Market Research: Why Can't The Story Of Luxury Electric Business Go On?

"Building the supply chain is the only thing that will take effect next year. The reason why we do not want to do this is that we hope tomorrow will be effective."

Zhao Shicheng, the founder and CEO of the Shang pin network, was silent again after a long silence in May. Although the outside world has gradually understood the early termination of cooperation with TOPSHOP, it has no direct relationship with the latter's ability to provide strong support for offline expansion, but the TOPSHOP brand itself is going to decline because of its poor management.

But it is undeniable that the Shang pin net itself has come to another turning point of fate. A few days ago, Shang pin network again burst out to usher in third layoffs. The company team has been reduced from the original two hundred to 35 people. The June 15th promised salary has not been delayed.

In the development of Shang pin network, layoffs and self insurance are not uncommon. In 2012, the first layoffs in the Spring Festival, according to the staff at that time, due to the confusion in management and the delay in carrying out the revised version, the venture capital temporarily suspended the entry of funds. In 2015, the second time, more than half of the employees were fired.

In fact, despite the hardship of the two layoffs of Shang Ping network, a series of luxury vertical business operators such as Hohhot, hokhot and Zun have been closed down, which already indicates that the industry is stepping into the shuffle stage. Now, it seems that even the first storehouse of luxury electric business under the aura of the aura is under tremendous pressure. In the first quarter, it gave an embarrassing result of not increasing profits.

The story of luxury luxury electric providers may be coming to an end. On the one hand, for those players who still can not produce beautiful transcripts, it is obvious that they can not convince VC to open the already tightened pocketbook. On the other hand, the overall layout of luxury goods such as Tmall and Jingdong means that the rules of the game are being rewritten.

Just a few years, why can't the story of luxury electric business go on?

1. what is the luxury vertical electricity supplier?

Before talking about the rise of luxury electric business, it is necessary to answer a question: what exactly is buying luxury goods?

Veblen, an American economist, once proposed the "Veblen effect". He believes that the purpose of conspicuous consumption is not just the commodity itself, but to distinguish himself from others by this kind of consumption. In other words, money alone is not enough. Consumers have to prove that they have money.

Time goes back to 2010. At that time, China's economy continued to maintain strong growth, social wealth accumulated further, mobile Internet gradually popularized, social networks broke the barriers of time and space, imported the world's fashion information into the country, accelerated the new front-line / second tier urbanization, and further spread the consumption soil.

In other words, it is time to prove that we have money.

Driven by many forces, 2010 became the year of luxury consumption in China.

Bain statistics show that global luxury goods sales will reach 168 billion euros in 2010, up 10% from 153 billion euros in 2009, while sales in China rose by 30% to 9 billion 200 million euros, significantly higher than the global level; and the rising China Luxury Market Research Report released in 2011 by McKinsey can also see that 2010 has become the take-off point of luxury consumption in China.

The vigorous growth of consumer demand has naturally attracted a number of players into running. Looking at the market at that time, Tmall has not yet been born, Taobao, which is composed of C end businesses, can not be carried; and Jingdong, who has won the financing, has been busy transforming from 3C category.

The "luxury electric business" track is in a vacuum at this time, no matter whether the giants are standing on the starting line together, the competitors they face are actually many individual purchasing groups. Once the short board of personal buying and buying such as transaction trust and experience can be overtaken, the market can be quickly seized.

For example, the Shang pin network, which was launched on July 2010, soon handed over a beautiful report card with an average growth rate of 200% per quarter, and an average price of more than 2000 yuan per passenger, making it popular for capital in the next two years. It has won over 70 million investment including the investment of Xing Xing, Lei Jun, Si Wei and so on. But in 2011, it took the largest B round of financing in the history of domestic electricity supplier, with a quota of $100 million and a valuation of 500 million dollars.

However, the noise has only ended in three years. In the 2014-2015 year, the network, the product gathering network, the Jiapin net and so on went bankrupt, but Fifth Avenue, vip.com, temple library and so on announced the transformation.

Since consumer demand has not shrunk, why is the "Zhu Xiao tiger model" that has failed repeatedly? The reasons come from many aspects, such as brand, capital and so on.

On the one hand, the luxury brand at that time is still in the "last flourishing age", and there is still some resistance to the electricity supplier. The consumption of the millennial generation has not yet erupted, and a large number of luxury consumption still takes place online. There is a conflict between the channel and the brand protection between the platform and the brand.

On the other hand, the anticipation of capital for returns has constantly ripened the players and eventually pushed them into the abyss. At that time, high tariffs on imported luxury goods, and the role of exchange rate and tax exemption, absorbed a large number of luxury consumers outside the country. Statistics show that by the year 2011, purchasing data of major luxury goods areas in France, Italy and the UK showed that over 6 of buyers were from China.

Under the influence of two phases, many luxury goods vertical businesses fall into fake products and smuggled mire, and eventually bury the whole industry.

　　 2. "cat and dog" encirclement and suppression of luxury business circle

BMW marketing director has said this:

"My job is to make all young people over the age of 18 dream of having a BMW before going to bed."

This reveals a core logic of luxury sales: maintaining communication with non target users. Because for many people, luxuries are not on tiptoe. As a brand, it is necessary to put a desired seed in the mind of consumers ahead of time, and ultimately achieving sales is just one part of communication with consumers. This also determines that luxury sales are clearly not a "slow business" that can be quickly ripened by capital.

This "slow" is also reflected in the vertical electric business platform providers, the game continues to upgrade.

In May 2015, GUCCI, YSL and many brands of Kai Yun group filed a lawsuit against Ali, claiming that they knew the truth but still provided sales channels for fake products. The misunderstanding of both sides made Ma Yun once expressed the attitude of "losing the lawsuit and not reconciled".

