The trend of digitalization in luxury industry
In 2020, the epidemic caused the global luxury industry to see a 25% drop in first quarter sales and an estimated 20% to 35% decline in full year revenue. This has led brands, which used to prefer offline scenes, to start focusing on online channels and further development in China market.
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In the previous year, luxury goods purchased by Chinese consumers accounted for 35% of the global consumption, thanks to the booming of Chinese outbound travel market. In fact, 70% consumption by Chinese came from their spending in overseas markets while traveling.
After the epidemic blocked outbound travel and limited in-store consumption, e-commerce platforms are actively launching new channels and developing new features to get ready for the arrival of this new battle.
Tmall & Jingdong’s luxury business
Before the epidemic, Tmall had launched its sub-platform, Luxury Pavilion, with 150 brands in-house, and its parent company Alibaba had also formed a joint venture with Yoox Net-a-Porter, the world’s largest luxury e-commerce company. As the epidemic continued to spread in Europe, another sub-platform on Tmall was launched, Luxury Soho, which includes discounted products from low-priced brands .
Jingdong and Tmall share the same ambitions towards luxury market, but ended up going different ways, with Jingdong focusing more on investment. It not only took a stake in global luxury e-commerce platform Farfetch and local platform Secoo, but also invited more than 20 brands such as TISSOT to its own channel.
However, Tmall and Jingdong also have their shared disadvantage: they do not precisely target luxury buyers. And that is where Secoo holds its strength.
The vertical platform: Secoo
Secoo was founded in 2008 and landed on the Nasdaq in 2017, making it the first listed luxury e-commerce company in China. As the leader in its domain, it has partnered with 3,800 brands worldwide.
In terms of business model, Secoo keeps on developing online and offline channels simultaneously, providing consumers club services (products repair and maintenance, VIP client communication, etc.) in 7 experience centers around the world that do not aim at selling, in order to enhance consumer experience.
Technology and luxury
Counterfeit goods have always been a stubborn problem in this industry. In the era of relying on artificial authentication, the three players mentioned above have begun to explore the possibility to apply blockchain technology to counterfeiting prevention. As technology continues to develop, we could believe that more and more intelligent solutions will be adopted in the luxury industry in the future.
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