A Wish of E-Shoppers Everywhere, Now in China - ResearchInChina

Date:2011-08-05hanyue  Text Size:

When China's online luxury shoppers click to spend more than $4,000 on a Maison Martin Margiela leather jacket or over $3,000 for an Alexander McQueen dress on fashion website thecorner.com.cn, they will have an option the company doesn't make available to any other customers around the world.

FedEx Corp. delivery men will wait on the doorsteps of Chinese consumers while they inspect their purchases, try them on for size, and decide if the products are worthy of keeping or sending back.

Luxury Internet-retail company Yoox Group SpA and FedEx custom designed the service, which will start up in September to accompany the launch of thecorner.com.cn, Yoox's online designer fashion store.

Yoox, based in Milan, is aiming to appeal to China's high-end buyers, who are driving the world's fastest-growing luxury market and are getting accustomed to being pampered each time they open their wallets. The goal is to draw more of that luxury spending online. It is also part of a larger trend of retailers offering special perks to impress upon China's consumers they are priority No. 1.

"China's luxury buyers started decades later than the rest of the world, but in many ways, they are not only catching up but are surpassing the others," said Federico Marchetti, founder and chief executive of Yoox, which runs thecorner.com.

Thecorner.com sells collections from rising designers to consumers in more than 50 countries including the U.S. and countries across Europe. It may offer the standby service designed with FedEx in other countries if it proves successful in China, Mr. Marchetti added. Yoox.com, another of the company's online stores, launched in China in December.

Yoox and FedEx declined to specify the financial details of their arrangement.

Long gone are the days when setting up a store in China was enough to attract the attention of that nation's big spenders. China's luxury lovers are now among the world's most sophisticated, Mr. Marchetti said, adding they are well versed in their knowledge of brands.

They have also grown more demanding, said Chloe Reuter, who runs ReuterPR, a Shanghai-based public-relations firm. "The crucial question is: How can a brand go above and beyond to offer an unforgettable experience?"

Luxury brands now have to up their ante with star-studded events and China-centric offers to win the affection and loyalty of the market, which is poised to become the world's largest luxury market by 2020. China is estimated to account for at least 20% of anticipated $547 billion worth of luxury purchases by that year, according to investment research group CLSA Asia-Pacific Markets.

Events that were once reserved for established fashion centers—New York, Paris, and Tokyo—are now popping up in China. Jewelry designer Cindy Chao in late July brought "Sex and the City" actress Sarah Jessica Parker to help her show off her $400,000 bracelets to prized and would-be customers. Around the same time, Ferrari gave customers private driving lessons in Shanghai with professional Formula 1 drivers.

Also in July, Prada invited a limited crowd of its Chinese customers to a fashion show in which runway models presented sister-brand Miu Miu's winter collection, while guests sat at dinner tables, feasting on lobster tail and passion fruit panna cotta.

Service providers are also working to distinguish themselves in the increasingly crowded luxury market. At Hilton Worldwide Inc. hotels, China's high-end world travelers can have access to customized Chinese services that include front desk workers fluent in Mandarin, Chinese-language television channels, and their own breakfast menu of friend dough sticks and rice porridge known as zhou (pronounced like "joe"). Starwood Hotels Resorts Worldwide now globally offers in-room tea kettles, slippers, and translation services.

"In a country where everything has been built within the past five to 10 years, just being new isn't enough," Starwood CEO Frits van Paaschen said in a recent interview in Beijing.

Thecorner.com.cn will feature a 24-hour call center and instant-messaging fashion advisers who can answer questions about fabric, quality, style and sizing. Mr. Marchetti expects to have many queries since thecorner.com.cn is unveiling for the first time in the China market clothing from designers such as Alexander Wang, whose dresses have been worn by First Lady Michelle Obama, and Haider Ackermann, whose works have been shown off by pop star legend Lady Gaga.

To ease concerns about counterfeit products—still a big issue in China—Yoox is attaching to each product a radio-frequency-identification, or RFID, tag to track products from warehouse to doorstep to make sure nothing is swapped out for fake lookalikes. Consumers know that if it doesn't come with the RFID tag, which looks like an extra price tag, then it isn't the real thing.

Products ordered on thecorner.com.cn in China also come with the shopping bag of the brand and in an reusable, extra-durable gift box made of sturdy cardboard with a magnetic clasp, as Chinese buyers like to flaunt their purchases, Mr. Marchetti said.

Still, luxury services may be not be enough to convert high-end customers to online shopping, said Yuval Atsmon, a principal partner at consultancy McKinsey Co. in Shanghai. "While everything online is growing very quickly, including spending on some luxury goods, most consumers will continue to buy in stores," Mr. Atsmon said. A McKinsey survey of more than 1,500 consumers in 17 Chinese cities showed 44% of luxury shoppers prefer to learn about products in physical stores.

And even offering additional services may not be enough to win some shoppers for whom price trumps all. Jin Yunduan, a 46-year-old shopper in Beijing, said she normally buys her luxury products on Wooha.com, a Beijing-based online retailer that launched in 2006, because it typically has less-expensive prices and calls her when new products arrive.

"I don't really need a FedEx man to stand at my door," Ms. Jin said. "I just want to know I'm getting the best prices."

2005-2011 www.researchinchina.com All Rights Reserved 京ICP备05069564号-1