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Global luxury brands failing to leverage WeChat-led omni-channel to conquer China

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Global luxury brands failing to leverage WeChat-led omni-channel to conquer China
Global luxury brands failing to leverage WeChat-led omni-channel to conquer China
Leading global luxury brands have little or no direct e-commerce offering in China, because they are failing to develop proper cross-channel strategies led by WeChat commerce.

According to the study “China Luxury Demand Momentumby customer engagement specialists Contactlab and Exane BNP Paribas, e-Commerce penetration in China is about 7 to 8%; similar to the level in western markets. Looking at the market from this point of view, it is surprising that leading global brands, including Hermes, Louis Vuitton and Gucci, still have no direct ecommerce offering in China.

Luxury brands have trailed other retailers in digital adoption, but in China the study found that some international brands are mirroring Chinese e-tailers. Brands such as Coach are creating a range of digital touch points, including localised content on WeChat, customer reviews on products, and are offering multiple delivery options.

In contrast, most of the European luxury brands are falling behind in cross channel services and in guaranteeing a personalized shopping experience.  

A key finding is that global brands are not exploiting WeChat, a crucial engagement tool. The report also looks at a younger and more sophisticated demographic of shoppers: their digital consumption habits, such as their affinity for mobile retail, are reshaping the region’s luxury landscape.

The researchers highlighted that the expectations of Chinese customers for a personalized luxury online shopping experience include features such as online chat assistance, standard delivery in 1-2 days, and a full spectrum of digital payment methods, such as Alipay and ‘cash on delivery’.

Out of 34 luxury brands examined in “China Online Boom: yet to come for Ostrich Luxury Brands”, only Cartier utilises the platform for full e-Commerce purposes, despite the importance of the platform to Chinese consumers. Others such as Chanel and Dior have used the platform for temporary stores selling single items.

The study warns that brands must make more efforts to engage with customers in China, as the domestic luxury market grew 10 percent in 2016 whilst foreign shopping remained flat. In fact, China represents 16 percent of the worldwide luxury market, a percentage almost doubled by the number of Chinese Luxury Customers who represent 30% of worldwide fashion and luxury market.

Marco Pozzi, Senior Advisor at Contactlab, comments: “As the buying power of the domestic Chinese market increases, some global brands are upping their game by adapting their marketing and customer engagement strategies to meet these preferences. Over the next couple of years, the value for global luxury brands will be sizable if they can get their digital engagement right in China”.

Marco continues: “It is undeniably tough to create a best practice experience when you’re dealing with such a specific set of customer preferences. However, brands can help themselves by implementing practices such as a systematic benchmarking of Digital Best Practice in order to fill the gap with Chinese e-tailers that are able to provide Chinese customers a seamless shopping experience with those features that local customers consider crucial”.
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