Luxury Brands Are Turning Hard Into The Internet.

The Internet seeks economies of scale.

It has always been a deliberate adherence to the niche market. These two seem to be natural "deadly enemies" and have long been difficult to integrate.

However, Chanel (Chanel) is going to be an e-commerce provider.

According to the reporter, Chanel China has hired a domestic company.

The head of the media website set up an e-commerce department to launch the network sales channel.

Meanwhile, luxury brands such as Hermes (Hermes) and Cartier (Cartire) are also trying to e-commerce. The top luxury brands suddenly start embracing the Internet.

The most direct driving force for luxury goods to go down to Internet sales is the increasingly sluggish sales volume.

China's slowdown in economic growth, stock market slide, government crackdown on corruption, overseas buying and buying, and euro yen and other currencies are low, making luxury brands a "difficult business" in the Chinese market.

In 2015, LV (Louis Weedon) closed seven stores in China, and Burberry (Bo Baili) also reduced the double flagship store in Hongkong's Swire Plaza to a single layer.

In fact, in recent years, Prada (Prada) has closed about 1/3 of Chinese stores, and Hugo Boss (Hugo Bosse) has closed seven stores.

LVMH, the parent company of luxury brands such as LV, Givenchy (Givenchy) and Bvlgari (Bvlgari), also announced that if there are more than two stores in individual second tier cities in China, one of them will be closed or the rental area will be reduced.

According to statistics of the Institute of wealth and quality, in 2015, 83% of luxury brands had various forms of customs clearance in China.

The Institute predicts that more than 95% luxury brands will be strategically closed in 2016.

According to the Bain consultation report, the proportion of China's luxury goods market in the global luxury market dropped from 13% in 2013 to 11% in 2014, and by 2015, this figure was less than 10%.

In addition, the export volume of famous luxury brands such as LVMH and Prada to China's market has declined at different levels in 2015.

Starting e-commerce, luxury brands may be waiting for what they call "maturity opportunity".

"I don't understand why luxury brands will lower their noble heads and go to the grass-roots Internet.

A luxury industry employee believes that the niche positioning of luxury goods will sacrifice their brand value in the Internet with public characteristics.

Luxury brands began to turn to the Internet hard, which is mixed with the third party luxury business platform in recent years: happy people believe that they can pull the past cold brands into their sales channels, while the worry is that the luxury official electric business will be more exclusive.

In any case, as long as the luxury brand starts to touch the net, the third party platform will increase the opportunity for cooperation.

Capital has sniffed this delicate market trend and is pouring into the field of luxury electric business. Although in the scope of their visibility, the third party platform is still difficult to change its weak position.

At the end of October 2015, Bain consulting released the global luxury market monitoring report in 2015. It is estimated that the global personal luxury market growth in 2015 will fall from 3% in 2014 to 1%-2%, the lowest since the outbreak of the financial crisis, and the increase in 2008 is -11%.

It is difficult to create enough profits. Luxury brands choose to streamline the store network and cut prices to tide over the difficulties.

In the continuing recession, inventory has become the biggest problem for these luxury brands.

Luxury brands that have always maintained high-end lines have adjusted their marketing models.

In early 2015, Chanel cut 20% in the Chinese market and put forward a global market parity strategy.

The whole luxury industry has yet to quell the feeling of consternation, and a wave of price cuts sweeping the industry has begun.

Dior (Dior), Versace (Versace) and Cartier have followed up the price promotions, and long queues of fans buying pictures of luxury goods explode social media.

Even Hermes, who has never been discounted, has been on sale for two days in Hongkong, with some products being sold at half price.

Previously, in order to maintain the high-end reputation of the brand, luxury brand discount often used covert operation. With the Chanel's public price adjustment, the Domino domino effect appeared.

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"However, the massive price reduction promotion is a great damage to the brand, which may cause loyal consumers to stop buying positive products and fall into a vicious circle."

