In case you missed it, China has topped the list of the world’s largest luxury goods markets. It’s not a rare scene that in large Chinese cities like Beijing, Shanghai and Shenzhen, you’ll spot fashionable Chinese women carrying Louis Vuitton or Gucci bags, on the street, on public transport, or even in a supermarket.
Here are the facts: Chinese consumers account for 31% of global luxury sales, followed by US consumers at 24%, and Europeans at 18%, the Guardian reported. Global online luxury sales are expected to be worth EUR 70 billion (USD 78 billion) annually by 2025, according to McKinsey.
China’s expanding consumer class and booming e-commerce scene has given rise to many luxury goods platforms. Among them is Secoo, China’s largest one-stop luxury lifestyle products and services platform.
Authentic luxury products for Chinese people
“Chinese people had a tradition of enjoying the pleasures of life in the past. Then there were times when poverty deprived us of those kind of pursuits,” said Tao Guangquan, the director of international business at Secoo.
When purchasing luxury items online, Chinese consumers are often worried about accidentally buying some of the counterfeit products that run rampant across the country’s e-commerce platforms.
Offering authentic luxury products is one of the ways that Secoo hopes to outflank its competitors.
Ever since its establishment in 2008, Secoo has made multiple efforts to ensure the authenticity of the luxurious items sold on its platform, which can vary from international brand bags to luxury cars. When it was founded, three out of the six people in the founding member team held an appraisers certification – an appraiser being a professional who is verified to be able to tell whether a given luxury is authentic or not. Currently, it has a team of 70 appraisers out of its over 600 employees.
Secoo has also participated in the formulation of luxury leather and watch authentication standards in China.
Over the past few years, Secoo has increasingly relied on technology in its authentication process. For example, it uses devices to detect the proportions of particular elements – gold, for example – in a given product to decide whether the product is authentic or an imitation.
Secoo’s Secrets of Survival
Secoo’s timing was perfect. Over the past decade, the urban middle class has expanded in China: the percentage of middle-class families in the country’s cities is expected to skyrocket to 76% by 2022, up from a mere 4% in 2000, according to McKinsey.
There used to be many more competitors on the market: In 2010 alone, over 30 luxury e-commerce platforms secured financing, Tao said. Since then, many of those smaller companies have disappeared. The market is now dominated by a handful of e-commerce giants like Tmall, China’s top e-commerce platform belonging to Alibaba, and specialized sites like Secoo.
Tao attributed Secoo’s survival to its supply chain management. “Luxury is a seller’s market, especially back in 2010,” he said.
Tao explained that a customer’s request to buy 10 Louis Vuitton bags could have been be declined, because the supply could not meet the demand. In contrast, if a client had ordered 10 IBM laptops, the salesperson might have tried to sell them 20 laptops.
Tao said that in 2012 some of Secoo’s competitors grew overwhelmingly fast, massively expanding their goods on offer, shifting away from a luxury goods focus. Some platforms launched massive advertising campaigns, offering discounts on luxury items. Ecstatic customers rushed to their platforms, only to find that the discount products were sold out.
“Secoo believes that slow is fast,” Tao said, explaining that they have no interest in copying other platforms’ failed strategy of a fast expansion driven by an aggressive advertising campaign.
“The Supply chain is key to any luxury industry. Secoo has established a sound and stable supply chain in China, and overseas, ” said Tao.
A one-stop luxury lifestyle platform
On top of the e-commerce platform, Secoo has five offline clubs to engage with its high-end customers. Clubs sell products directly to customers, but they also offer authentication and maintenance services. So far it has established clubs in five major metropolises: in Shanghai, Beijing, and Hong Kong, but also in Chengdu and Milan. The sixth club is scheduled to open in Malaysia.
Fuelled by this decade’s “consumption upgrade” wave in China, the Beijing-based Secoo understands China’s new rich.
It has attracted 15 million users, who are dominated by female white collar workers in first-tier cities. Its average customer transactions are RMB 4,000 (USD 600) online, and RMB 15,000, offline, according to data from 2014. Tao said that 70% of Secoo users are women aged between 25 to 45, and men aged between 30-50.
In July 2015, Secoo announced over USD 100 million in financing from strategic investors like China Media Capital, IDG Capital Partners, and Bertelsmann.
A bridge between the West and the East
The company’s current business is mainly selling international brand products to Chinese consumers. It is in contact with prominent luxury makers overseas to enhance its supply chain.
Secoo started its own globalization in 2013, when the company established an offline club in Europe, and an office in New York and Tokyo respectively.
Currently, Secoo has two websites: a Mandarin website for mainland consumers, and an English and Cantonese website for the Hong Kong market. It is currently building an Italian website.
“Secoo is now positioning itself to be a platform for global high-end consumers,” said Tao.
As a bridge between the West and the East, Secoo has brought Chinese design to Europe. In the Secoo offline club in Milan, luxury items from China are elegantly displayed.
Tao mentioned the “Laobuxie”, which is a kind of handmade fabric shoe, made using traditional patterns that still exist in rural China. These days these kind of shoes can barely be found in Chinese cities.
“My European friends wear them all day in their offices, because they are so comfortable,” said Tao.
Tao said Secoo partners with Chinese brands to boost the outbound development of Chinese designs.
From the Bund in Shanghai to the Upper East Side in New York, the consumer tastes of high-end consumers are continuing to converge, and Secoo sees an opportunity to move the world’s wealthy consumers onto a single platform.
(Top photo from Pixabay.com)