BEIJING — Topshop celebrated its official launch on ShangPin.com, a Beijing-based luxury and fashion e-commerce site, becoming one of the first major global brands to enter the Chinese market digitally rather than with brick-and-mortar stores.
The brand kicked off its China debut with a pop-up shop set up at The Place, a shopping mall in central Beijing. The store opened just before the Chinese National Holiday, a weeklong break the first week of October. Arcadia Group Ltd., the brand’s parent, also inked a deal for its Miss Selfridge brand to be sold on ShangPin.
Highlighting the growing prevalence of mobile commerce on the mainland, store visitors were able to view merchandise then order it on their cell phones to be shipped to their homes. More than 5,000 shoppers visited the store and were able to virtually try on clothes and share photos across social media. A supersize smartphone displayed some 300 Topshop looks that could be purchased via mobile phones.
ShangPin also launched a style platform, offering shoppers fashion advice. Executives said offering content to consumers, whether on pairing garments together or how to use other fashion items, is important to Chinese shoppers.
ShangPin executives said 40 percent of sales are now via mobile. This is a trend extending across the e-commerce sector here. In August, e-commerce giant Alibaba Group Holdings Ltd. reported in its first-quarter financial report that mobile represented 32.8 percent of gross merchandise volume, up from 12 percent a year ago.
Topshop’s launch in China is part of the brand’s strategy to broaden its global footprint. There are also plans to open Topshop stores in the U.S., continental Europe and Hong Kong. Topshop executives were not available for interviews at the Beijing launch. David Zhao, founder and chief executive officer of ShangPin, said the brand’s decision to enter China first online will enable it to penetrate smaller markets much quicker than through more traditional brick-and-mortar stores.
“Online technology can be used to explore the market,” Zhao said. “China has more than 300 big cities. It is very hard to open brick-and-mortar in a short time. Opening online can help get customers immediately, to promote the brand in a dramatic way.”
ShangPin’s business model is different from other e-tailers largely because Zhao, the founder, started his company by building Web sites for Chinese banks. The e-commerce venture, founded four years ago, incorporates a full-priced and flash-sales model. ShangPin has been able to leverage banks’ databases to pinpoint potential customers across the country. For example, ShangPin offers promotions to those who use certain types of credit cards and is able to send special offers to VIP bank customers to shop on their site.
“This helps us to penetrate tier 2, 3 and 4 cities,” said Claire Chung, ShangPin’s vice president of international business development. “We can leverage our databases from banks and do special offers with brand launches, especially with credit-card users. In China, they are new consumers and almost pre-vetted because they can get a credit card.”
Chung also highlighted the importance of using key opinion leaders, or KOLs, for marketing, noting that there are not only nationally recognized bloggers and celebrities, but also regional KOLs that in some cases are more influential.
“In China, you have a huge plethora of KOLs, whether national or regional ones who are very popular,” Chung said. “Because we understand the market, we are able to target and for each brand, cater a specific KOL strategy, whether it be with a celebrity or fashion blogger. That, combined with the banks, is how we are reaching new consumers.”
According to Zhao and Chung, these consumers are willing to buy full-priced goods from ShangPin, which is contrary to the commonplace perception in China that most online shoppers are only looking for bargains.
The ShangPin executives said their customer outreach strategy is designed to reach newly moneyed shoppers more so in the interior who have not necessarily traveled abroad, yet want to have access to the latest fashion or luxury items, and are willing to pay for them.
“We don’t see ourselves as having that much competition because of our VIP database,” Chung said. “We have quality customers. On the other sites, there is no loyalty because you are only as good as your next deal. You are not offering anything innovative or new. The customer is becoming much choosier. There are brands on flash-sales sites that people don’t want anymore because they have been on too many flash-sales sites in China.”
Other brands that have partnered with ShangPin include Lanvin, DKNY, Juicy Couture and Diesel.
Ninety percent of ShangPin’s brands are from overseas. The executives said they will continue to introduce more young designer and emerging brands to fashion-savvy Chinese shoppers, adding, “That is the commitment. ShangPin will act as a bridge, connecting the two sides.”
One interesting question is why Topshop executives chose ShangPin over Tmall.com, the online marketplace operated by Alibaba, which recently raised $25 billion in a record-breaking New York initial public offering, to launch an e-commerce store. A number of brands, ranging from Nike and Uniqlo to Burberry and Estée Lauder, have opened store fronts on Tmall.com.
“Our consumer base is profoundly different from the Tmall consumer,” Chung said. “The Tmall consumer is very price-sensitive. On ShangPin.com, the consumer wants to buy in-season.”
“People like to talk about the big player in the market, but the market does not only belong to one big guy,” Zhao said, referring to Alibaba. “There is still space for very focused fashion e-commerce sites. It is a big opportunity in China right now. Tmall is a very big portal, so Tmall can give brands traffic, but I would say traffic is becoming more and more expensive.”
The ShangPin executives feel their business is more suited to “the new Chinese consumer who is younger, who want authentic brands and are willing to pay full-price to be in style.”
“That is very different from the first generation cruising the Web when Jack Ma started his business,” Chung said, referring to Alibaba’s founder.
“I am very proud of what we have done,” Zhao said. “Jack Ma did not introduce Topshop to China. I did.”