Why luxury brands are eagerly jumping on the e-commerce train in China?
It’s simple.
1. Because they need to keep the expected growth rates
2. Because China is the still “younger” and fresher market for fashion, full of eager customers
3. Because very likely the brick-and-mortar markets worldwide won’t perform well in the next future and won’t be either able to support a fast pace growth
Most of these Brands are streamlining their own retail network only to open on the e-commerce, shifting from a high-fixed-cost business model to a lower costs-higher margins one. This will work only if the e-commerce of these Brands will quickly take off in China (guaranteeing volumes), that’s why they are trying to get the most of the partnerships with local e-commerce entities. But this also means finding compromises with e-commerce platforms that were previously considered as evil.
It can be a short term success but in the long term the risk will be to succumb to them and delegate the management of the Brand locally, as it happened in the past with the wholesale partners. Is it a hit or a miss? We will tell in 3-5 years, when the fashion landscape will be totally different and, maybe, the hottest brand of this moment will be in trouble or under a new renovation.
