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China luxury sector moves online

News, 08 October 2015

BEIJING: China's luxury consumers are increasingly comfortable purchasing online with almost half buying products this way according to a new report.

China's Connected Consumers, a study from consulting firm KPMG, in association with online retailer Mei.com and social media platform Weibo, was based on responses from 10,150 luxury consumers. This found that 45% of respondents said they bought more than half of their luxury items through online options.

This shift has been accompanied by a willingness to spend more. The average spend on a single purchase has risen 28% to RMB 2,300 from RMB 1,800 a year ago.

But a more dramatic vote of confidence in online luxury retail came in the maximum amount respondents were ready to commit: RMB 4,200 for a single purchase was more than double the RMB 1,900 KPMG had registered in a similar 2014 survey.

For all that, ecommerce remains a small part of the total luxury market in China – KPMG estimated its share to be somewhere between 5% and 10% but said it was "growing at tremendous speed" compared to the total market.

The main drivers for this growth continue to be pricing and better deals, although other factors are becoming more important.

Product origin, especially those from the US or Europe, has risen up KPMG's ranking of drivers, as has uniqueness, as buyers look to differentiate themselves with items not available in stores. Online retail facilitates both these.

Thibault Villet, co-founder and CEO of Mei.com, observed that Chinese customers preferred to buy on platforms such as Tmall rather than from a brand website.

"Brands' own websites provide reliable and accurate information, as well as authentic products, but usually trigger very low conversion rates," he said, adding that next year Mei.com planned to open the first e-commerce market place dedicated to luxury goods.

Data sourced from KPMG; additional content by Warc staff