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Economy

Future of luxury lies online in China

Louis Vuitton, Gucci latest to launch Chinese e-commerce sites

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Louis Vuitton is phasing in its online store in China, starting by making the service available in 12 major cities.   © Reuters

TOKYO -- The experience of buying luxury goods should be much more than a click of a button, say -- or at least said -- many store clerks at high-end brand stores.

But for many Chinese -- the world's biggest spenders on luxury goods -- visiting a boutique seems like just a lot of unnecessary hassle and more and more brands are facing up to the inevitable transition to internet sales.

Online shopping and payment is far more common in China than in anywhere else, and now Louis Vuitton and Gucci have become the latest luxury brands to launch e-commerce sites in the country, following in the footsteps of Burberry, Coach and Armani.

"We have always recognized the importance and strong potential of e-commerce in China," a spokesperson for Louis Vuitton said.

"We took the time we needed to assess the local market specifics before launching our own e-commerce platform there," the person added.

The e-commerce market in China eclipses all others, totaling $928 billion in 2016, up 40% from a year before, according to U.S. market research company eMarketer. That compares with $398 billion for the U.S., up 16%.

The country's size and the underdevelopment of traditional retail channels make e-commerce the preferred way to shop for many consumers, but intense price competition and the proliferation of counterfeit goods have made many Western luxury brands pause for thought before diving into China's e-commerce market.

Currently, most luxury goods are sold at brick-and-mortar stores, with only 9% of apparel purchases being made online, according to L2, another U.S. research company. That number, however, is growing steadily, the company noted.

Analysts at Exane BNP Paribas concurred: "More and more consumers in China prefer to buy luxury products online."

Many high-end brands so far have avoided going into popular e-commerce marketplaces, such as Tmall or JD.com, preferring instead to try and keep as much control as they can over how their products are sold.

"We wanted to control the quality of our clients' experience from end to end, just as we do in our own stores," the Louis Vuitton spokesperson stressed.

The French company last week launched www.louisvuitton.cn, making China the 11th country to get a dedicated e-commerce service after France, the U.K., Germany, Spain, Italy, the U.S., Canada, Brazil, Japan and Australia.

Chinese shoppers can now buy Louis Vuitton leather goods, shoes, accessories, luggage and jewelry online and payments can be made by Unionpay credit card, or through Alipay or WeChat Pay.

The service initially launched in just 12 cities, including Beijing, Shanghai and Dalian, but will be extended to others in the coming months.

"We prefer a phased approach to ensure that we can meet the highest level of service from order to delivery," the spokesperson said.

Gucci also launched its China e-commerce site on July 3. The Italian fashion brand said it wants to make its full collection available and provide better access to its products, with no restrictions resulting from store locations or opening times. The site will also offer payment through Alipay and WeChat. Prada is expected to follow suit by the end of the year.

China's luxury market grew 4% in value last year, the first expansion in three years, as its recovery continues from the effects of the country's anti-corruption campaign, according to L2.

Chinese shoppers account for an estimated 30% share of the world's luxury market. The bulk of the spending has traditionally taken place overseas, with domestic market accounting for just 7% of the global market.

But that trend is changing, said L2, as Beijing has been trying to keep consumer spending within the country, through measures such as tariffs and a crackdown on smuggling.

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