Facing slowing sales, global luxury brands are angling for a piece of China’s e-commerce market, where people are accustomed to buying gadgets and groceries, but not high-priced jewelry and haute couture. Many are unsure, however, about diving headfirst into online retail, because China’s favorite way to shop is also an industry better known for piracy and dusty deliverymen than for shine and polish.
To court the luxury market, companies like Alibaba and JD.com are using their vast customer base to offer upscale retailers support on issues like digital marketing, pricing, customer services and, in the case of Mr. Tang, delivery.
“The most difficult thing to overcome is the experience for the shoppers,” said Xia Ding, president of JD.com’s fashion division. “But because we own the logistics we are really able to deliver luxury goods in a way that makes shoppers feel like they are getting the same special experience as they get offline.”
Chinese shoppers have long dominated the global luxury market. In the last two years, a continuing anticorruption campaign and an economic slowdown led to a decline in Chinese demand for luxury, contributing to an overall global slump. Still, last year Chinese shoppers accounted for 30 percent of global luxury purchases, according to a report by Bain & Company.
Until recently, however, many Chinese luxury purchases were being made overseas or through daigou — personal shoppers who buy goods abroad and bring them into China, avoiding the country’s hefty taxes. That started to change two years ago when, in an effort to combat gray-market sales, a number of high-end luxury brands led by Chanel took steps to reduce the price gap between goods in China and overseas.
At about the same time, the Chinese government also stepped up efforts to crack down on daigou shoppers, increasing checks at airports and lowering duties on some luxury goods imported through official channels.
As a result, brands have seen a shift in luxury shopping habits, with more and more Chinese consumers now choosing to buy at home rather than abroad. This so-called reshoring has caught the attention of Chinese e-commerce companies, causing major players like Alibaba and JD.com, as well as smaller luxury-focused companies like Secoo and Xiu, to invest aggressively in the luxury sphere.
“Mass market brands already know that there is no choice but to be on these e-commerce platforms,” said Liz Flora of L2, a market research company based in New York. “So luxury is really the next frontier for these e-tailers. You can see the competition getting more and more fierce.”
In addition to starting the white-glove delivery service, JD.com announced a deal last month to invest $397 million in the luxury e-commerce platform Farfetch, which is based in London. Both Alibaba and JD.com are considering rolling out separate platforms focused exclusively on luxury in the coming months, executives from the companies said in interviews.
But so far, China’s e-commerce companies have struggled to persuade top international luxury brands to sell on their platforms. Luxury companies have long been concerned that with e-commerce, it would be impossible to replicate the gilded, perfectly curated in-store shopping experience. Brands also worry about their products being sold next to counterfeit and gray-market items — an issue that Alibaba in particular has struggled with in the past.
Still, there is no ignoring the reality that Chinese consumers love shopping online. Chinese shoppers spent $758 billion online last year — more than the United States and Britain combined, according to official data, buying everything from toilet paper to luxury cars.
“The brands are finally starting to intellectualize the fact that to succeed in China, they need to go online,” said Alexis Bonhomme, co-founder of CuriosityChina, a Beijing-based digital marketing and tech company that works with luxury brands. “The bottom line is they need new revenue channels and e-commerce is a real revenue channel.”
Some brands have already made the leap. Burberry in particular has led the push into e-commerce in China, opening a flagship store on Alibaba’s Tmall platform. Others, like the Hong Kong jeweler Chow Tai Fook and the Swiss watch brand Tag Heuer, have stores on JD.com.
To appeal to brands, e-commerce companies offer to increase efforts to crack down on counterfeits.
“One of our goals was to clean up the e-commerce market so we could ensure that anyone who bought online was buying a real Tag Heuer,” said Leo Poon, general manager of Tag Heuer in greater China. “So far it’s been working and we’re seeing sales picking up.”
But for more high-end luxury brands, increasing the anti-counterfeit effort is not enough.
“Luxury brands are control freaks,” Mr. Bonhomme of CuriosityChina said. “They want complete control over everything.”
For now, some luxury brands are opting to create their own e-commerce websites to sell directly to consumers. Many, like Cartier and Bulgari, have also begun partnerships with Tencent’s popular WeChat mobile messaging service to create online stores, flash sales, and marketing campaigns featuring major Chinese influencers.
Ultimately, e-commerce giants like Alibaba and JD.com are hoping that the allure of their vast consumer base will be too difficult for luxury brands to resist. Shiny add-on features like the white-glove delivery service may make swallowing the e-commerce pill a little easier for the brands.
On a recent morning, Mr. Tang, the courier, pulled out of a JD.com warehouse on the outskirts of Beijing with a single delivery box in tow. Three-wheeled delivery carts whizzed past as he drove calmly toward the city’s central business district.
After waiting for the customer for nearly two hours, Mr. Tang stepped out of the car, pulled on his signature gloves and headed out to deliver the package.
“Wow, I wasn’t expecting this service at all,” Yan Luxia, 30, said as she received the box and took out a designer Italian leather handbag.
Ms. Yan, who manages a dating service in Beijing, later said the premium delivery service had been a very “satisfying” experience.
“But to be honest,” she added, “consumers care more about the authenticity of the product.”