China is expected to account for over 20% of the world’s luxury goods market by 2015, according to recent research conducted by McKinsey. Understanding this market and how to reach it most effectively could provide an enormous opportunity for those wanting to tap into China’s estimated $27 billion luxury goods market via eCommerce methods.
Is the market in China ready for new retail concepts like private event retailing, deal of the day, group coupons and other social shopping experiences? The basis for the market is there but how effective an eCommerce vendor will be in implementing these concepts for the Chinese market will be depend upon several factors. Here are a few that immediately come to mind:
Proper Internationalization and Localization: This goes beyond language in China, or languages, I should say. There are numerous Chinese character sets, with the most popular being Simplified Chinese and Traditional Chinese. Partnering with a firm that understands the unique language and locale requirements of reaching a particular market segment is a must. Unless you have this expertise in-house, one would be well advised to research appropriate service providers with these skills. To illustrate the importance of not guessing: The People’s Republic of China primarily uses Simplified Chinese while Hong Kong and the surrounding area primarily use Traditional Chinese. Is the target market in Hong Kong or Beijing? Can one effectively reach the market in Hong Kong in English, where its use is very common or with the growing use of Mandarin, is using both a necessity — or perhaps Cantonese is also a requirement? Finding the money is only part of the equation. Knowing how to best communicate with those holding the money is critical to say the least.
Social Shopping / Media: This should be fairly obvious by now, but Social Media has changed the way we shop online and offline. A white paper by Optaros (my employer) goes into more depth than I can in this blog and accurately describes new retail concepts that, when managed as a portfolio, can provide a balanced and successful approach.
Effective Distribution and Fulfillment: If you’re an online retailer, what is the best method for getting your products to the consumers in China? A company should be ready to respond quickly and successfully to demand for product and a failure to do so could mean a lot of negative feedback and customer service nightmares. There are companies that can help with fulfillment in geographies new to a company where the online economy is expanding. Initial research on similar services in the Chinese market turned up a few including Amazon and SunTek.
According to the report, a good in-store experience is the largest motivator for purchase, while the internet is clearly the second most important customer touch-point, especially when it comes to certain product categories like fashion. The Chinese market will continue to grow and more opportunities will be available for online merchants to offer products, luxury and otherwise, to the vast market represented by this bustling economy. A “market appropriate” online approach that is backed up with solid fulfillment and customer service strategies will help companies succeed in gaining a share of this fantastic growth opportunity.