SHANGHAI —Chinese luxury goods retailer Secoo has just secured fresh financing of $100 million to embark on an international expansion drive.
Secoo is best known as an e-commerce player selling products like handbags and watches. It also runs a network of five Secoo Club retail stores in Shanghai, Beijing, Chengdu and Hong Kong. The company plans to extend its retail network this year, opening its first three international stores in New York, Paris and Milan to cater mainly to Chinese tourists shopping abroad.
Secoo chief executive Li Rixue said Chinese consumers love to shop abroad- as many as 70 percent of luxury purchases from Chinese consumers are made outside China- but they still face barriers, including language difficulties, as well as after-sales service and repairs once they return to the mainland. More than 100 million Chinese consumers expected to travel abroad in 2014.
"We will open Secoo Club branches in global luxury centers that can supply better service to high class Chinese consumers. By setting up these overseas branches, Secoo will also build strategic relationships with brands, distributors, and agents to bring the newest and most comprehensive overseas luxury products to China's consumers," he said.
The company boasts three million registered users on its site, secoo.com. Founded in 2008, the company posted 2013 sales of 1 billion renminbi, or $162 million at current exchange.
Secoo sells both new and used luxury products. One of the major selling points for consumers is the authenticity guarantee. Secoo claims to have China's most comprehensive luxury testing center and tests 100 percent of the products it sells online and in its stores. The retailer carries products from 76 global luxury brands, including Prada, Cartier, Giorgio Armani and Chanel.
The site's average online transaction value comes in at 8,000 renminbi, about $1,300 at current exchange, considered extremely high for China.
Li said Secoo generates about 80 percent of its sales online but the executive said he sees online-to-offline (O2O) as the future, not only for Secoo, but also for Chinese luxury shopping more broadly.
"The e-commerce platform and app can satisfy the needs of consumers to conveniently see what's available and shop, the offline stores can give consumers a better shopping experience and satisfy the customers' need to see and touch high end products," he said.
Last year, China's O2O market was estimated to be around 60 million renminbi, or $9.7 million, in terms of gross transaction value, according to iResearch Consulting Group. With the firm projecting this figure will grow more than seven times by 2017.
A slew of China's e-commerce heavy hitters have been jumping on the bandwagon in 2014, with Alibaba, Tencent Holdings Ltd. and Baidu Inc. all stepping up their O2O maneuvering to increase their reach across China's retailing sectors.
The difference with Secoo, according to Jasmine Sun, an e-commerce analyst with Smith Street Solutions, is its plan to go the O2O route solo, without partnering up with an established offline retailer.
"O2O is a big trend, but it's not that easy for online companies to go offline, [from what we have seen so far] in order to do this O2O thing, e-commerce companies have to work with offline partners," she said.
Li Rixue said the company is also interested in expanding its stores' range to sell Chinese-made luxury products as well.
"With the development of the overseas strategy, we also hope we can bring some of China's exquisitely crafted products to the international market," he said. "I would like more people to understand China's homegrown luxury and craftsmanship eventually."
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