The luxury market is transitioning to ecommerce — and China is leading the pack

Luxury ecommerce sales will reach $58B in 2020, up 48% YoY. The major innovations in the space are coming from China.

December 15, 2020

Despite its reputation for counterfeits (e.g., “Dolce & Banana,” “Abibas shoes”), China is a critical player in luxury goods.

According to Bain & Company, the Middle Kingdom accounted for 33% of the $300B+ of the global luxury market in 2018.

Ecommerce now makes up 23% of all luxury goods sales — nearly double last year’s figure — and China is leading the way.

A very different customer journey in China

According to Jing Daily, product discovery in China isn’t done by browsing on a large ecommerce platform like Amazon.

Rather, the buying journey typically starts on a social or streaming platform (Trends covered this, er, trend here).

This approach — known as social commerce — is ubiquitous in China and is a comparatively easier way for luxury retailers to control their brand online (check out Burberry’s Lunar New Year “Ratberry” promotion).

Luxury ecommerce sales will reach $58B in 2020, up 48% YoY

Chinese ecommerce giant Alibaba is leading the way with its Tmall Luxury Pavilion app, which was launched in 2017 and wooed luxury retailers with fully customizable social features:

  • Cloud pop-up stores
  • Shoppable digital lookbooks
  • Integration with Tmall livestreaming

Today, it boasts 200+ luxury brands each running their own virtual boutiques with Alibaba taking a 5% commission on all sales.

Last month, Alibaba was at the center of a $1.1B joint venture, partnering with online luxury platform Farfetch, Swiss luxury house Richemont, and the investment arm of Kering.

We can laugh all day at couterfeits like “Pizza Huh” or “Johnnie Worker Red Labial,” but China’s luxury ecommerce innovations are worth knocking off.

So close, yet so far.

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