Macy's-Fung Retailing online venture to connect China's consumers with US goods

US department store to bring American goods to Chinese consumers

PUBLISHED : Sunday, 08 November, 2015, 11:49pm
UPDATED : Sunday, 08 November, 2015, 11:49pm

Macy's, one of the biggest department store operators in the United States, is hoping Singles Day in China will become one of its busiest online shopping holidays as its new venture with Fung Retailing joins the event for the first time this year.

"Black Friday and Cyber Monday in the US are the largest-volume days for our online business, so we're very excited to add another holiday," Terry Lundgren, the chairman and chief executive of Macy's, told the South China Morning Post.

Macy's China - the joint venture formed in August between the US retailer and privately held Fung Retailing, part of Hong Kong conglomerate Fung Group - is participating in Singles Day through e-commerce giant Alibaba Group Holding's Tmall Global platform, which connects foreign-brand retailers with consumers in China.

That exclusive online flagship store on Tmall Global gave Macy's distinction as the first US department store chain running on Alibaba's online retail platform.

Macy's and Fung Retailing have said they were investing about US$25 million in the operations of their joint venture over an 18-month period. About 65 per cent of that sum will come from the US retailer, corresponding to its stake in the venture.

Lundgren pointed out that Macy's originally wanted to open a physical retail store in China about five years ago, but changed its plan based on extensive research and management discussions with various market experts, such as Fung Retailing.

"We learned the Chinese consumer is very adept at using technology, perhaps more so than in any country that we've studied, including the United States," Lundgren said. "So we needed to start here with Macy's online, rather than a physical store."

Current internal forecasts show that Macy's e-commerce business in China will generate sales of about US$50 million next year. Macy's began selling a selected range of products into China and about 100 other countries through macys.com in 2011. Goods bought from that website are shipped to international customers from the US.

Sabrina Fung, an executive director at Fung Retailing, said the Macy's China venture started its online testing phase last week, when products shipped to Chinese customers came from inventories stored at the company's warehouse in Hong Kong.

She said Macy's China would have 2,000 stock keeping units (SKUs) ready for Alibaba's "Double 11" online shopping campaign on Singles Day, which starts on Wednesday. An SKU refers to a distinct type of item for sale in the field of inventory management.

"Two thousand SKUs may be a lot for some Asian retailers, but that's a drop in the bucket in Macy's world," Fung said.

Macy's, which had total revenue of US$28 billion last year, operates about 885 physical stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's, Bloomingdale's, Bloomingdale's Outlet and Bluemercury.