First Emporio Armani. Now Marni. And more high-end luxury sites are on the way from Bologna, Italy-based Yoox.
On March 1st Yoox SpA plans to launch the Marni fashion brand, its second e- commerce site in China. The sites will tap the growing online demand for luxury goods, which is projected to be China’s fastest-growing consumer category over the next five years. According to brokerage CLSA, shoppers from mainland China may account for 44 percent of global luxury sales by 2020.
That's a lot of high-end e-commerce from a single country.
Yoox's Serious Gap Analysis: "You've got to be there"
“Delivering to China is different from having operations in China,” says Yoox Chief Executive Officer Federico Marchetti. “The only way to do China seriously is from China.” Most Chinese e-commerce retailers focus on the low end of the apparel and accessories market, according to Marchetti. “We have gone to fill the gap for luxury," he said.
Marni and Armani will be the only European luxury goods brands with an e-commerce site operating from China, Marchetti said. About 450 million Chinese are connected to the Internet, making the country the world’s most-populated online market, and the number is growing by about 100 million annually, he said.
Planning to Corner the Market?
Yoox expects China to become one of the company’s top three markets by 2015. To tap the opportunity, Yoox will introduce two or three more e-commerce sites in China in 2011, including thecorner.com, its online multi-brand retail business. It will also accelerate luxury brand openings over the next few years, according an interview reported by Bloomberg.
Yoox, based in Bologna, Italy, opened an office and logistics center in Shanghai last year. The company operates online retailing and distribution for fashion and luxury goods brands including Valentino and Dolce & Gabbana.
China is the company's next frontier now that Yoox has successfully entered the U.S., which will likely become Yoox’s biggest market in 2011. Sales in the U.S. exceeded Italy for the first time in the fourth quarter of 2010, Marchetti said.
What's the take-away here?
It's clear that more European brands are targeting the U.S. and China as key global international e-commerce markets.
It's also becoming clear to online retailers that serious strategic moves designed to tap the Chinese market will require investing in your own logistics center (although a single DC may quickly prove to not be enough to support the exploding Chinese e-commerce market). The existing logistics infrastructure in China is simply not capable of handling the boom in e-commerce.
Still, for many brands, entering China via cross-border e-commerce will continue to be the best option. However, the key to success will be tapping into the new infrastructure investments being made by companies like Yoox.
If Yoox boosts its investments in logistics, the company will likely find out that quite a few brands (and not just luxury brands) will soon be knocking on its door.
Yoox, both an e-commerce aggregator of sought-after high-end brands and an e-commerce platform, is making a wise investment in the future of e-commerce.
Yoox's move into Chinese will be one to watch.
Until then,
Cheers
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