August 1, 2012

Four Things To Know About China’s Luxury E-Commerce Market

Brands Should Tap Luxury-Hungry Second-Tier Consumers

Expected to become the world’s largest by 2015, China’s luxury e-commerce market is becoming as profitable as it is overcrowded. But how are consumer attitudes changing and adapting to the growth of online retail? Recently, the China E-Commerce Research Center (中国电子商务研究中心) released a survey of 1,762 potential online luxury shoppers in 100 cities throughout China — roughly divided in terms of gender, with 897 male and 865 female respondents — that addressed that very question and identified some very interesting trends in the Chinese high-end e-commerce market.

Finding 1: 80 Percent of Consumers Now Willing To Buy Online

One trend identified by the research is that a growing number of Chinese consumers are willing to test the waters with high-end e-commerce. 62.7 percent of respondents with experience shopping online said that they felt luxury goods are “suitable to buy online,” with 57.4 percent of consumers with the intention of shopping online soon agreeing. In total, 85.4 percent of respondents expressed a willingness to buy luxury goods online, while the remaining 14.6 percent said, for various reasons, that they aren’t yet prepared to try it out.

Consumer attitudes towards luxury e-commerce are shifting quickly

Consumers are rapidly becoming more open to luxury e-commerce

Finding 2: Second-Tier Cities Have the Most Potential

Holding that total consumption of luxury handbags, footwear, cosmetics and apparel are expected to reach a record-setting 84 billion yuan (US$13.2 billion), the report noted that relative price advantage compared to physical stores is a leading factor in the exponential growth of China’s luxury e-commerce market. 67.6 percent of respondents said they felt prices for luxury goods online were lower than at local brick-and-mortar stores, with other major factors pushing online purchases being convenience and better selection of products and brands.

Choice is a critical factor motivating consumers in smaller second- and third-tier cities, where many brands have yet to expand in China. 28.4 percent of respondents said that e-commerce is the only way for them to purchase certain luxury goods, with the vast majority of these individuals living in second- and third-tier cities. This, to the China E-Commerce Research Center, indicates that these cities hold the most potential for online retailers.

Price advantage is a leading factor driving purchases, but selection is catching up

Finding 3: Women Opt For Clothing & Cosmetics, While Men Go For Watches

Consumers in China aren’t just becoming more diverse in terms of which brands they buy, they’re becoming more diverse in terms of what products they’re buying. The study identified differences that broadly broke down in terms of gender, with female respondents more inclined to purchase luxury apparel, footwear, handbags, cosmetics and fragrances than male respondents, who mainly shopped online for electronics, watches and jewelry.

Men are watch-mad, while women focus on apparel and cosmetics

Finding 4: Quality Assurance, Authenticity Are Critical

Perhaps the most obvious finding of the survey is that the vast majority (76.9 percent) of consumers feel quality assurance and product authenticity are the most important factors driving them to make a luxury purchase. Additional factors noted by respondents included better pricing than brick-and-mortar stores, the credibility of the website itself, secure transactions and after-sales service.

Quality and authenticity assurance are critical for companies in the e-commerce sector

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Tag: e-commerce, Fashion 2, jewelry, luxury consumption... , More
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