How the chic learned to click
The past few months have seen the number of luxury online retailers mushroom across China. 'We don't want to miss out,' says Stephanie Horton, head of communications for New York-based Shopbop.com, during a recent visit to Shanghai for the Chinese version of the site.
It's understandable that Shopbop finds it hard to resist the booming Chinese market; the numbers are certainly looking good. Chinese internet users hit 485 million as of June this year, according to the China Internet Network Information Centre. And a study on China's online luxury shopping users, issued last week by China-based consulting group iResearch, says mainland spending on online luxury shopping is expected to reach 10.73 billion yuan (HK$13.1 billion) by the end of this year, a 69 per cent jump compared with last year.
Since the launch of TheCorner.com.cn by Milanese luxury internet retailer Yoox Group in September, Shopbop is one of the few international players to challenge home-grown sites such as Secoo, 5lux and various high-end shopping channels on portal websites such as Sina, Alibaba and Tencent. The crowded landscape also faces competition from international sites that deliver to China such as Asos, Gilt Groupe and Net-a-porter.
Earlier this year, Lane Crawford and Joyce jumped on the luxury e-commerce bandwagon, as well as a string of smaller Hong Kong-based operations such Zeuz.com and Aroxta, which went online last week.
For the retailer chains such as Lane Crawford and Joyce, the launch of their e-stores is as much for publicity as for business.
'We want to expand our store's experience online but also use the e-store as a channel to prepare for future physical stores opening and gaining new customers,' says Morgan Tan, Lane Crawford's vice-president of e-business.
While most China-based online shops focus on established designer brands such as Louis Vuitton, Chanel and Hermes at discounted prices, their international counterparts offer a mixed selection of high fashion and up-and-coming designers aiming to tap into the country's young and increasingly wealthy online shopping market.
'We differentiate ourselves from the other sites with the number of brands and the variety,' says Horton, of Shopbop.com. It delivers more than 400 brands to China, which makes it one with the most comprehensive collections.
'We believe our customers shop both high and low fashion. They might wear their US$90 jeans with a US$2,000 jacket,' says the site's fashion director, Kate Ciepluch.
Shopbop's buyers work like those for traditional boutiques, she says. 'We go to over 100 shows during New York fashion week and also cover the ones in London and Paris,' says Ciepluch. 'We flip our homepage five days a week and do a daily newsletter. It's a lot of content.'
To stand out among the online clutter, a growing trend among fashion e-tailers is to think beyond sales and move on to editorial and localised content, such as a shopping list for Lunar New Year.
'We give our shoppers advice and tips on how to mix and match in order to keep them engaged,' says Ciepluch.
Lane Crawford's Tan says: 'We aim to provide a complete brand experience. We include weekly editorial features with a focus on China, interactive marketing and events to answer Chinese luxury consumers' willingness to engage and be informed.'
Luxury retailer Joyce takes a different approach by offering products exclusive to the web store. The site debuted in February with a collaboration with Japanese fashion brand Mastermind. Later projects featuring Toga and milliner Piers Atkinson's cherry head pieces were well received by fashionistas.
For the coming festive season, the site is launching another web-exclusive pop-up store featuring the shop's best-sellers, including The Row, Anthony Vaccarello, Thom Browne, Maison Michel and Alexander McQueen. Each was invited to create a party wardrobe for the shop. The site is also due to undergo a revamp next year.
While the major players all want a share of the seemingly lucrative mainland market, others are testing the waters from Hong Kong.
'We would like to focus our efforts into building a presence here in Hong Kong before expanding elsewhere,' says Shyla Viju Motwani, managing director of Aroxta. 'As for the mainland, it remains a huge and very diverse market.'
One challenge retailers from abroad will face is understanding the mindset of the Chinese consumer. 'Chinese online shoppers' habits are already different from the rest of the world,' says Tan. 'They're shaped by Taobao [the Chinese equivalent of eBay] and the rise of social media and local trendsetting. These habits and new interaction mediums will prove very important for fashion e-commerce in the future.'
Although mainland online shoppers are mostly searching for bargains, the large customer base and the country's increasing wealth still prove irresistible to retailers.
