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Clicking to buy clothes online set to boost sales

ORDIFEN International Group, a Taiwan-based underwear maker, has become the latest garment maker to launch a Chinese mainland online shopping site, taking a punt at the sometimes risky business of trying to convince consumers to buy clothing they can't try on.

The company, which has operations on the Chinese mainland, started in mid-May, promising consumers better products and after-sale services. It joins thousands of other "e-tailers" going after shoppers who are often wary about buying a pig in a poke.

"I like online shopping because so many beautiful clothes of all styles are accessible with one click of the mouse," said Rebecca Yao, a 30-year-old banking clerk in Shanghai. "But I had one experience of a dress I bought online turning out to be slightly different in color and style from what I ordered."

The online retail business in the Chinese mainland has grown rapidly in the last decade, with revenue last year more than doubling to 17 billion yuan (US$2.5 billion). The value is expected to surge 78 percent this year to 30.52 billion yuan, according to consulting company iResearch Inc.

Garments have come to dominate online retailing, exceeding even books in sales value.

Prior to launching its own Website, Ordifen tested the waters of online retailing in a year-long partnership with Taobao, China's largest consumer e-commerce Website.

"We found the online store concept works especially well during the current financial crisis because it offers lower prices," said Chris Lu, virtual channel executive manager of Ordifen.

It's a lucrative market fraught with risks.

"It is a promising business but it's much more complicated than the online book selling model," said Li Weihan, a consultant from research and consulting company Sinotrust. "Users are limited. Consumers like trying on clothes before buying, and they are concerned about the quality of what they get and after-sale services if they aren't happy."

He believed that the "online apparel selling business still has a long way to go and it's safer if you have a real store network backing you."

Shanghai Mecox Lane International Mail Order Co, China's first foreign-invested mail order firm, launched its Website,, in 2000. It was a pioneer in the e-retail model when the industry was still in its fledgling stage in China.

"It is 10 times harder for a real store retailer to enter the online business than a mail order company," said Gu Beichun, chief executive officer of Mecox Lane. "It takes a lot of effort and money to build the required back-up system, call center, warehouse, consumer database, order-dealing capabilities and logistics services. You can see a great deal of companies showcasing their products on their official Websites, but only a small proportion of them are selling online. That's the problem."

In fact, many apparel manufacturers chose to launch online "flagship" stores for China in partnership with Taobao to share resources and cut costs. They include casual wear maker Metersbonwe, Giordano, down jacket maker Bosideng and Japan's Uniqlo.

Taobao had 120 million registered users by the end of May, with daily turnover at 500 million yuan.

"Though online apparel selling is lucrative, it is not easy to grab a bite of the market," said Shen Nanpeng, founding partner of venture capital firm Sequoia Capital China

For its part, Ordifen launched its own Website because the company wants to provide better products and after-sale services, Lu said.

"We want to guarantee complete and better service so that consumers no longer need to worry about the process of returning products," he said.

Operating one's own Website also helps prevent consumers from being cheated by hawkers of counterfeit or fake products, which is common in the online business, Ordifen said.

So far, the results have been encouraging. An average of between 100,000 and 200,000 users have viewed the Website daily, beating the company's expectations. Ordifen said it expects the clicks to increase.

Gap filler

China is the first country outside Japan where Uniqlo has an online shopping presence. Online retailing fills a gap for the Japanese clothing maker, which also operates about 30 stores in China, mainly in Shanghai and neighboring cities.

That's far fewer than rivals such as Hong Kong-based Giordano, which had 909 stores across the nation at the end of 2008.

The online "flagship" Uniqlo store, launched in mid-April, aims to increase brand awareness and make inroads into the growing Chinese e-commerce market, said Uniqlo officials.

"Most consumers are not willing to switch from regular brands to cheaper ones, but they can spend more smartly by buying online," said George Singleton, regional strategy director in Asia Pacific for Publicis, one of the world's leading provider of communications and advertising services.

As much as 74 percent of Chinese on the mainland are not willing to switch from regular brands to cheaper ones, according to a recent survey by Publicis.

As Uniqlo discovered, the e-retail model is pretty solid in cities such as Shanghai and Beijing, where the Japanese retailer derives about 60 percent of its online sales.

But the vast majority of Chinese don't live in the nation's handful of ultra-sophisticated cities, and therein lies the most lucrative untapped market for the highly competitive fashion retailing industry.

In a recent report, iResearch advised online clothing e-tailers not to turn their backs on bricks and mortar if they want to build and expand a customer base.

Gu at Mecox Lane said markets outside major metropolitan areas are not mature enough for the online business because consumers there don't necessarily have convenient access to the Internet. Also, online payment systems require use of credit and debit cards, which are not common in less developed cities, he said.

Mecox Lane plans to shift its focus to retail stores and add 2,000 more outlets for its Euromoda and Rampage fashion lines within two years, adding to its chain of 200 stores.

"By penetrating into third and fourth-tier cities, real stores can help build brand awareness and take their fashion concepts to a wider audience," Gu said. That's the successful strategy used by sportswear brands like Nike, Adidas and Kappa, he said.

Mecox's strategy may strike a chord with consumers.

"I would prefer to go into a store to buy most of my clothes," said Shanghai bank clerk Yao. "There may be size problems, and let's face it, not every dress that looks beautiful will necessarily look good on me," she pointed out.


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