In its second-largest acquisition, Amazon buys the company for $970 million.
But a Forrester report suggests uncluttered web sites and ‘entry goods’ to capture sales.
Luxury brands hoping to sell online to consumers in China need to operate relatively simple web sites and offer cheaper goods that can appeal to low-income shoppers. Those are among the tips offered in a new report from Forrester Research Inc. entitled “Selling Luxury Goods to Online Shoppers in China,” by analyst Zia Daniell Wigder.
Forrester, which says China is the world’s second largest market for luxury goods, behind Japan, also says that it’s not only higher-income shoppers in China who are buying luxury goods. 79% of lower-income consumers—shoppers who earn no more than about $9,500 per year—say they have bought some sort of luxury good. Those lower-income shoppers, though, are less likely than more affluent shoppers to visit a luxury brand’s web site, or to research products online before buying them inside stores, the report says.
The report also says that 26% of low-income consumers, along with 26% of middle-income consumers (who earn up to $19,000 yearly), and 33% of high-income consumers, expect luxury goods to cost less online than they do in stores. The findings are based on a survey conducted in the fourth quarter of 2011 of 3,621 consumers aged 18 and older from China, including Hong Kong.
To capture luxury sales, brands not only need to offer Chinese-language web sites, but keep in mind the bandwidth constraints in the country. “Web site and image load times are markedly slower in China than in other parts of Asia,” the report says. “Brands should keep the interface relatively simple while expanding parts of the site that are less likely to slow down site performance—for example, by simply building out product descriptions, optimizing images and considering deploying a content distribution network’s services for China.”
To spark more luxury interest among consumers not in the highest income brackets, brands also should offer what the report calls an “entry good” such as a small leather bag. Doing so will “expose them to the quality, look and experience of shopping with your brand,” the report says.