Fashion
Online and mobile commerce for luxury brands in China has risen at an exponential pace while smartphone penetration continues to grow rapidly, results of a recent survey shows.
The new study of online spending in the country was conducted by KPMG in partnership with Mei.com, a China-based online luxury flash sales retailer, and Weibo, an online social media platform in China.
Among the key findings is that 45 percent of respondents said they purchased most of their luxury items through online options, and the maximum amount they felt comfortable paying online for a single item is RMB4,200 ($660.8), far higher than the RMB1,900 ($298.9) they indicated in a similar survey in 2014, or an increase of 121 percent.
The average spend levels also went up about 28 percent compared to the previous 2014 survey.
China’s consumers are spending close to one-third more on online purchases – averaging around RMB2,300 ($361.9) on each single luxury transaction.
The top driver for purchasing online remains pricing and better deals, however, close to one-third of respondents had made luxury online purchases at the full, non-discounted price.
“Price is becoming less of a driver. But value remains important as customers are well informed about global prices since most of them travel physically or digitally,” said Thibault Villet, CEO of Mei.com.
The survey likewise points to an increase in the average amount spent on luxury purchases in most product categories.
A higher amount was spent on average for popular categories such as bags (109 percent), women’s apparel (58 percent) and cosmetics (18 percent), and also noted a significant increase in spending on categories such as watches (126 percent) and jewelry (65 percent) that accounts for a relatively smaller share of total online luxury sales.
Cosmetics is the most popular product bought online, followed by women’s shoes, bags and leather goods, women’s apparel and accessories.
The survey finds that among the key online triggers to purchase luxury e-commerce, the most persuasive one is reading about a product on a blog or social site and seeing the product in an online shop.
While online shops are setting up temporary or pop-up stores, most luxury brands are also increasingly developing their China websites and shops on popular e-commerce platforms.
“The pace of change in today’s marketplace in China is taking retailers and brands by surprise. This change is unrelenting and now outrunning the company strategy in many cases,” Egidio Zarrella, Clients and Innovation Partner, KPMG China, noted.
In addition to luxury items, the survey finds increased numbers of luxury services purchased online, including online hotel and restaurant bookings, followed by domestic and overseas trips.
Forty-eight percent of respondents said they had bought items overseas over the previous 12 months, close to a majority. More than two-thirds of these claimed they increased their overseas online luxury purchases in the past 12 months.
The survey sees a near doubling of Chinese luxury online consumers planning to buy overseas trips online – from 35 percent who indicated they bought an overseas trip online during the past 12 months, to a forecast 61 percent during the next 12 months, or a growth of more than 70 percent.
“Chinese consumers have a significant propensity to spend, they are technology savvy and want the best quality. Therefore, both new and existing entrants to China must expect to compete in a dynamic and fast-paced market. They must develop the right strategies to survive and thrive in an increasingly disruptive environment,” Zarrella concluded.
