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Shopping experience can't be replicated online
September 29, 2011, Thursday
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Print Edition
Print Edition
AS domestic consumers, especially young online shoppers, increasingly spend their money on fashion apparel, handbags and accessories, online retailers are starting to include more high-end goods in their product mix.
In my view, it's a risky realm for purveyors of luxury items.
Domestic online retailers may have a hard time cashing in on the zeal for expensive brand names in a market notorious for picky consumers who don't part with their money without careful scrutiny of what they are buying.
Web pages may be fine for general shopping, but buying Gucci isn't the same as buying laundry detergent.
That's the lesson George Ji, founder and chief executive officer of Xiu.com, learned when he launched his website specializing in luxury bags in 2008.
Ji discovered it wasn't enough to concentrate on the top end, so he shifted his focus to include more mid-priced clothing and accessories. Last month the company received US$100 million in investment funds from two institutional investors to expand its partnership with international brands and bring more products to consumers.
Ji now says Xiu aims to become an online department store, offering not only high-end brands but also lesser-known designer brands that cater to a wider range of consumer tastes.
It's an uphill battle to convince consumers to buy high-priced fashion online.
"Consumers of luxury goods love the feeling of being served," said Sandy Chen, a research director at TNS Research International's Shanghai office.
Indeed, trying on designer clothes and shoes, and being pampered by fashion consultants in a well-appointed shop is part of the fun and experience of shopping that cannot be replicated online.
"The majority of luxury goods buyers are not in the habit of buying things from websites, and luxury online retailers need to find their specific group of target customers to keep their businesses running," said Chen.
One of the biggest concerns of luxury-goods shoppers is authenticity. Nobody wants to be spending a lot of money on fake goods. The suspicion runs high that you're more likely to get something counterfeit via the Internet than in a shop where you can closely inspect the merchandise and talk with the vendor.
Even 15 to 20 percent discounts on online luxury goods may not be enough to sway shoppers from the quality and service found in boutiques.
Earlier this year, Kela.cn, an online diamond retailer, sought to address that problem after it received US$10 million from Tencent to expand its product range and upgrade its technology.
Kela now operates 22 bricks-and-mortar shops around the country to allow customers to see and even try on jewelry before placing orders online.
"The success of Kela and a few other online retailers will be isolated cases because building up a brand name merely through online channels is very difficult," according to Analysys International's researcher Chen Shousong.
Luxury retailers with fairly narrow lines of stock also run into the problem of logistics, which has proven a thorn in the sides of many online sellers. Warehouses need to be set up in key cities to ensure prompt, reliable delivery of ordered goods.
Many online sellers trying to expand their range of products have discovered just how costly that is.
That was the case with Dangdang, which started out as an online bookstore but has expanded into cosmetics, skin-care products, consumer electronics and even home appliances. It was a similar case when consumer electronics and home appliances seller 360Buy expanded into food, daily necessities and books in its drive to provide a one-stop shopping site for customers.
In my view, it's a risky realm for purveyors of luxury items.
Domestic online retailers may have a hard time cashing in on the zeal for expensive brand names in a market notorious for picky consumers who don't part with their money without careful scrutiny of what they are buying.
Web pages may be fine for general shopping, but buying Gucci isn't the same as buying laundry detergent.
That's the lesson George Ji, founder and chief executive officer of Xiu.com, learned when he launched his website specializing in luxury bags in 2008.
Ji discovered it wasn't enough to concentrate on the top end, so he shifted his focus to include more mid-priced clothing and accessories. Last month the company received US$100 million in investment funds from two institutional investors to expand its partnership with international brands and bring more products to consumers.
Ji now says Xiu aims to become an online department store, offering not only high-end brands but also lesser-known designer brands that cater to a wider range of consumer tastes.
It's an uphill battle to convince consumers to buy high-priced fashion online.
"Consumers of luxury goods love the feeling of being served," said Sandy Chen, a research director at TNS Research International's Shanghai office.
Indeed, trying on designer clothes and shoes, and being pampered by fashion consultants in a well-appointed shop is part of the fun and experience of shopping that cannot be replicated online.
"The majority of luxury goods buyers are not in the habit of buying things from websites, and luxury online retailers need to find their specific group of target customers to keep their businesses running," said Chen.
One of the biggest concerns of luxury-goods shoppers is authenticity. Nobody wants to be spending a lot of money on fake goods. The suspicion runs high that you're more likely to get something counterfeit via the Internet than in a shop where you can closely inspect the merchandise and talk with the vendor.
Even 15 to 20 percent discounts on online luxury goods may not be enough to sway shoppers from the quality and service found in boutiques.
Earlier this year, Kela.cn, an online diamond retailer, sought to address that problem after it received US$10 million from Tencent to expand its product range and upgrade its technology.
Kela now operates 22 bricks-and-mortar shops around the country to allow customers to see and even try on jewelry before placing orders online.
"The success of Kela and a few other online retailers will be isolated cases because building up a brand name merely through online channels is very difficult," according to Analysys International's researcher Chen Shousong.
Luxury retailers with fairly narrow lines of stock also run into the problem of logistics, which has proven a thorn in the sides of many online sellers. Warehouses need to be set up in key cities to ensure prompt, reliable delivery of ordered goods.
Many online sellers trying to expand their range of products have discovered just how costly that is.
That was the case with Dangdang, which started out as an online bookstore but has expanded into cosmetics, skin-care products, consumer electronics and even home appliances. It was a similar case when consumer electronics and home appliances seller 360Buy expanded into food, daily necessities and books in its drive to provide a one-stop shopping site for customers.
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