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KarmaLoop Inks Distribution Deal With Xiu.com

China's leading online luxury e-tailer is targeting an annual volume of $500 million in 2012 due to the expansion of Western brands on its site.

A view of KarmaLoop’s Web site.

Streetwear e-commerce site KarmaLoop.com has inked a distribution deal with Xiu.com, the leading online luxury e-tailer in China.

The deal is believed to double KarmaLoop’s distribution, once the products from KarmaLoop.com reach the Xiu.com Web site in about two months.

Richard Kestenbaum of Triangle Capital, KarmaLoop’s financial adviser, said, “This transaction is the first of its kind and KarmaLoop is very well suited to doing new and innovative things. The relationship with Xiu.com will open up China to virtually the entire range of products being offered by KarmaLoop and allows KarmaLoop and Xiu to have enormous and continued growth.”

Other financial contacts said they believe the deal between KarmaLoop and Xiu could be the first of its kind.

Xiu, which counts venture capital firm Kleiner Perkins Caufield & Byers and private equity company Warburg Pincus — the two firms have invested a total of $120 million — among its investors, has ramped up significantly in the past year. While it sells many local Chinese brands on its site, the most popular are the Western brands through direct arrangements with the companies themselves, according to Maureen Mou, senior vice president of global sourcing.

Among the luxury and fashion brands sold on Xiu.com are Abercrombie & Fitch, Andrew Marc, Balenciaga, Bally, BCBG, Betsey Johnson, Calvin Klein, Chloé, Diesel, Dolce & Gabbana, Ermenegildo Zegna, Givenchy, Guess, Jessica Simpson, Kipling, Longchamp, Marc Jacobs, Michael Kors, Miu Miu, Polo Ralph Lauren, Tommy Hilfiger and Tory Burch. Sixty percent of the merchandise is in-season and the balance is considered “outlet goods.”

Data from Xiu indicate that it has two million registered users. Each visit to the site averages six minutes, with 43 seconds spent per page view. There are about four million page views a day. By gender, 45 percent of customers are male and 55 percent are female. The largest customer pool by age are those between 25 and 30 at 36.4 percent. The second largest customer base, at 32 percent, are those between ages 18 and 24. Those ages 36 to 40 comprise 14.7 percent of Xiu’s customers.

According to Mou, the average total per shopping cart visit is $100. Among the apparel brands, merchandise priced between $100 and $500 is the most popular. In accessories, the price points skew higher, with $150 to $1,500 the hot price range.

“Women do more of the shopping on our site, buying apparel, shoes and cosmetics. The men spend more due to gift giving. For themselves, they buy belts, shoes and watches,” Mou said.

Xiu.com posted $150 million in volume in 2011. Xiu is targeting a volume range of $500 million for 2012.

According to Mou, the jump from $150 million last year to a $500 million projected range this year is due to the firm’s expansion into 10 product categories and its hosting of more than 2,000 brands, of which more than 300 are Western brands.

“We are looking to add more individual Western brands or brand aggregator sites,” Mou said of Xiu’s expansion plans.

Payment on the site is via online banking through Chinese bank-issued credit or debit cards; Alipay, which is similar to eBay’s PayPal, and offline money transfer options such as money orders.

KarmaLoop has also been busy eyeing expansion opportunities.

Greg Selkoe, founder and chief executive officer, described the Chinese market as a “great leap for us.” He said he will use the learnings from Xiu to eye expansion possibilities for KarmaLoop in Korea. The firm in December purchased European Web site Streetammo, which will serve as KarmaLoop’s growth platform in Europe.

For now, Selkoe’s busy working on ramping up for the launch on Xiu. “The price points are slightly higher in China, because the [Western] goods are harder to get there and consumers are willing to pay a premium to get American clothing,” Selkoe said.

The photos will be taken from KarmaLoop’s Web site, with Xiu adding Chinese characters for the translation. As for distribution, Selkoe is planning on shipping in bulk from the U.S. initially, with a distribution center eventually set up in China, possibly within a year.