A new report by market research firm L2 reveals that luxury brands can no longer afford to ignore the Chinese ecommerce market.
Many manufacturers and retailers of luxury items had been wary of expanding into China for fear that the country’s reputation for counterfeit goods and cheap imitations may tarnish their brand by association.
Ecommerce only represents 5 per cent of the luxury goods market in China at the moment, but as western brands are finding it more and more difficult to open bricks and mortar retail outlets there, it looks set to gain in importance.
The report, Luxury China, evaluated the performance of over 100 high-end brands in the Chinese ecommerce market, ranking them in categories from “Genius” to “Feeble”. The “Genius” category contains only two brands, Burberry and Cartier. Burberry was one of the first luxury brands to launch itself on the major Chinese ecommerce site Tmall. It was expected that other brands would follow, but most have either shunned Tmall altogether or restricted their presence to their lower-end lines. For example, Hugo Boss has its Boss Orange collection on Tmall, but restricts its full collection to its own website.
The report found an overall unwillingness to engage with social media in China. The Chinese ecommerce market is much more interconnected than most western territories, and links between a brand’s website, Tmall and social media apps such as WeChat, “in” and Youku Toudu is considered vital for success.
“Nothing about marketing in or to China is easy” said the report’s lead author, Danielle Bailey. “If brands are looking to take a first step, I would prioritize a WeChat presence – it will provide a means of connecting directly with consumers and for the brand to share their heritage, multimedia branded content, retail locations, and provide authenticity checks.”