Coach reaches deal on e-fakes
American luxury brand Coach has kick-started its e-commerce plans with a landmark deal intended to prevent counterfeits of its products from being sold on Taobao Marketplace, the mainland's largest consumer-to-consumer online shopping website.
The agreement marks the first time that Coach, a New York-based maker of luxury bags and accessories, has collaborated with an influential e-commerce platform on the mainland to combat counterfeiting.
The initiative will apparently pave the way for the company to start building its online shopping presence in the world's largest economy.
Chairman and chief executive Lew Frankfort described e-commerce on the mainland as 'a very substantial opportunity for Coach'.
'We plan to bring e-commerce to Hong Kong and the mainland within the next 12 months,' Frankfort said.
Expansion into the online retail market would follow the listing of Coach last week on the Hong Kong stock exchange - the first United States-incorporated company to do so. The firm has forecast its sales on the mainland, Hong Kong, Macau and Taiwan to reach at least US$300 million in its current fiscal year to June, up from its previous guidance of US$250 million.
Frankfort said Coach aimed to launch about 30 stores annually over the next several years, the vast majority of which would be on the mainland. These store openings are expected to continue driving the company's growth on the mainland, which is expected to become its second-largest market after the United States over the next few years.
With its core North America market recording significant gains in traffic and sales on the internet, Coach is considering co-operation with yet-undisclosed e-commerce companies to help improve the visibility of its brand and widen the distribution of its merchandise on the mainland.
'We are in active discussions with several different major players,' he said. 'In China, our business model is different than most other retailers because our proposition is not based upon special pricing. It's based upon affordable luxury.'
According to internet consultancy iResearch, the total online shopping market on the mainland will be worth 1.096 trillion yuan (HK$1.339 trillion) next year, up from an estimated 771.9 billion yuan this year.
But that e-commerce opportunity has been tempered by the rise in counterfeiting, 'which is damaging Coach's brand image, the interests of consumers, and those involved in the industry' on the mainland, said Victor Luis, president of Coach Retail International.
Luis said the co-operation with Hangzhou-based Taobao Marketplace, a unit of privately held internet conglomerate Alibaba Group, would ensure strict measures to monitor and remove counterfeit product listings on the popular website. Under their agreement, Coach and Taobao Marketplace will also push for greater education of mainland internet users on anti-counterfeiting and closer cooperation with Chinese law-enforcement authorities.
is the year that Coach was founded, employing six leatherworkers
- In 1985, Coach was sold to Sara Lee Corporation for US$30 million