SHANGHAI — Glamour Sales Holdings Ltd., an Asian e-commerce site specializing in flash sales of discounted fashion and luxury products, has just named a new brand ambassador and unveiled a fresh domain name as part of its efforts to raise its profile in China.
Chinese actress Sun Li was named brand ambassador while the site name was shortened to mei.com, which means both beauty and glamour in Chinese. Thibault Villet, the company’s co-founder and chief executive officer, said a number of Chinese e-commerce players have been shortening domain names.
The announcements, made last week, come as competition on Chinese e-commerce landscape heats up and investors turn their attention to Alibaba’s hotly anticipated ipo this month. Just a couple weeks ago, Dalian Wanda Group, one of China’s biggest real estate developers, announced it will launch an e-commerce venture in tandem with tech giants Baidu Inc. and Tencent Holdings.
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Villet said the decision to name a brand ambassador and ramp up a media campaign for the site, specifically in first- and second-tier cities, stems not from poor performance of Glamour Sales — the site has experienced 100 percent annual revenue growth since it entered China in 2010 — but rather from market indicators of growing demand for online consumption of discounted luxury goods.
“We believe there is an opportunity to accelerate,” Villet said. “The goal with this campaign is to accelerate our growth. We see opportunities from the brand side — there is stock available — and more and more people are shopping online, and more and more people are shopping on mobile [phones].”
He added: “What has been changing the game is the development of the smartphone in China. We see huge growth from mobile shopping with 45 percent of total revenue in August coming from purchases via our mobile apps. We think it is really changing the game.”
Glamour Sales, which also operates in Japan, recently created an integrated system with China’s WeChat, the mobile messaging app owned by Tencent, whereby subscribers to the e-commerce site’s account can receive targeted advertising as well as updates on orders and direct communication with customer service representatives. WeChat users can also use the apps payment system for transactions on Glamour Sales.
“Now when we are redeveloping platforms, we think about mobile first and then how to adapt mobile onto PC,” Villet said, adding that close to 10 percent of transactions on Glamour Sales come via social media channels, including WeChat and Weibo, China’s version of Twitter, which is still influential in second- and third-tier cities.
The number of e-commerce sites selling luxury and high-end brands in China has decreased over the past couple of years, Villet said, with only a few players left in the market. “When we started four years ago, there were at least 40 websites doing similar flash sales models. Today there are only four or five left,” Villet said. “A lot of them died, went bankrupt or were sold.”
While competition from the remaining players does exist, Villet said increasingly competition is coming from overseas e-commerce players where Chinese are ordering luxury products to avoid steep taxes on the mainland.
“Overseas websites have products not available in China,” he said. “As Chinese consumers evolve from in the show to in the know in terms of the products they buy, they are looking for brands that are more unique.”
The executive said he sees three major growth opportunities for the luxury market in China: outlet malls, discounted e-commerce sites and third-tier cities where consumers are still willing to pay full-price. Glamour Sales has been testing the sale of full-price luxury, but Villet said Chinese still overwhelmingly look for deals online, preferring to buy full-priced luxury goods while traveling overseas or from international e-tailing sites. He also said that some brands still fail to understand that, when it comes to e-commerce, China is a “platform market,” meaning that while consumers may go to a brand’s stand alone site for research, they still purchase from Glamour Sales or a similar company.
“Brands that launch their own websites see huge traffic but low conversion rates,” he said. “This is a platform market, and you have to collaborate with platforms to maximize sales opportunities.”
He said that foreign e-commerce companies that have entered China have experienced slow growth due to issues with localization. Villet added that it remains to be seen whether brands, particularly luxury players, will have success on Tmall.com, the online shopping platform operated by Alibaba. More luxury brands, such as Burberry, have opened storefronts on Tmall, yet Villet said consumers appear to be unwilling to pay for full-priced items on the platform, which instead is most beneficial for marketing purposes.
“The brands that still find it difficult to get sales on Tmall remain the more high-end brands,” he said. “The price point is too high, and consumers are aware of the price gaps between China and the rest of the world.”
He added: “Opening on Tmall is good to get Tmall’s support to fight counterfeits, and Tmall has a huge database and traffic. Those are all pros of being on Tmall. It seems that brands collaborating with Tmall have less counterfeits [on other Alibaba platforms]. Now is that a coincidence? I am not sure.”
A spokeswoman from Alibaba declined to comment for this story.
In July, Kering SA, owner of brands including Balenciaga, Gucci, Bottega Veneta and others, filed a suit against Alibaba alleging the e-commerce giant facilitated the sale of fakes globally. The suit was later withdrawn following constructive dialogue between the two sides.
“Big platforms are trying to clean their counterfeits offer because it is the only condition for them to get the support of the big brands,” Villet said. “Step-by-step we see clearly some progress, especially on the business-to-consumer platforms, but on the consumer-to-consumer side, we don’t really see some changes. That is harder to control.”
Villet says he thinks the next big trend in e-commerce in China will be so-called O2O, or online-to-offline, whereby e-commerce sites, brands and retailers work together using technology, such as social media platforms and smartphones, to drive consumers to make purchases in brick-and-mortar stores or vice versa.
“A lot of luxury people think O2O is the next frontier,” Villet said.
Glamour Sales has been experimenting with O2O with their investment partner, Chow Tai Fook Enterprises, which, in partnership with Investec Bank Plc., poured $65 million into the e-commerce site earlier this year.
Part of that investment was used to pay back Neiman Marcus Group Ltd., which invested $38 million, representing a 44 percent stake, in Glamour Sales in 2012 as part of NMG’s strategy to launch a Chinese e-commerce site. NMG later decided to not hold inventory in Chinese warehouses, instead shipping to Chinese customers who ordered from the U.S. NMG sold its Glamour Sales stake earlier this year.
“[NMG] was very happy with their return on investment. They went to China, they invested, they learned and they returned with the money they invested. It wasn’t a bad deal for them,” Villet said. “They helped us grow our in-house expertise as well as our overall understanding of how we can improve operations so we learned a lot from them.”
The Hong Kong-based Chow Tai Fook Enterprises is the parent of New World Development Co. Ltd., a developer of a number of malls in China, including the K11 art mall in Shanghai. The company also owns Chow Tai Fook, the largest jewelry retailer in the world by market value.
With Chow Tai Fook, Glamour Sales is experimenting with launching special collections in its retail properties, such as K11 Art Mall, and having those collections only available for purchase online.
“We are leveraging their big network of opportunities, including product supply and selling of Chow Tai Fook brands,” Villet said. “I have been very impressed with their knowledge of the local market as well as their strong involvement in terms of e-commerce, O2O and digital marketing. They are very smart and they know this O2O opportunity very well. For us it reinforces our understanding of the local market.”