Beauty says business director Flora thinks discount sales promotion is the most helpless way for luxury brands, and it is also the most dangerous strategy.

E-commerce has become the most imaginative channel for luxury brands to look for growth.

According to McKinsey, the growth momentum of luxury e-business is strong in the next ten years, and the electricity supplier will account for 18%.

Since 2009, the scale of luxury E-business has increased by 27% every year, which is 4 times the growth rate of offline sales.

In April 2015, Chanel made a test of the high jewellery Coco Crush on the famous luxury electronics business platform Net-a-porter. The goods sold out in a few hours and replenished again and again.

Hermes launched the menswear digital platform MANifeste in September 8th, including men's clothing series, shoes and so on. All products have video, text and list display, and can be purchased online directly.

In October 24th, Cartier opened an e-commerce platform in China. Its Calibrede Cartier Diver diving watch series, Amulette de Cartier jewelry series were also sold exclusively on the Internet.

Christian Dior works with Bergdorf Goodman, a well-known luxury department store in the US, and the 14 shoes of the Dior 2016 holiday series landed on Bergdorf Goodman's e-commerce website at the end of 2015.

The above e-commerce attempt is just a small area of the luxury brand to take part of the product category test water behavior.

"Under normal circumstances, shoes and scarves and other highly standardized accessories products are relatively more in line with Internet consumption habits, and clothing and other categories of luxury products experience higher quality requirements, and sales on the Internet may not work."

Flora analysis said.

Burberry is a luxury brand that launched e-commerce earlier in China.

In April 24, 2014, Burberry announced its entry into Tmall to sell a full range of products.

But after being settled for a month, it was questioned by the outside world that sales volume was dismal and the return rate was high.

A source told financial news reporters that Burberry's sales in Tmall were only 5000 yuan a month, and the overall return rate was close to 30%.

However, the high return rate is not Burberry's worry.

"If a customer buys a genuine product, he will retire with a fake."

A staff member of a luxury brand revealed that the company identified fake goods, but customers would push the responsibility on express delivery.

Brands are always worried that in the industry where rules and regulations are rampant, once the sales channels are released, it is difficult to control the phenomenon of fakes or subcontracts in warehousing and logistics links, causing disputes, thereby affecting the brand image of luxury goods.

The Internet platform is flooded with fake products, which is attacking the online sales channel of luxury brands.

Once the luxury products are online, users will unconsciously compare the prices of the other products on the Internet with the price space of fake goods and parallel goods, and the image of the luxury brand will no longer be beautiful.

Luxury electric business platform Fifth Avenue CEO Sun Yafei said.

Prior to this, Alibaba and Gucci (Gucci) had accusations, and Ali accused the luxury brands of not supporting the platform's verification requirements for counterfeit goods.

The above luxury brand staff explained to Caixin reporters that as a brand side, they simply did not allow themselves to sell products outside their own channels, and the brands had no obligation to inspect the parallel imports and fake commodities. Moreover, the volume of these goods was very large. Once the promised goods were inspecting, it would be a very huge workload.

"This is also an important reason why luxury brands are reluctant to set foot in the electricity supplier."

He said.

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"The shopping guide lady wore white gloves, wrapped my Chanel left three layers and the right three layers, and carefully played the camellia knot outside the black box.

This process is a part of luxury. "

Miss Liu, who is obsessed with luxury goods, believes that the experience of shopping in luxury stores is an irreplaceable online purchase.

The value attributes of luxury goods such as service experience, environmental layout, high quality products and so on are hard to achieve on the Internet.

Chanel fashion President Bruno Pavlovsky had explained why Chanel didn't sell online, saying: "fashion needs people to see, touch, and feel in person."

Cartier, a staff member of the the Bund store, said, "we will even call the The Peninsula Hotel afternoon tea for the guests in the shop, and choose the articles with close attention, even if she doesn't buy anything all afternoon."

