What happened
Prada’s Shanghai subsidiary has won a legal case against Chinese online luxury retailer Secoo, freezing 1.63 million (11 million RMB) in assets from the latter. This follows disputes surrounding a 2019 contract that allows Secoo to sell Prada and Miu Miu products. Prada isn't the only brand to have beef with the platform: public records show that Secoo also has multiple contract disputes with other companies, as well as over 1,000 ongoing complaints on the consumer rights protection platform Black Cat.
Founded in 2008, Secoo was one of the first luxury resale sites in China, managing to outlive most of the competing sites launched around the same time. In September 2017, Secoo was listed on Nasdaq, billing itself as the top choice for luxury e-commerce in China.
The Jing Take
Secoo’s attempt to transition away from a pure luxury resale platform to a broader lifestyle and direct retail platform has been challenging. Without a larger parent like Alibaba or JD.com, it lacks the promotional support to bring in potential customers from an extensive portfolio of social media and e-commerce platforms. Meanwhile, the retailer faces increasing competition in its core business and its foray into livestreaming has not saved sales from falling.
In recent years, the Shanghai company experienced various financial troubles including fines for fraudulent advertising, missing payments of tens of millions of RMB to over 200 suppliers, and withholding salaries to its employees. Secoo's performance was so challenging that its founder and CEO Li Rixue considered taking it private and delisting from the Nasdaq in January 2021. During that fiscal year, revenue reached 460 million (3.13 billion RMB), marking a 48 percent year-on-year decline, and net loss totaled 83.8 million (566 million RMB), a 547 percent year-on-year increase.
Currently, the company is trading at 0.31 per share, a far cry from its 12 per share upon debut. A lawsuit from a renowned brand such as Prada only makes Secoo’s comeback all the more difficult.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.