West Wins in Luxury E-commerce Site Ranking, as China Plays Catch-up

In a surprising finding, Chinese consumers still see services provided by Western luxury e-commerce platforms as more satisfying and advanced than their Chinese counterparts, according to a new report by Hong Kong-based consulting firm OC&C Strategy Consultants. Then again, timing is everything: Overall, the older, better-established sites proved more popular with customers, and more (but not all) of those e-commerce pioneers are based in the U.S. and Britain. Will rival Chinese platforms be able to catch up?

Platform overall satisfaction ratings by Chinese online shoppers. Source: OC&C Luxury E-commerce Survey (2018), OC&C analysis

Platform overall satisfaction ratings as assigned by Chinese online shoppers. Source: OC&C Luxury E-commerce Survey (2018), OC&C analysis

The study, based on a June survey online of over 5,000 Chinese luxury shoppers, asked respondents to rate their customer experience on 17 luxury e-commerce platforms operating in China (with five of them being Western) in the past six months based on 10 criteria:

  1. Ability to guarantee product authenticity
  2. The breadth of products offered (number of SKUs) within each brand
  3. Availability of in-season products
  4. Shopping convenience
  5. The breadth of brands offered
  6. “Luxurious” experience (subjective)
  7. Ability to deliver pre-sales services (e.g., style advice)
  8. Flexibility in payment methods
  9. After-sales services (e.g., simple and efficient returns)
  10. Level of newness (renewal rate) in products offered

For this report, the definition of a luxury shopper is someone who had purchased fashion products from two or more brands on the agency-provided list over the last year. The list included 25 brands, from top luxury brands like Chanel, Louis Vuitton and Dior to more affordable luxury labels like Paul Smith, Maje and Kate Spade. (So respondents did not actually have to have shopped on the sites they rated.)

All five non-Chinese luxury e-tailers performed well. Amazon’s premium fashion e-commerce platform Shopbop was the top-ranked in service satisfaction, the report shows. Net-a-Porter, owned by the Swiss luxury group Richemont, came in third. British luxury e-commerce platform Farfetch, which just went public in the United States in September, was ranked fifth, followed by British department store Selfridges’ e-commerce site (seventh) and the Hong Kong group Lane Crawford (eighth).

“Although Chinese platforms are ahead of the game so far in awareness and transactions, customers who have tried the Chinese version of international platforms like Net-a-Porter or Farfetch, rated them among the top 5 overall, primarily because of their strong scores on authenticity and assortment,” said Pascal Martin, Partner, OC&C Strategy Consultants.

Chinese luxury e-commerce site Secoo (second) and JD.com’s luxury portal TopLife (fourth) were two exceptions in the survey. Secoo outperformed on “product authenticity,” “assortment” and “shopping convenience,” and TopLife excelled at offering an in-depth assortment within offered brands and in “shopping convenience.”

Other major Chinese players like Alibaba, Little Red Book, and NetEase, which all just entered the luxury e-commerce arena in the last two years, are lagging behind their international peers, according to the report.

Longevity counted: the “older” sites, such as Shopbop, nearly 20, and Secoo, founded in 2008, outperformed some younger rivals. Online retailing giant Alibaba’s relatively new luxury portal Luxury Pavilion is at the bottom of this ranking. Launched in August 2017, Luxury Pavilion has since collaborated with brands like Valentino, Loewe and Stella McCartney to set up virtual pop-up stores. Martin said the platform scored reasonably well on “product authenticity” but was not rated among the top five websites in any of the other nine categories.

Top rated platforms against selected key platform selection criteria. Source: OC&C Luxury E-commerce Survey (2018), OC&C analysis

Top rated platforms against selected key platform selection criteria. Source: OC&C Luxury E-commerce Survey (2018), OC&C analysis

Tmall, the other major arm for Alibaba to sell luxury goods, was slightly better, taking the 13th position. Martin said it was rated among the top three in payment flexibility, lower in authenticity.

NetEase-owned cross-border e-commerce site Kaola and the hip social commerce app Little Red Book do not offer a full shopping experience and, therefore, did not score well on most of the criteria in the survey.

In other findings, 59 percent of China’s Gen-Z consumers (born after 1995) said they are shopping online, compared to millennials (born between 1980 and 1995) (37 percent) and Gen X (born between 1960 and 1980) (26 percent). However, Gen-X respondents indicated that they are keen to shop more often online in the future. The survey also finds over half of Chinese Gen-Z luxury shoppers spent more than $7,206 (RMB 50,000) online last year, compared to only 32 percent for millennials and 34 percent for Gen X.