KPMG has recently launched a new e-commerce survey of online luxury spending in China. The study is a sequel to a 2014 survey which also analysed these patterns in China. Overall, the report highlights the rise of online transactions within the Chinese luxury goods market, as well as the increasingly important role social media and mobile are playing on purchase patterns. Some interesting facts are the increasing influence of the traveling Chinese luxury consumer and the rapid rise of mobile commerce.
Online confidence is booming
45 percent of luxury online shoppers now buy over half of their luxury goods online, which is an increase of about 28 percent compared to the 2014 study. It is expected that 50 percent of China’s domestic luxury consumption will be generated online by 2020. The top driver for purchasing online remains pricing and good deals.
Mobile commerce expenditure is growing
In previous reports, we reflected on the start of the mobile age in China. They are the largest market in the world and will lead global ecommerce. Consumers have grown with sophistication, buying many different services on mobile platforms and we expect that this type of expenditure will soon exceed the PC internet platform. Companies must therefore develop the right strategies to survive in an increasingly disruptive environment, as we will see a massive movement in the number of service industries online.
Spending in the digital world is increasing
Chinese consumers, compared to Western consumers, most likely spend more in the digital world. They are willing to shop, consume, entertain and live within this virtual environment. It is how they are connecting with friends, family and a broader community.
Online luxury services are booming
Consumers are moving away from simply owning a luxury product to experiencing luxury. The study shows that also the number of luxury services purchased online, such as hotel bookings or domestic and overseas trips are increasing.
Implications for Swiss luxury brands
Mainly the Swiss watch industry, but also other Swiss luxury products (ie. jewelry, leather accessories) will benefit from this growth in online shoppers. If not already implemented, high-end brands should adapt their web presence and include the possibility for online shopping. Nevertheless, very high-end watches and jewelry will stay the exception when it comes to online shopping, as these items are meant to be seen and touched before an actual transaction. Finally the rise of online transactions, especially the disperesed sales of luxury products could affect the branding and reputation of the industry due to online discounts as well as the risk of counterfeits.