'It is clear that this market is very appealing to all sorts of retailers and will bring more and more competition from global online players, mono brands and local businesses,' says Tan.
Then there's the issue of logistics. Hong Kong-based office worker Elizabeth Chu used to shop extensively online when studying in the US, from buying basics on Shopbop, to splurging on a discounted designer clutch on Gilt Groupe. But the 25-year-old says she hasn't been doing so as often since moving back to Hong Kong.
'I used to shop online because it was convenient, but now the wait for delivery and the currency exchange are making it less exciting,' says Chu.
While Shopbop ships its products from the US and promises a three-day delivery worldwide, The Corner has taken things a step further. In a China-only policy, it has paired with FedEx to create a policy whereby delivery staff will actually wait for customers to finish trying on the products upon the arrival of their orders, in case they want to send anything back.
The risk of counterfeit products is a challenge faced by all international luxury brands - and online retailers are no exception.
'In China, online sites are not yet seen as a trusted source for shopping. This is even more of a problem with luxury products,' says Tan.
In many cases, counterfeit products attract even more site traffic than the authentic ones. For example, the much anticipated Versace for H&M collection reportedly appeared for sale on Taobao weeks before its official launch. Only buyers willing to pay the hefty mark-up will have found out whether the products they bought were genuine or counterfeit.
'Our niche is to have brands that are not commonly available in Hong Kong or China,' says former model Qinnie Chan, whose newly launched Zeuz.com focuses on high-end European labels. 'I want to differentiate from Taobao. I think our clients are very different.'
Tan adds: 'We are investing long-term in initiatives and are building creative partnerships to establish trust and credibility, and to be seen as a home-grown brand for the new generation, by leveraging social media channels.'
While their main operation is still in the US, Shopbop will launch its Chinese-speaking customer service in March.
Before Shopbop turned digital in 2000, it started off as a bricks-and-mortar shop in the college town of Madison, Wisconsin. They found a niche selling luxury designer denims. After the business took off, Ciepluch moved to New York City to become a full-time buyer. Amazon.com acquired the site in 2006.
Ciepluch, who's been with Shopbop for 11 years, says online shopping has changed dramatically in the past decade. 'When we first started, we'd call the FedEx guy to pick up a box or two, but now we are shipping cargo. It's really been a perfect storm,' she says.
'Customers today crave more knowledge. They want to know how to incorporate the jacket they just bought with other things in their wardrobe. E-commerce has given us the ability to instruct and inspire shoppers and become a part of trend-making in the industry.'
While she says the site has gained success thanks to its loyal fans, it's clear that Shopbop and other international newcomers will need time and experience to crack the online Chinese market.
Horton says: 'I think at this stage we are taking the test-and-learn approach to see what works and what doesn't.'
The amount, in billions of HK dollars, mainland consumers are expected to spend on luxury goods online by year's end
Who's who in the e-tailer zoo
Founded: February 2011
The collection may be scarce compared with its counterparts, but it attracts savvy shoppers with its exclusive designer collaborations.
Founded: September 2011
Features localised contents on its Chinese site. It lined up famous Hong Kong lensman Wing Shya and Taiwanese actress Kwai Lun-mei for its debut online video campaign. Offers FedEx for VIP standby delivery in China.
Founded: October 2011
The online store features a curated collection of women's ready-to-wear, shoes and accessories. Look out for brand stories, designer interviews and stylist blogs. Editorial content and customer services are available in both English and Putonghua.
Founded: October 2011
Features womenswear, menswear, accessories and beauty products. Focuses on exclusive and up-and-coming designers from both Europe and Japan. Its main clientele is in Hong Kong, Taiwan and Japan, though business from the mainland is picking up.
Founded: Chinese site launched in November 2011
Offers more than 400 designer brands from both high-end and up-and-coming designers. The Chinese site features identical content to its international site. Products are delivered from the United States.
Founded: December 2011
The latest Hong Kong-based online luxury retailer to join the pool, it stocks more than 15 brands selling mainly jewellery and leather goods. The founder said her main target is to fill the gap in the middle market. The site also builds its community via monthly offline events showcasing new products nd inspires creative activities.