September 4, 2012

Zara Jumps On China’s E-Commerce Bandwagon

Inditex-Owned Brand Entered Mainland China In 2006

The Zara mainland China online store launches this week

Now with more than 100 brick-and-mortar locations in more than 40 cities in China, on September 5 the Spanish fast fashion juggernaut Zara will launch its mainland Chinese online store, jumping on the country’s multibillion-dollar e-commerce bandwagon. Having entered the mainland China market in 2006, two years after its Hong Kong debut, Zara has capitalized on China’s massive demand for foreign fast-fashion brands in recent years. In an astonishingly short time, Zara has built a vast retail footprint throughout first- and second-tier cities throughout China, investing heavily to take on home-grown Chinese competitors as well as global rivals like Japan’s Uniqlo (which is also engaged in China’s e-commerce market via an official Tmall store), America’s Forever 21 and Sweden’s H&M.

With its foray into China’s young and crowded yet booming e-commerce market, Zara apparently hopes to take advantage of the rising popularity of online shopping among urban white-collar shoppers and those in third- and fourth-tier cities currently without physical Zara locations.

According to a company release, Zara’s mainland China online store will price items the same as at its brick-and-mortar locations, with shoppers having the option of home delivery or in-store pickup. The retailer will also list a toll-free customer service hotline for shoppers to reach a dedicated China help desk. Deliveries come in specially designed eco-friendly packaging, and will ship for a flat 10 yuan (US$1.60). Delivery times range from 2-3 business days to cities like Beijing and Shanghai to 5-7 business days to customers in Xinjiang and Tibet. Along with the e-commerce launch this week, Zara will also release a new mobile app for the China market, which includes online shopping capabilities and lets shoppers scan tags at Zara locations to check online availability.

Uniqlo operates an online store on China's Tmall

Despite Zara’s bullishness about China’s e-commerce market, we’ll be curious to see whether its online expansion proves profitable. As Jing Daily noted last month, fast-fashion and discount retailers typically operate at razor-thin margins in China’s online retail market, with customers expecting special perks, deep discounts, and online exclusives. Rather than engaging in race-to-the-bottom price wars, retailers entering the China e-commerce market now are adopting the relatively new “O2O” (online to offline) model, an “authentic and full-price” business model.

So far, retail giant Macy’s has invested US$15 million in the domestic Chinese online retailer VIPStore and is on track to launch sales on VIPStore’s luxury site, Omei.com, in spring 2013, delivering “original priced” goods that are timely, exclusive, and readily available. As Jing Daily pointed out this past spring, American luxury retail group Neiman Marcus is also set to kick off its own China expansion with a US$28 million investment in the privately held e-commerce company Glamour Sales Holding by the end of this year.

Business & Finance / Fashion / Investment / Lifestyle / Marketing & Branding
Tag: brick-and-mortar, business, e-commerce, fast fashion... , More
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