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Luxury brands tap China e-commerce

News, 12 January 2016

SHANGHAI: International luxury brands are gradually expanding their online offer in China, but their strategies need to align with the preferences of the Chinese luxury consumer, a new report has advised.

With its "Luxury Insights China 4th Quarter" report, market intelligence firm FDKG highlighted transparency, incentives, ease of payment and reliable collection as key considerations for luxury brands to consider to win over Chinese online shoppers.

FDKG said that catering exclusively for a few consumers via select physical boutiques only works when sales are strong and that the growing popularity of the internet makes e-commerce an increasingly important option, Luxury Daily reported.

For example, an e-commerce site that lists prices may help infrequent or first-time buyers feel more comfortable about visiting a store.

Equally, Chinese consumers are more inclined to make an online purchase if they are reassured about the transparency of prices on a brand's website and can see that prices in their local boutique do not differ much from ones in Europe.

Convenience of payment and collection is also an important factor for luxury brands to consider, the report advised, because Chinese online shoppers prefer cash on delivery as their payment method.

And being able to go to a physical store to collect a purchase is still preferred to delivery because Chinese luxury consumers feel it is less risky and removes any uncertainty from the process.

Incentives are also important, the report stated, as it cited Singles Day on November 11 and Double 12 on December 12 as shopping events that appealed to discount-seeking consumers.

Having an e-commerce site to serve the whole country is also more cost effective than opening stores in every potential market, the report added.

It found that a number of well-known brands, including Armani, Ferragamo and Chanel, have reduced the number of stores they operate in China after achieving the right balance between in-store and online.

Above all, the report said that luxury brands need sound research and a good understanding of the complexities of the changing Chinese market to find success.

Data sourced from Luxury Daily; additional content by Warc staff