Luxury e-commerce site sees education as path to mainland China

US e-commerce firm AHAlife wants to bring 100 luxury brands to Chinese customers

PUBLISHED : Monday, 03 February, 2014, 4:11am
UPDATED : Monday, 03 February, 2014, 4:11am

Shauna Mei, founder and chief executive of US luxury e-commerce firm AHAlife, has a passionate mission; to educate mainland Chinese consumers and help them learn more about luxury products.

AHAlife, whose tastemakers include Wendi Deng and Lauren Bush, will expand to the mainland early this year, planning to launch a local business that offers niche brands of luxury products to tap into the rising affluence of Chinese consumers.

Mei feels more comfortable defining AHAlife as a media company rather than an e-commerce site.

"It's part of my passion to educate Chinese consumers," Mei told the South China Morning Post. "You should buy something that makes you feel good, and make sure it is a quality product that is worth the value."

In the West, Chinese buyers of luxury goods are often considered ignorant, lacking an understanding of the products and making buying decisions based on logos or brand names.

Mei, who was born in Inner Mongolia and previously worked in leveraged finance at Goldman Sachs, said AHAlife's "unique relationship" with luxury brands would give it an advantage in competing with local rivals.

Chinese shoppers' spending via the internet topped 1.3 trillion yuan (HK$1.65 trillion) in 2012 and will overtake the US this year to become the world's largest e-commerce market, according to global consultancy Bain & Co.

Chinese e-commerce spending would grow 32 per cent a year on average up to 2016 when the market size is expected to reach 3.3 trillion yuan.

"I don't have an expectation of sales volume initially," Mei said. "We want to test the market and learn from it."

AHAlife has raised about US$22 million from investors such as Doll Capital Management and FirstMark Capital.

Mei said it would consider raising funds to replenish the mainland expansion when conditions were ripe.

She admitted that the high import duties imposed by the mainland custom authorities were a hindrance to rapid growth of the business and said the government should do something about it.

"It's not good for the economy if Chinese are travelling overseas to buy things," she said.

"I think the Chinese government should consider lowering the duties to a reasonable percentage."

Bain said Chinese shoppers for luxury goods, including those from Hong Kong and Macau, account for 29 per cent of global luxury sales but a large portion of the purchases were made in Europe where products are as much as 40 per cent cheaper than their counterparts sold on the mainland.

Taobao, China's online shopping services provider, is playing a dominant role in the country's e-commerce market. But no single online shopping giant geared for luxury sales has taken root in the world's most populated market.

"In the next three years, I really believe the Chinese market will be a quarter of our business," Mei said. "I will bring at least 100 brands to China initially."