Online luxury sales rise in China

15 February 2012

BEIJING: Luxury online retail revenues are rising rapidly in China, as growing numbers of the country's expanding internet audience splash out on high-end goods.

According to iResearch, the insights provider, sales of such products via the web - not including direct to consumer purchases from brand owners - were worth RMB10.7bn in 2011m, versus RMB6.4bn in 2010.

The company estimated that returns would reach RMB15.7bn in 2012 and RMB21.3bn in 2013. Figures should then hit RMB28.5bn in 2014 and RMB37.2bn in 2015, the analysis suggested.

While revenues are pegged to rise dramatically, the pace of acceleration is due to slow somewhat, from the 68.8% lift recorded in 2011 to 30.9% by the end of the assessment period.

However, this sector delivered just 1.4% of total online retail sales in 2011, a figure which may surpass 8% in 2015.

Ding Jiaqi, an analyst at iResearch, predicted in the China Daily that the presence of more challenger brands could help drive this trend.

"Current online luxury purchasing was confined to top-class brands such as Hermes, Gucci and Louis Vuitton. Many second- and third-tier brands are not yet being sold in China. When they enter the market, online selling would be the best channel for them," he said.

The availability of a wider range of products beyond the existing selection - dominated by bags, jewellery and watches - is likely to further facilitate this process, he continued.

More broadly, iResearch reported that men made up 65.5% of online luxury shoppers, with women on 34.5%. By contrast, female customers make up 51.2% of frequent ecommerce buyers, falling to 48.8% for males.

Within this, around 80% of web users acquiring premium goods through this channel were under 35 years old, while 40% were below 24 years old.

Numerous specialist online retailers - like VIPStore, Shangpin and Ihaveu - are all competing to attract this audience, but most believe a long term approach will be essential.

"So far, China's online luxury market remains small. We are waiting for it to explode," said Chen Xiao, founder of Ihaveu.

Data sourced from China Daily; additional content by Warc staff