U.S. online retailer Le Tote is looking for 3,000 Chinese women to test whether shoppers in the world’s largest e-commerce market will embrace its model of sending subscribers, for a monthly fee, boxes of clothing and accessories that they can rent for as long as they like.
To recruit that test group, Le Tote, No. 677 in the Internet Retailer Top 1000 ranking of North America’s leading online retailers, has turned to WeChat, the pervasive messaging service and social network in China. Consumers interested in being part of the test can sign up within Le Tote’s WeChat account. After a month of promoting the test, Le Tote is close to its goal of signing up 3,000 women, says Le Tote’s founder and CEO Rakesh Tondon.
Tondon says Le Tote is not spending heavily on marketing the test at this initial stage. “We work with about 100 influencers and place online ads on WeChat,” he says. “Both work very well for us.”
For 499 yuan a month (about $79), Chinese shoppers can receive a box containing either four items of clothing or three garments and two accessories. They can keep those items as long as they want and send them back when they want to rent different items. The service works similarly in the United States, where the monthly subscription fee ranges from $59 to $79, depending on the number of items in each box, or “tote.” As in the U.S., if a shopper chooses to keep an item Le Tote will bill her for the purchase price.
The selection available to Chinese shoppers includes some 3,000 items from fashion brands such as BCBG and Rebecca Minkoff.
Le Tote’s entry into China, its first international foray, follows a $30 million investment in the San Francisco-based e-retailer by the Tang family, which last year sold its Hong Kong-based Belle International footwear company to private equity firms for $6.8 billion. Clement Tang, who was an executive at Belle International, now manages Le Tote’s China division.
China offers Le Tote a target market of 400 million women who buy fashion products, Tondon says. “With a large volume of women joining the workforce, we believe there is a growing demand for our service among the Chinese middle class,” he says. “The timing is appropriate, and we’d better capture the huge market opportunity before others do.”
Le Tote plans to formally launch its service in China in the spring, but first is observing its initial subscribers to learn about the differences between women in China and the United States. Tondon says Chinese women seem more interested in what’s trendy while U.S. women are more focused on utility. He also says the Chinese women signing up are younger—typically 28 to 32—while the typical U.S. subscriber is about 35.
In testing the service initially with a limited number of women, Le Tote, which was founded in 2012, is following the strategy it employed before launching in the United States, where it conducted a test with about 1,200 women. Le Tote targeted women in their late 20’s who liked to go out, but found that the women most interested were in their early 30s.
The China service is initially available through WeChat, and subscribers can use WeChat Pay, a widely used online payment method in China, to pay for the service.
“Eventually, we would love to look at other platforms, but WeChat is the right place for us to start,” Tondon says. He adds that Le Tote also is building a mobile website and mobile app for Chinese consumers.
Le Tote China, which has about 50 employees, is headquartered in the big southern China city of Shenzhen, with satellite offices in Beijing and Hong Kong. The e-retailer is building a distribution center in Dongguan, about 45 miles north of Shenzhen that covers a 120,000-square-foot area and has plans to open two similar warehouses in Beijing and Shanghai in the next six months, Tondon says.Favorite