She believes that customer relationship is the core value of luxury brands. On the Internet, it is difficult for customers to experience value-added services, and the added value of brands will no longer exist.

In 2010, Cartier went online on the US electricity supplier website. However, the trial was questioned because of the poor service experience of "some products could not be paid online" and "customer service phone was hard to get through."

Pay attention to the fast, convenient and pparent internet purchase experience. In some ways, it is diluting luxury goods with the added value of hard work. Luxury brands are full of natural resistance to e-commerce.

"We don't know how this kind of customer relationship should be built online.

As long as we find a way to connect this relationship online, we will devote ourselves to the electricity supplier. "

Christian Dior garment President Pamela Baxter once said.

Going to the Internet does not mean copying the experience of entity management under the line, and finding a way to balance online and offline is the ultimate attribution of luxury brands.

Sun Yafei said that now the number of luxury brand stores is shrinking while increasing the experience function. "They have been pformed into a flagship store under the line, and the flagship store takes on the role of culture and education complex. Besides consuming products, users can also experience eating, drinking coffee and watching in the shop.

Xiu and a series of services.

These are the soft attributes of the brand.

"Xiao Xiang Feng" (which refers to Chanel's collocation style) is prohibited by the company's legal department and can not appear in any publicity document outside China.

Chanel a staff member told Caixin reporter that the brand positioning clearly expressed "Chanel does not want everyone to use it" means, "no luxury brand wants its product" rotten Street ", whether it is genuine or fake.

Flora said that most luxury brands have "idol baggage" and the shelves put up are hard to put down in the public, even in the way of sales channels and advertising.

"For example, the effect of the new media is very strong now, but the big ones will not have budgetary categories for the new media in the internal advertising budget. If the Chinese branch wants to put in the new media, it will only play the edge ball, which is related to the headquarters control."

Flora said.

The reason why luxury brands are slow to respond to China's booming Internet also includes the structural constraints of international companies.

Sun Yafei said that the international Brand Company's headquarters authority is very tight. In order to maintain the brand's unified image and positioning, the marketing authorization for the Chinese branch is limited. Chinese companies often fail to carry out many innovative ideas.

A member of the Spanish luxury brand marketing department told Caixin reporter: "I summed up, in 2015, it seems to have done two things, one of which is to persuade the headquarters to add the Chinese channel to the official website."

"I suggested that we also open Chinese on the grounds that our competitors had a Chinese channel. The headquarters asked me," why do they have us? "The cost of communication is very high.

The staff said that the old European luxury goods group's response was very inflexible. The fundamental reason was that the pace and degree of competition in the European market were far from that of China.

Compared to 2011, the difference in luxury prices between China and abroad is narrowing.

The Fortune Research Institute reports that the price difference between home and abroad has dropped from an average of about 50% to 20%-30% in 2015.

This is related to the policy of the Chinese government to further reduce import tariffs in recent years, and it is also related to the "policy" of the various groups in China. "The group will gradually take into account the importance of the Chinese market and give some preferential policies."

The luxury brands said.

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In 2014, the Industry Research Institute released the "2016-2021 year China Internet fashion industry in-depth research and investment opportunity analysis report". In 2014, the global luxury market total amounted to US $232 billion, of which Chinese consumption amounted to US $106 billion, accounting for 46% of the total global luxury goods consumption.

In the luxury consumption structure of Chinese consumers, domestic consumption amounted to 25 billion US dollars, down 11% compared to the same period last year, and overseas consumption was 81 billion US dollars, up 9% over the same period last year.

In 2016, China will further increase the adjustment of import tariffs, and use various policy measures to restrict overseas shopping, so as to promote the growth of China's local consumption.

This means that the allure of purchasing agents and Hai Tao will be gradually reduced. Chinese luxury goods are expected to flow back from overseas to the mainland, and then rely on the luxury O2O mode of local stores or usher in opportunities.