In July of the same year, Ali threw more than 100 million dollars (about 621 million yuan) to quietly open the layout of luxury goods, and "offered" the charm of luxury luxury e-commerce website. But the deal is not a success. The latter is now only a flagship store in Tmall.

On the other side, the dispute between Ali and brand is further escalated. In May 2016, before the spring meeting of the international anti fake Alliance (IACC), many luxury brands threatened to withdraw from IACC, forcing IACC officials to suspend the membership that Ali had just acquired in April.

But it was also in 2016 that "Ali bought the world's largest luxury goods supplier Yoox Net-a-Porter (hereinafter referred to as YNAP"). Although Ali subsequently denied it, its enthusiasm for the luxury market is obvious.

It can be seen that in the first two years of the "vertical collapse" of the vertical electricity supplier industry, Alibaba is more likely to make up short boards by buying mature sales channels.

But 2016 is destined to be a turning point in China's luxury consumer market.

In 2015, Chinese consumers spent $116 billion 800 million on global luxury goods, accounting for 46% of the global market, but among them, up to 91 billion US dollars took place abroad, accounting for 78% of the total, while the domestic market accounted for only 7% of the global luxury market in the same period.

According to the South China Morning Post, in 2015, Louis Vuitton first closed the shops in the center of Yuexiu District in Guangzhou, then closed two shops in Urumqi and Harbin, while Burberry closed 4 shops in the mainland of China and Coach closed two.

In other words, nearly 80% of the luxury goods are "back", which has made the luxury brands at that time face the risk of losing the domestic market.

For the domestic consumer market, this is undoubtedly a huge loss. In March 7th of 2016, the director general of the Customs General at the Tianjin delegation of the National People's Congress participated in the discussion. When asked about the high price of imported high-end goods, he responded: at present, the State Council is actively adopting a tax reduction policy to attract overseas consumption back.

In fact, the luxury goods at that time also appeared more or less in the market performance.

In the year of 2015~2016, the millennial generation became the main consumer force, and also became the "culprit" of the decline in the performance of luxury brands. The luxury brands that inherit family design have failed to keep up with the fast changing fashion trend, and have been losing ground during this period.

And the brands that responded in time were the first to taste the sweetness.

The new generation of creative directors of GUCCI, who took office in 2015, began to break the established design rules, no longer adhere to the color, style, lace, silk, bandage, embroidery and so on. The feminine color design has been introduced into the whole line, which soon won the love of the millennial generation.

The foundation of all this is that GUCCI has fully updated the store decoration, advertising, supply chain and logistics, and digital marketing, such as electricity providers and social networking platforms. This has led GUCCI to soon lead the luxury industry.

The McKinsey luxury industry report predicts that "online luxury sales market share will double to 12% in 2020, and e-commerce will become the third largest luxury market in the world after China and the United States."

Of course, the uniqueness of China's market determines that foreign monks do not necessarily chant scriptures.

YNAP and Farfetch, two of the largest luxury goods providers in the world, have entered the Chinese market in 2012 and 2015. However, the two performances are still untenable. ASOS, New Look, TOPSHOP and many other brands have lost China, which proves that even the fast fashion self built channels can not be based, let alone the higher demand for luxury goods.

Chinese consumers crossing the PC Internet era are accustomed to Tmall users, Jingdong and other "super APP" Chinese users. It has been proven that it will not be wronged to the consumption of brand official channels.

In other words, if a luxury can still show its strength for many years, the past two years have begun to turn to Ali and Jingdong for survival.

Ali formally launched the luxury Channel Luxury Pavilion in Tmall in August 2017, and the first phase was 17, including Burberry, Hugo Boss, La Mer, Martha Lahti, Guerlain and Zenith.

In October last year, Alibaba announced that it would jointly set up a joint venture with YNAP, the world's largest luxury goods supplier, and Net-a-Porter and Mr Porter will directly enter Tmall luxury platform Pavilion Luxury.

Jingdong invested $397 million in June 2017 to become the largest shareholder in the UK luxury electric business Farfetch, and launched the independent luxury electric business TOPLIFE in October of that year.

In October last year, Jingdong broke up the luxury business from the men's luxury goods department and established it as a separate luxury department of the two level department. In February this year, Jingdong announced the merger of TOPLIFE into Farfetch's China business, and the luxury business was further focused.

So far, Tmall has won many resources such as YNAP, LVMH and so on through the YNAP. Jingdong has acquired many brands of Kai Yun group and Burberry group successively through its stake in the company.

The domestic luxury goods business two pattern has been laid down, and the luxury brands for survival are deeply bound with the two, which means the road of luxury independent electric business has come to an end.

　　 3. conclusion

For luxury brands, the continuous injection of electricity providers is not just expansion, but also self preservation.

In a recent report, HSBC stressed that the slowdown in iPhone sales in China would not be a case, and the next one might be luxury goods such as Louis Vuitton. This means luxury brands.

The two sides have been seeking a higher level of capital cooperation attitude, it is easy to see that taking YNAP and many other resources behind, and fully support Farfetch, for Ali and Jingdong, it will only be a appetizer for luxury racetrack.

After gradually enjoying the domestic luxury market, the experience of Chinese e-commerce players in the blood and fire will inevitably be exported to the world. And to that end, the whole luxury industry will probably be rewritten.

After sorting out the development course of luxury electric business track, it has clearly displayed some development logic behind it. The early exit of the luxury luxury vertical electricity supplier is more accidental.

And when we look at it, even if we are going through the bloody season of the year, the task of expanding the remaining market will eventually turn into the hands of Ali and Jingdong.