When Topshop, the English fast fashion retailer, decided to sell its products in China, they didn’t open a store but launch their own e-commerce platform first via ShangPin.
But Topshop is not the only example of major brands which decided to launch its brands without opening physical stores.
Costco, the fourth distributor in the USA, operated the same way to hit its Chinese targets by setting up a store on Tmall and launching it on Nov, 11, the “Day of singles”; the equivalent of the Black Friday in the US.
But is that common in China?
Yes, it is! Opening an online store via a platform like Tmall or its own website is actually a way of testing its products without taking big financial risks. In fact opening a shop can be quite expensive compare to an e-commerce platform.
Then, if it works you can still open a store later! It’s also a way of knowing which products your Chinese consumers are looking for and prefer so that you can adapt your strategy and then minimize your costs.
And this practice is not only common for Westerns brands, even several Chinese’s brands first opened their online shop rather than a classical brick and mortar. Xiaomi, a company specialized in making smartphone decided at the beginning to sell its products via Internet.
And that’s true that it’s a good way to be able to reach his target even in the most remote places where almost everybody right now in China have access to Internet thanks to mobile phones. So when you sell you products online you can hit more people than with a usual brick-and-mortar shop in one of the biggest city in China.
The e-commerce is blooming in China
The numbers can make you go haywire. In 2014, the Chinese spent $315,2 billion through e-commerce (compare to $441 billion for the USA).
In 2016, the Chinese e-commerce sales will be greater than the one in the USA.
Then you can consider China as a huge laboratory for experiments.
Is is risk-free?
No, it’s not! You’ll have to make marketing investment if you want to increase your brand awareness. If nobody knows your brand, nobody will buy your products.
When Topshop launched its online boutique, they organized a huge event and invited celebrities (like the singer and actress Wang Luodan) and bloggers.
The event was a huge success as 250,000 people looked up for the brands on their mobile after the event.
What about the retail risks?
Selling online is less risky than opening a store for sure. The rent are becoming super expensive in China and finding a place available in a good location is not that easy.
Some major brands have completely failed before. Best Buy the American electronics retailers closed its boutiques because its prices were too high for the Chinese market (The Chinese market is actually a market where the consumers are very sensitive to prices).
Mattel also failed and shut down its Barbie’s mega-store in Shanghai because of disappointing figures two years after its opening.
Then I would say without any doubts go with e-commerce first, market your brand, adapt your strategy, wait for results and if its works think of opening a store but not before.
No need to rush to succeed!
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