China Online Luxury Market Surpasses 10 Billion Yuan For First Time
Tuesday, February 14th, 2012
Market Expected To Record 30 Percent Growth In Coming Years
China’s booming luxury e-commerce market surpassed 10 billion yuan (US$1.59 billion) last year, a nearly 70 percent leap over 2010, according to a new study by iResearch. Despite the possibility of overcapacity, the market is expected to post 30 percent annual growth over the next several years.
As the report points out, last year’s 10.73 billion yuan is expected to surge to 37.24 billion by 2015, which looks even more dramatic considering luxury e-commerce turnover only reached 6.36 billion yuan in 2010. Interestingly, iResearch’s study did not take into consideration revenue generated by luxury goods’ direct-sales online stores.
According to Ding Jiaqi of iResearch, “Current online luxury purchasing was confined to top-class brands such as Hermes, Gucci and Louis Vuitton.” Added Ding, “Many second- and third-tier brands are not yet being sold in China. When they enter the market, online selling would be the best channel for them.”
Despite the rapidly growing revenues, the online luxury market in China makes up only 1.41 percent of the country’s total online retail market. However, this is expected to rise to eight percent by 2015. As Chen Xiao of the luxury e-commerce site ihaveu.com, told China News Weekly, “So far, China’s online luxury market remains small. We are waiting for it to explode.”
Held back by a crowded market of large and small vendors with limited inventory and little differentiation, it seems Chen will have to keep waiting. As Ding of iResearch noted, greater choice would be the biggest benefit to the industry, adding that bags, jewelry and watches are the most-purchased luxury items in China.
Despite reports that luxury e-commerce sites in China are finding it more difficult to attract venture capital, China Daily notes that one very positive statistic about the market is its young core demographic. According to iResearch, 80 percent of luxury online shoppers are under the age of 35, with those under the age of 24 accounting for 40 percent of purchases.