China and thecorner.com collaborated on a special “Vogue Talents Corner” on the site, selling designs created by five up-and-coming young Chinese designers. In addition to featuring work by emerging designers, Net-A-Porter may choose to feature lesser-known brands that are interested in expanding into China, catering to the deepening tastes of top-tier consumers. As Ding Jiaqi of iResearch recently pointed out, this is an area in which domestic e-commerce sites are lacking. Said Ding, “[The majority of online shopping is] confined to top-class brands such as Hermes, Gucci and Louis Vuitton. Many second- and third-tier brands are not yet being sold in China. When they enter the market, online selling would be the best channel for them.”

With dozens of luxury-focused online retailers to choose from, including international players like Yoox and soon Net-A-Porter and dozens of domestic platforms, the China e-commerce industry may be in dire need of a shakeout. As Torsten Stocker of the Monitor Group recently told Jing Daily, the relative chaos of the market indicates to him that “luxury e-commerce in China more on a natural evolution path, where new concepts and ideas are still being tested, and where it is still unclear what will work for which brand.”

As Adrienne Ma herself said in December 2010, somewhat presciently, of Shouke and the evolution of luxury e-commerce in China, “You don’t have to look very far to see that online e-commerce has already begun to co-habit alongside bricks and mortar businesses. We may be a little early in terms of coming in with a truly luxury site, but we really believe in the enormous potential of the market.” Apparently, Net-A-Porter is ready to agree with her.


Fashion / Tech
Tag: adrienne ma, brand expansion, china expansion, e-commerce... , More
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