U.S. department-store chain Macy’s Inc. will sell private brand goods on Chinese e-commerce site omei.com and become an equity investor in the website’s parent company VIPStore Co., Ltd.
Along with Intel Capital, Macy’s Inc. has made a move into China by investing US$ 15 million in VIPStore Co., Ltd., a Chinese e-commerce firm and parent company of omei.com. That enables Macy’s to acquire a minority in the company. In addition, Macy’s announced Last Wednesday it will sell its highly praised private brands directly to customers in China through a Macy’s channel on omei.com, a newly established online retailer of in-season luxury brands operated by VIPStore Co., Ltd.
The marriage between Macy’s and VIPStore received many praises since it was made. Macy’s, one of the world’s most respected retailers with 153 years of experience, first started selling online in China and more than 100 other nations in 2011 through a collaboration with FiftyOne, an international e-commerce provider. Regardless of the recession in U.S., Macy’s which has had solid results thanks to its focus on tailoring merchandise to different regions, also reported a sales gain that beat Wall Street estimates which allows Macy’s to invest in VIPStore. On the other hand, as one of the most frequently used online retailer site in China, VIPStore owns omei.com and jiapin.com, which have been doing well, especially jiapin.com, an established flash sale site. VIPStore also raised USD 71.5 million in its recent round, which effectively valued the company at USD 316.79 million. Considering those, Macy’s has what VIPStore lacks, vice versa.
However, there are reasons for some caution. Firstly, Chinese consumers are interested in global brand names over little-known domestic offerings. Most of Macy’s merchants and brands will be not as competitive as famous brands like ZARA, H&M etc. Secondly, size and other differences between the two cultures can also be tricky problems waiting to be solved.