Sina Debuts Luxury Online Shopping Platform: Is China’s “E-Luxury” Market Getting Saturated?

Sina The Latest To Join The B2C Luxury Online Retail Fray

Sina Luxury (Image: TechWeb)

Sina Luxury (Image: TechWeb)

Following the lead of competitors like Netease, Alibaba and Tencent, this week the largest Chinese-language news portal, Sina (新浪) launched its new luxury e-commerce platform, Sina Luxury, in the hopes of tapping the country’s increasingly young and free-spending online shoppers. Selling luggage, clothing, watches, jewelry and accessories, the new platform stocks nearly 50 brands, including Louis Vuitton, Balenciaga, Gucci, Dior and Burberry, claims 100 percent authenticity and guarantees risk-free returns up to seven days after purchase.

With China’s luxury industry expected to become the world’s largest by 2015, and the country’s online population swelling, dozens of companies, including domestic hopefuls like Shangpin, Zouxiu, Jiapin, Youzhong and ihush, as well as international players like Yoox, have jumped on the high-end online retail bandwagon.

According to the China Internet Network Information Center, the number of Internet users in China jumped 28.9 percent in 2009 to 384 million — more than the entire population of the United States. And, in recent years, more of Chinese netizens have warmed to online shopping, often getting their first taste of online commerce via small-scale purchases on sites like Taobao. As a report by Yiguan International recently noted, China’s online retail market reached 3.45 billion yuan (US$540 million) in the second quarter of 2011, with annual turnover for 2011 expected to reach a whopping 16 billion yuan ($2.5 billion).

Still, despite Sina’s clout — it’s one of the country’s most popular news portals, and runs China’s wildly popular answer to Twitter, Sina Weibo — the company’s new luxury e-commerce platform will face fierce competition not just from domestic competitors but also well-capitalized, experienced international retailers. Recently, in addition to operating its own platform and hosting online stores for brands like Emporio Armani in China, the aforementioned Yoox teamed up with FedEx to launch, a specialty luxury shopping service that looks to attract Chinese consumers via some very interesting, localized features.

As Jing Daily noted earlier this week, a new white paper by market research firm Huicong D&B found that 67 percent of regular luxury shoppers in mainland China cite online shopping as their primary motive for Internet use. However, as Huicong pointed out, despite its draw for companies and the buzz surrounding it, China’s e-commerce market remains young and underdeveloped, and as such most high-end purchases made online by respondents to Huicong’s survey are still smaller items. As a relative latecomer to China’s “e-luxury” market, Sina might have to think creatively to compete with more established rivals like Zouxiu and Shangpin, perhaps offering personalized services and stock more niche designers (not unlike the overarching strategy of and introducing high-tech features to assuage consumer fears about authenticity, in order to entice shoppers to purchase bigger-ticket items.