As China’s e-commerce market continues to boom, luxury retailers are all clamoring to get a piece of the digital pie. Earlier this year, American retailer Neiman Marcus announced that it expected to launch E-Commerce in China by the end of 2012, with a $28 million investment in Hong Kong based Glamour Sales Holding to build the brand’s Asian E-Commerce site. Neiman Marcus’ announcement followed moves by other retailers such as Net-A-Porter, Yoox, Zara, Armani, and Coach- all which have or plan to establish an online retail presence in China.

The latest brand to set up digital shop is Salvatore Ferragamo, which announced last week that it will launch it’s Chinese e-store on October 11. The brand, whose sales in China grew 36% first quarter of 2012, is partnering with domestic luxury e-tailer Xiu.com to carry full collections of clothing, shoes, handbags and accessories for men and women.  The Ferragamo partnership is considered a major coup by the Xiu.com in an environment where homegrown Chinese retailers have found it difficult to compete with expanding global powerhouses such as Net-a-Porter and secure constant inventory.

So where is the Chinese luxury e-commerce market heading?  According to research done by The Boston Consulting Group, China is posed to become the world’s largest online retail market by 2015, with sales expected to hit US $360 billion. In comparison, last year online retail generated about $121 billion in sales in China.  The market has almost 200 million online shoppers and by 2015, the average Chinese shopper is expected to spend $1000 per year online- on par with what US consumers are currently spending annually online.

Despite promising numbers, e-commerce in China is still in its nascent phase, plagued by security and service issues ranging from credit card fraud to a weak shipping infrastructure. But online retail is particularly lucrative to luxury brands because a lot of the new wealth in China is popping up in smaller cities, where it’s wouldn’t be possible to build an actual store. Though if all the investment in the e-commerce space is any indication, there may be a lot of rapid advancements coming very soon for the online Chinese shopper.

 

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