Secoo (NASDAQ:SECO), China’s largest premium e-commerce platform, is hosting the ‘Goddess Festival’ retail campaign with Parkson Retail Group from February 28 to March 11. This is the two’s first commercial foray after the strategic alliance establishment in January.
The ‘Goddess Festival’ campaign targets China’s high-profile female consumers to build a high-end ecosystem within China’s luxury market.
As China celebrates the March 8 International Women’s Day as a national holiday, it is customary for leading retail giants like Alibaba and JD to launch retail campaigns to boost sales in March. As retail groups are looking for other ways to generate retail revenue, many are ambitiously designing new shopping scenes and events to foster business.
Secoo is closely following this trend by taking advantage of economic potential and the present Chinese retail landscape.
China’s massive female economy holds opportunities for Secoo’s aggressive moves.
Apart from China’s huge market that breeds large-scale luxury consumption, Boston Consulting Group predicted earnings of Chinese females will reach USD 4 trillion by 2020. According to Chinese media, 62% of consumption in China is led by females. Though traveling, fitness, and entertainment are enjoying rising market share among the country’s female economy, clothing and beauty still dominate the field and continuously demonstrate high expectations in cross-field experience-building.
To satisfy diverse consumer needs — especially those from the millennial generation — Secoo’s ‘Goddess Festival’ offers Chinese-style indie designs, avant-garde designer’s displays, and couture makeup that expand profit channels beyond mainstream brands like Hermès, Louis Vuitton, and Chanel.
Additionally, Secoo decides to also follow millennial new-to-luxury consumers’ early and affordable pursuits, namely beauty products ranging from mascara to skin-care, with the aim to quickly and effectively boost revenue and expand brand reputation. Leading Chinese digital information platform iResearch says the CAGR (Compound Annual Growth Rate) of lipstick business hit 38.2% in H1 2017 while data suggest that the beauty industry will continue to maintain a CAGR of over 9% for the next two years in China.
Additionally, the company hopes to increase its penetration in offline luxury experience-building.
Unlike general retail, luxury consumption is witnessing increasingly sophisticated participation of China’s new middle-class who demand real experience and understanding of complex shopping behaviours. Though leading retail groups such as Alibaba’s Tmall landed online cooperation with Burberry and launched the luxury Tmall Pavilion channel for exclusive members, offline stores offering experiential opportunities still contribute major business deals and enjoy consumer loyalty in China’s luxury market.
Meanwhile, for bargain deal e-commerce platforms including Vip.com that share part of Secoo’s businesses and are likewise in cooperation with offline resources, even Tencent’s and JD’s capital investment cannot restore the market’s confidence in them. Concerns of counterfeit products haunt the market and its hopes of further growth or sustainability. Therefore, it is highly strategic for Secoo to introduce experienced international offline players like Parkson into the game. Doing so will establish reliable channels as well as allow Secoo to benefit from the positive global reputation of retailers like Parkson.
In addition, with Parkson as a strong offline distributor, Secoo will set up a distribution system integrating online and offline resources that utilizes diverse operation channels. This will further allow efficient management of goods, channels, and inventory.
International e-commerce retailers hoping to grab a piece of the booming Chinese market, on the other hand, often either struggle to survive in the fierce Chinese market or ultimately choose to localize their business model and jointly operate with existing players.
Neiman Marcus, the high-end US department, for instance, gave up its Chinese e-platform in six months. ASOS, though well-known among fashion groups in China, found it difficult to sustain its Chinese business and eventually approached Tmall for help.
Net-a-Porter and other platforms are also encountering challenges. In an interview with Sina, Net-a-Porter acknowledged that when it comes to tax, logistics costs and other administrative expenses, Net-a-Porter holds no absolute price advantages in the Chinese market despite its outlet unit outnet.com. Bloomberg reported that the 2017 Yoox Net-a-Porter Q3 sales growth slowed due to undesirable performance in the U.S and China.
According to a Bain & Co. report highlighting Chinese luxury market’s strong rebound, it seems Net-a-Porter and its likes are in an arduous fight.
Secoo, however, is catching on with not just its own brand resources and strategic partners but also its independent local bargaining power in the realms of cost and channel.
Meanwhile, Secoo plans to strategically cut into the retail finance sector, one often dominated by BAT giants, by leveraging the company’s exclusive channels and position in the high-end market.
During Secoo’s ‘Goddess Festival’ campaign, shoppers at Parkson can use Secoo’s financial services to pay in interest-free installments with discount rewards. With these offerings, Secoo hopes to gain fresh insights and information about high-profile consumer buying habits. Doing so will gradually establish a comprehensive database as well as cultivate consumer loyalty for Secoo.
Once the database has been established, Secoo can extend its market influences to more cutting-edge technology that will facilitate the company’s new retail ambitions. Secoo will also benefit from stronger bargaining power in competitions involving gurus like BAT and global profit-seekers.
As Richard Li, Founder and CEO of Secoo, put it, “The deepening cooperation between Secoo and Parkson will enable innovative business practices in smart technology-driven retail models that explore data’s practical use in future challenges.”
(Top photo: Secoo offline store in Shanghai. Photo from Secoo)