China’s growing middle class buys a lot online, including luxury goods, and that’s prompting upscale consumer brands to embrace all kinds of digital sales channels in China.
The latest example is Swiss luxury watch brand IWC, which this week launched a store on Chinese social media platform WeChat. Consumers can also visit the store by scanning a QR code from a poster on the IWC stores or IWC’s Chinese site.
IWC says WeChat can help it easily communicate with its loyal customers and better serve those who live far from the large cities in China where 43 bricks-and-mortar stores sell IWC products.
To visit the WeChat store, users first need to subscribe IWC’s account on WeChat and click store from the menu on the first page of the IWC account. Consumers now can buy about 30 watches, including Portugieser and Portfolio collections. IWC says consumers will receive their products within seven days of placing the orders.
The brand says the store inside of its WeChat account is its only authorized online channel in China. IWC doesn’t sell its products on a company site or on marketplaces like Alibaba Group Holding Ltd.’s Tmall.com.
IWC is not the first overseas companies to sell their products on WeChat. Italian apparel e-retailer Yoox Group S.p.A set up a similar shop on WeChat in 2014.
“Luxury brands have realized that e-commerce is a driver to grow sales. WeChat is a powerful tool for them as the app has more interactive features than a normal website or a brand app,” says Zhang Zhouping, China E-commerce Research Center’s senior analyst.
WeChat is a popular mobile-based social network in China, which enables users to connect with their friends in multiple ways, including via online posts, voice chat, conference call and group chat.
WeChat’s monthly active users topped 697 million in 2015, up 39% from a year earlier, according to the operator of WeChat, Chinese Internet giant Tencent Holdings Ltd.
Aiming to drive greater use of its app, WeChat has expanded well beyond social media. Leveraging its mobile payment features, WeChat offers various services, including taxi hailing, paying electronics bills, making doctor appointments and booking hotels. About 400 million WeChat users have used its payment features to buy products online or to transfer money, according to WeChat.
Enterprises also recognize that WeChat’s large user base represents a marketing opportunity. More than 8 million companies have opened official accounts and use WeChat to connect with consumers.
Tencent says more than 85,000 apps have connected with WeChat. For example, a WeChat user who wears a smart band could upload her fitness data, such as the number of steps she walked today, into WeChat and see how she compares to her friends.
To compete with Alibaba’s giant Taobao web shopping portal, WeChat offers brands and retailers several free e-commerce features, including order management. Companies or individuals can use those features to build their stores on WeChat and sell products to their followers or connections. WeChat says Chinese retailers generated $42 billion in sales through WeChat in 2015, according to the company.
Table: Digital expansion of luxury brands in China
Brands |
Category |
Type of expansion
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Time |
Salvatore Ferragamo |
Fashion |
Opens store on Xiu.com
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2012 |
Mont Blanc |
Fashion |
Launches Chinese e-commerce site
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2014 |
Burberry |
Fashion |
Open store on Tmall.com
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April 2014 |
Cartier |
Watch, Jewelry |
Launches Chinese e-commerce site
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October, 2015 |
Tods |
Shoe |
Open store on JD.com
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August 2015 |
TAG Heuer |
Watch |
Open store on JD.com
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September 2015 |
Hennessy |
Wine |
Open store on JD.com
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January 2016 |
Maserati |
Car |
Opens store on Tmall.com
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March 2016 |
Sources: Topguide500.com, 2016 China 500.
JD.com is No. 1 in the 2016 Internet Retailer China 500, which ranks retailers by their online sales in China. Although Alibaba accounts for the majority of online retail sales in China it is not ranked because it is not the merchant of record for any sales, instead, like eBay, providing a platform on which other companies sell.
For a full report on the opportunities for foreign brands to sell online into China, read “Open Door Policy,” which appears in the November 2015 issue of Internet Retailer magazine.
For more Chinese e-commerce data, please click here for the new-released Internet Retailer 2016 China 500.
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