Facing slowing sales, global luxury brands are angling for a piece of China’s e-commerce market, where people are accustomed to buying gadgets and groceries, but not high-priced jewelry and haute couture. Many are unsure, however, about diving headfirst into online retail, because China’s favorite way to shop is also an industry better known for piracy and dusty deliverymen than for shine and polish.
To court the luxury market, companies like Alibaba and JD.com are using their vast customer base to offer upscale retailers support on issues like digital marketing, pricing, customer services and, in the case of Mr. Tang, delivery.
“The most difficult thing to overcome is the experience for the shoppers,” said Xia Ding, president of JD.com’s fashion division. “But because we own the logistics we are really able to deliver luxury goods in a way that makes shoppers feel like they are getting the same special experience as they get offline.”
Chinese shoppers have long dominated the global luxury market. In the last two years, a continuing anticorruption campaign and an economic slowdown led to a decline in Chinese demand for luxury, contributing to an overall global slump. Still, last year Chinese shoppers accounted for 30 percent of global luxury purchases, according to a report by Bain & Company.
Until recently, however, many Chinese luxury purchases were being made overseas or through daigou — personal shoppers who buy goods abroad and bring them into China, avoiding the country’s hefty taxes. That started to change two years ago when, in an effort to combat gray-market sales, a number of high-end luxury brands led by Chanel took steps to reduce the price gap between goods in China and overseas.
At about the same time, the Chinese government also stepped up efforts to crack down on daigou shoppers, increasing checks at airports and lowering duties on some luxury goods imported through official channels.
As a result, brands have seen a shift in luxury shopping habits, with more and more Chinese consumers now choosing to buy at home rather than abroad. This so-called reshoring has caught the attention of Chinese e-commerce companies, causing major players like Alibaba and JD.com, as well as smaller luxury-focused companies like Secoo and Xiu, to invest aggressively in the luxury sphere.
“Mass market brands already know that there is no choice but to be on these e-commerce platforms,” said Liz…