Chinese Online Luxury Market, Expected to Hit 16 Billion Yuan in 2011

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I’ve always felt Asia has been a region of stark contrasts. One of the biggest, is the wealth gap between rich and poor. Sanlitun, Beijing is one of the best places to witness this. On the way from the subway station, there are beggars and crippled people lying on the street. Then you hit, Sanlitun Village, the Mecca for affluence and luxury goods. Walking around Workers Stadium at night time, ridiculously rich people show off their ultra sports cars like Ferrari’s, Porsches, Lamborghini’s. The point is, there is a layer of Chinese society getting richer and richer, they need somewhere to spend it, and luxury goods are a major beneficiary if the boom.

A recent report from Analysis International, shows that for the second quarter of 2011, the Chinese online luxury goods market reached 3.45 billion yuan and is expected to be 16 billion yuan total for the year. Luxury goods include jewellery, bags, clothes etc.

The study however reveals certain difficulties the online luxury market faces:

  • People are more accustomed to buying luxury goods offline and enjoy the experience of browsing and trying
  • Generally people don’t trust online stores due to the inability to know if you are buying a counterfeit product
  • The range of products is not as comprehensive as real stores
  • Online stores don’t offer a very big price advantage over offline stores

One solution that has been tried by online fashion retailers is to hire a fashion buyer that can offer less well known and less expensive international luxury brands to China. However this strategy has generally failed because people just don’t recognize the brand name.

 

One of the biggest luxury ecommerce stores in China is ihaveu.com.