Oct 24, 2018
2 min

Hermès Continues Chinese Expansion with E-Commerce Website Launch

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Chinese shoppers account for a significant proportion of growth in the global luxury goods sector. Hermès launched its Chinese e-commerce website on October 17, according to Chinese luxury news site Jing Daily. The new Hermès site features a wide assortment of ready-to-wear men’s and women’s apparel as well as accessories and handbags. However, the iconic Birkin and Kelly bags are not available on the site. Luxury shoppers often wait a year for these high-priced, highly sought-after luxury markers, and they must still purchase them at an Hermès store location. Luxury shoppers seeking immediate gratification can often find the Birkin and Kelly bags for sale at consignment resellers. The new e-commerce site launch follows the company’s September announcement that it planned to open its 25th store in China, in Xi’an, Shaanxi Province, as it pursues Chinese luxury shoppers in their own country. Chinese shoppers account for a significant proportion of growth in the global luxury goods sector, whether shopping abroad or at home. Bain & Company projects 20% growth (22% at constant exchange rates) in sales of personal luxury goods in Mainland China in 2018. The consultancy expects young Chinese shoppers purchasing online to drive that growth, with social media providing a boost. The 20% growth figure compares with 6% growth that  Bain projects for the total global personal luxury goods market in 2018. Like many luxury companies, Hermès has been slow to adopt a digital strategy. Last year, the company tested the Chinese online channel with a WeChat pop-up store to introduce its Éperon d’Or Hermès x Apple Watch. E-commerce accounts for less than 10% of total luxury goods spending, but luxury goods brands are now focusing on the channel. Bain sees online sales of luxury goods accreting at a 12% rate through 2025, when e-commerce could represent 25% of total personal luxury goods sales. This year, luxury brands have been reporting solid, double-digit online sales growth as they meet new luxury shoppers where they discover, shop and buy—online. Kering’s Gucci has been a real standout, with third-quarter growth of 35% and online sales up 68%. On Kering’s October 23 call with investors, management spoke of a very healthy Chinese consumer, and said that sales in the Greater China region, including Mainland China, Hong Kong and Macau, grew at above 40%, in line with or even slightly higher than growth in the second quarter. According to Alibaba, more than 100,000 shoppers are spending more than ¥1 million ($159,000) on its Luxury Pavilion. The luxury site was launched in August 2017 and features about 50 luxury and premium brands, including Burberry, Givenchy, La Mer and Rimowa.

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