When a company debuts at a stock exchange, its male executives are often dressed in suit and tie with glittering leather shoes during the listing ceremony. Yet, Richard Rixue Li, founder and CEO of Secoo, China’s largest premium ecommerce platform, wore a pair of Chinese cloth shoes when his company was listed in Nasdaq in September 2017.
Doing so revealed how he values authentic Chinese culture, how he perceives the changing consuming habits of Chinese buyers, and how he seeks to fulfill Chinese middle class needs with his luxury products and services platform Secoo, which boasts a market capitalization of USD 452 million and 16 million deep-pocketed registered users.
From home appliance seller to ecommerce platform owner
Li, now 43 years old, founded Secoo in 2008, but prior to that he was a distributor of high-end home appliances in China’s coastal province of Shandong. His experience selling upscale home appliances and speakers to affluent consumers helped him realize the vast business potential in the realm of luxury products and services.
Li relocated to Beijing one year later and opened Secoo’s first brick-and-mortar store for consignment sales of unused and second-hand luxury goods. In 2011, Secoo upgraded the offline retail store to an experience center which primarily sells new luxury goods and provides other services. That same year, Li established his ecommerce site, Secoo.com. He then expanded Secoo offline experience centers to Shanghai and Chengdu, and more recently, to five additional major Chinese cities.
When enlarging his online and offline business, Li also took efforts to build a Luxury Authentication Center to ensure every item on the Secoo platform is real. As for now, according to Secoo, the center remains the biggest of its kind in China thanks to advanced techniques based on the company’s massive luxury authentication database.
“We devoted ourselves to luxury goods identification, consignment sales, and after-sale maintenance, making us a trustworthy platform,” Li once said in an interview.
Under Li’s leadership, Secoo has attracted hundreds of millions of USD in fundraising from venture capitalists before going public in Fall of 2017.
In July 2011, Secoo raised USD 10 million funding from IDG Capital, followed by two funding rounds in May 2012 and August 2013, with tens of millions of USD. IDG Capital continued to invest in the two funding rounds, joined by other VCs including Ventech China and Bertelsmann Asia Investments.
As of 2014, Secoo secured USD 100 million funding from existing investors including IDG Capital and Ventech China. Its last private funding was a USD 50 million investment led by Ping An Ventures in 2015.
Li was listed as one of China’s top 10 pioneering entrepreneurs in 2014 by Fortune China, alongside other titans of tech such as Xiaomi founder and CEO Lei Jun.
The Chinese consumer philosophy is changing
The Chinese saying “cheap and fine” refers to something of decent quality and reasonable price. However, Li thinks this shopping philosophy is changing as Chinese consumers come to appreciate that products with high quality and excellent design might come at a higher price point.
“In the past, it was the producers that influenced consumption. But nowadays, it’s the opposite,” Li said in a recent interview.
He explained why. The first reason is that the market has stabilized, and the annual per capita disposable income has seen a significant increase, from about USD 644 in 2000 to USD 3,469 in 2016, contrary to a few decades back when people had to use grain, oil, and other coupons in exchange for limited goods in turbulent markets.
Moreover, thanks to a stabilized living environment and much more developed social security system, Chinese consumers now have a strong sense of personal security and financial security.
Another reason is a consumer awareness awakening among Chinese. They know what they want, what their life ought to look like, and have more control over their own consumption decisions.
Notably, young Chinese consumer habits differ significantly from their Western counterparts and their parents. They are more likely to choose online channels when it comes to shopping, even for luxury brands at relatively high price points. The luxury industry is responding to this trend accordingly; one report shows that by June 2016 only 9% of luxury brands in China had yet to launch online sales, compared to the previous year’s 57%.
Another report by Secoo and Tencent shows the average age of online luxury consumers in China is only 25, which is 15 years younger than that of Europe and 20 years younger than that of the United States.
The report also indicates that this demographic is particularly favorable towards niche luxury brands such as Supreme and Vetements, instead of opting for mainstream or high-profile luxury logos as their parents do.
Chinese design in the spotlight
When it comes to designer brands, few Chinese consumers prefer domestic labels, which are actually little known. This doesn’t bode well for the Chinese fashion industry overall.
Concerned, Li reflected on the cause of this phenomenon in a recent interview:
“I think the major reason is that they are not confident about the culture they represent. Many designers are still imitating others. They lack fundamental cultural attainments.”
The second reason is that domestic labels are too conservative, too afraid to cross the ‘boundary’. He believes designers should take advantage of both ancient and foreign resources and draw inspiration from them. “Germany and Japan have now mastered the top ceramic-producing techniques for which China was famous. It’s a good example of transboundary. ”
Li continued to say that there are good designers in China, and yet they sometimes fail to properly build up their own brands. The reason lies in the fact that they are unable to draw sufficient support from supply chains, including fabrics, factories, quality-control, and sales channels.
“So if they are more confident about their culture, becoming bolder to go beyond boundaries and acquiring the ability to well manage the whole industrial chain, more Chinese domestic designer brands will emerge and obtain success,” Li said.
Therefore, he is taking actions to aid and promote numerous Chinese domestic brands on the Secoo platform.
For instance, the cloth shoes he wore on the Secoo listing ceremony came from China’s time-honored shoe company Neiliansheng. Its shoes were worn by emperors and modern China’s former national leaders such as Chairman Mao. But nowadays few people wear such shoes. To help the brand, Secoo is working with the company to design, promote, and sell the shoes in both domestic and international markets.
Li said Secoo has signed contracts with more than 500 such original brands to bring their products on the platform.
Li is not the only one to promote original Chinese designer brands though. Hong Huang, a popular fashion blogger and a second generation “red aristocrat”, also devotes herself to supporting Chinese designers. In 2010, she opened BNC, an original Chinese design concept store in Beijing, which showcases and sells products from more than 100 original designers. The store enables more people to become acquainted with Chinese designers and their brands.
Eyes on offline services
According to public records, over 80% of Secoo’s sales are generated from online sales, yet the company is expanding its offline presence and other services.
Last month, it announced it will open five more experience centers in Qingdao, Changsha, Hangzhou, Xiamen, and Tianjin. At each of these experience centers, aside from shopping, consumers will have access to a tea room, café, and built-in photo booth studio.
Secoo is also working with two boutique hotels to customize rooms with luxury goods available on the platform based on consumers’ interest. Users will be able to pre-order items on Secoo platform and have the goods delivered directly to the hotel room.
On the Secoo website, a growing number of offline services are available to book as well. They range from spa to yoga, from art classes to meditation programs.
“The standard of high-quality life varies from time to time. As for now, people care about exquisite goods and wonderful experiences,” Li said in a press conference in November.
(All photos from Secoo)