Future of Retail Lies in Clicks, Not Bricks

An increasing number of fashion and beauty product shoppers are turning to online sites in preference to bricks-and-mortar outlets, Tiffany Tan reports.

Lu Yiqing loves to shop but detests going to shopping malls. Instead, she spends about an hour each week browsing foreign online shopping sites for clothes, shoes, accessories, makeup and other beauty products. "Goods at local malls are quite expensive, and their prices usually don't correspond to their quality," Lu says, adding that the clothes and shoes she orders overseas usually cost a third of their price tags in China.

The 24-year-old Shanghai resident became a fan of online shopping — as well as British and Italian fashion brands — while studying for her master's degree in England two years ago. Now she makes a handful of purchases on her laptop each month while waiting for foreign retailers' big summer and Christmas sales.

Since product returns are free and easy, unlike Chinese online purchases, Lu says, she doesn't mind paying up to four times the domestic shipping rates.

Sun Qiong is another Chinese fashionista who stays clear of bricks-and-mortar stores. The new-media executive considers mall visits a "waste of time" since they often involve fending off overeager salespeople while not actually finding the things she needs.

"I'm the type of shopper who knows exactly what she wants," Sun, 39, says by phone from her office in Shanghai. "I've never liked salespeople following me around. I don't appreciate that kind of service."

Foreign shopping sites, which she discovered through a magazine in 2010, turned out to be her type of service. With just a few taps on her MacBook, and without having to step outside her home, Sun has found brands of accessories that aren't sold in Chinese stores.

Consumers like Lu and Sun are among the reasons foreign online retailers have dived into China in recent years. Of the 591 million Chinese with Internet access — almost half of the country's total population — 271 million shop online, according to January-June 2013 statistics from the China Internet Network Information Center.

Within the year, China's e-commerce market is expected to overtake that of the United States as the world's largest by total customer spending, says management consultancy Bain & Company. Drawing the biggest number of online shoppers — 91 percent, according to a recent Nielsen survey — are sellers of clothing and fashion accessories.

In 2010, Yoox Group launched the Chinese e-commerce sites of seven fashion brands, including Armani and Dolce & Gabbana. Over the next two years, the Italy-based company opened the Chinese versions of the multi-brand stores thecorner.com and yoox.com.

The group's China expansion has involved opening a domestic logistics center from where all Chinese orders are shipped, adjusting clothing sizes to respond to market needs, as well as doing local collaborations, such as styling the looks of contestants on Hunan TV's Super Boy talent show.

"We believe localization is one of the keys to success in the China market," Mimi Vong, China country manager of Yoox Group, says in an e-mail interview.

But in other areas, the company is turning international practices local. It offers Chinese customers a "butler service", which allows them to try on purchases while a courier waits up to half an hour to see if the person wishes to return any items.

The Outnet, run by the same group behind the online fashion retailers Net-a-Porter and Mr Porter, last year unveiled its Chinese website — its first non-English site. And among its three international teams of buyers, which watch out for market trends and demands, one is based in Shanghai; the others are in New York and London.

The company, which has headquarters in England, isn't surprised e-commerce has grown so quickly in a country of China's size.

The Internet "provides amazing access", Stephanie Phair, The Outnet's global managing director, says by e-mail. "Women living in second- or third-tier cities can access great fashion just like those living in Shanghai or Beijing."

Shopbop, a fashion retailer owned by Amazon.com, introduced its Chinese site in 2011. On it, the company has maintained its English website's layout, general product offerings, as well as prices — when imported goods are normally more expensive in China due to the country's tax regulations.

Price is currently the battleground in Chinese e-commerce — the most important factor taken into account by consumers when deciding on their purchases, says the Nielsen online-shopping survey.

For fashion-forward consumers, the quest for exclusivity is becoming a growing motivation for seeking out foreign retailers.

"We have also seen our customers' interests in China echo that of our customers globally," Darcy Penick, Shopbop's chief merchandising officer, says in an email. "She is coming to us for what's new and what's next in fashion, and not only shopping large, globally recognized brands."

Logistics, which includes product delivery, remains one of the major challenges for online retailers in China. But entrepreneurs are focused on the bigger promise in Chinese e-commerce.

One of the people about to wade in is Lu Yiqing, who is launching her own fashion shopping site this month. The marketing management graduate says she wants to make it easier, less expensive and more enjoyable for Chinese consumers to get their hands on foreign brands.

The business will give Lu even less time to visit shopping malls.