The capital market also expressed strong interest in luxury electric business.

In May 2015, after four years' B round of financing, the company announced that it won another $30 million C round of financing.

Followed by a treasure network founded in 2011, it announced that it had received 60 million yuan financing for A.

By July, Alibaba announced more than $100 billion in strategic investment charm, and jointly built a luxury flash shopping platform.

In the same month, the luxury goods business platform Temple library announced a $50 million E round of financing.

In November 25, 2015, at the beginning of 2009, Fifth Avenue announced that it had received A round of financing from Yuan Shi capital and circulating capital of tens of millions RMB.

At present, there are two main modes of luxury electric business, one is the self catering business platform for luxury goods, the other is the third party sales platform.

Because luxury brands consider their own brand value, they mostly use proprietary platform or designated cooperation platform to sell, and strictly control the channels.

Brand dealers will not easily authorize the third party network channels to sell, resulting in the lack of channels, making luxury goods a weak spot for online shopping.

Long Yu, founder and management partner of Bertelsmann Asia Investment Fund, believes that luxury business is far from being a simple channel in Tmall. The simple and crude way of spreading the traditional electricity supplier is almost the opposite of the luxury brand value added effect. It often brings damage to the brand and finds the wrong crowd.

Most of the existing third party e-commerce platforms are difficult to obtain official authorization from luxury brands.

China's local luxury electric providers can only maintain their supply through purchasing agents, overseas wholesalers, professional buyers or sweeping goods.

"It will be more difficult later."

Long Yu said.

She has just been employed as a member of the board of Coach, a luxury luxury brand.

According to her observation, the current international trend is that the brand side is tightening up the channels of authorization and e-commerce, strengthening control power, avoiding dilution of brand value and losing tonality, and the overall performance is "prudence, contraction and wait-and-see".

The third party sales platform for survival is still looking for new space.

According to McKinsey's analysis report on the consumption habits of 7000 luxury consumers in the world, luxury goods sales account for 6% of the total sales of luxury goods, about 15 billion 500 million US dollars, and this figure will change to 77 billion 600 million dollars in 2025, and the proportion of electricity supplier sales will increase to 28%.

After several years of elimination of luxury electric business, survivors are looking for new models.

Many early luxury electric providers began to involve light luxury and high-end consumer brands. For example, vip.com launched light luxury brand sales and flagship domestic brands.

Suffering from the lack of more brand licensing Fifth Avenue, the pformation from the traditional sales mode, abandoning the third party identity.

The new platform mode of Fifth Avenue will be opened up to the franchised stores of the brand side. The mode of "online platform order and nearby store pick up" should be used to start with the "e-business" of luxury stores, so as to ensure that users purchase genuine products.

Another luxury electric business website Temple library hopes to pform from luxury electronic business platform to comprehensive quality life service platform.

The founder and CEO Li day theory of temple library, "we are actually selling high-end watches through selling bags, and attracting customers to our members through bags and watches, and then retaining them through other valuable services or personalized services, so that enterprises can be more competitive. This is the complete business model of enterprises."

"The brand side knows that e-commerce is the way to go, so that we can grasp the future growth points of the 1980s and 1990s.

But after years of practical operation, no brand has done a good job and is looking for a way out.

Flora believes that e-commerce is not necessarily a luxury brand's life-saving straw, more focused on products is king, Loewe, Celine, Fendi in 2015 are very good performance, because they have launched products welcomed by the market.

Long Yu also agreed that the challenge for luxury goods is not the Internet.

"When the market is low and the competition is saturated, how can the luxury brand bring forth new ideas? Through mergers and acquisitions, stratification and other strategies, it will be the first challenge to combine the product array to enhance the competitiveness of enterprises."

Long Yu said, "for luxury goods, the priority of the electricity supplier is very low. The challenge of breaking the luxury goods by using the wrong weapon of the electricity supplier is to sacrifice the substance to the end."