October 11, 2013, 10:04 AM

Macy’s pauses on selling online in China

The retailer backs off plans to sell via a Chinese e-retailer that it invested in.

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When Macy’s Inc. invested $15 million in Chinese flash-sale retailer Jiapin.com last year, the U.S. retail chain projected selling its INC apparel brand online in China by June 2013. That date came and went, and Jiapin is not selling Macy’s products. In fact, an e-commerce site Jiapin created for Macy’s, Oumei.com, is no longer accessible to consumers. Plus, Jiapin’s founder left the company in March.

Macy’s needs more time to develop a strategy for China, company executives say. “Macy’s is very intrigued by China,” chief financial officer Karen Hoguet said in September at the Consumer Summit organized by Al Tayer Group LLC.  “We have studied China for more than 10 years, but we still need to figure out how to go there.”

Meanwhile, Chinese online shoppers still can buy from the retailer’s U.S.-based e-commerce site, Macys.com, which is No. 12 in the 2013 Internet Retailer Top 500. Macys.com has shipped to Chinese consumers since 2011. “Nothing much has changed,” a Macy’s spokesman says. “We continue to be interested in international expansion at some point, and believe there is potential long-term opportunity. We continue to sell internationally to 100-plus countries via Macys.com. We continue to hold our equity interest in Jiapin.com and expect to continue to do so. We continue to watch the marketplace in China and other countries and to learn about the preferences of customers in other cultures. We have no current plans for additional expansion.”

At least one Chinese e-commerce observer questions Macy’s plan to start selling on its own e-commerce site before opening a storefront on one of the online marketplace that accounts for most online retail sales in China, such as Alibaba Group’s Tmall or JD.com, especially without having any bricks-and-mortar stores in the country.

“Macy’s chooses to invest in building its own site first, but normally Western brands like to sell on a online marketplace as a start in China,” says Dou Zhijian, senior analyst at Neovalue, a Chinese research company, “I think Macy’s may open a store on Tmall in the future. It is good way to learn about Chinese customers quickly and save costs. Building an online shopping site may not be very hard technically, but it requires spending a lot on marketing. Also, Macy’s needs to open its physical store in China, since its strength is in store management.”

Chinese media have reported that Macy’s may open its first China store in Shanghai this year, but Macy’s declined comment.

Alibaba is No. 1 in the Internet Retailer Asia 500 and JD.com, formerly 360buy.com, No. 3.

Western brands like Macy’s also need to understand the differences in selling to Chinese versus Western online shoppers, says Jim Reesing, executive vice president of global accounts at Freeborders, a U.S. consulting firm that advises companies on e-commerce in China. “It is far from enough to just translate sites from English to Chinese,” Reesing says. “For example, the dimension units and payment system are totally different. Compared to U.S. customers, Chinese consumers want merchants to show more pictures and look for more details. They also like to ask many questions to an online representative before they place an order.”

While Macy’s considers its options, other retail chains are moving into China, For example, high-end Hong Kong retailer Lane Crawford last month invested $65.4 million to open a store in Shanghai with 500 international brands. The department store chain has two stores in Beijing and plans to open another in Chengdu. “The base of Chinese luxury consumers is increasing,” says Andrew Keith, president of Lane Crawford. “We will use both offline and online to expand our distribution channels to Chinese consumers.” Lane Crawford launched its Chinese site in last year. Marks & Spencer, the U.K.-based department store chain has opened 14 stores in China in the past two years and an e-commerce store on Tmall.

Marks & Spencer is No. 18 in the Internet Retailer Europe 500.

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