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Rising Online Sales in China to Drive Luxury Goods Sector
Dec 01, 2009

Luxury items sales are expected to rise next year on the back of growing demand in China and picking of online shopping.
 
Bain & Company, a leading consulting firm, has said that the sales of luxury items will rise next year (2010) after a gap of three years (since 2007) due to the soaring demand in China and ticking up of online shopping, as reported by Business Report.
 
According to a study conducted by Bain partner Claudia D'Arpizio, there will be an increase of 1% in sales of luxury goods industry worth e153 Billion (R1.68 Trillion) next year, but the current year (2009) seems to be gloomy for the industry as revenue is likely to drop 8% (less than 10% predicted earlier).
 
The global online shopping has made a decent progress of 20%, but it still accounts for below 3% of total sales. Nevertheless, it will play a crucial role in the growth of luxury goods sales next year.
 
China seems to drive the sales of luxury items considering the fact that the number of online customers will increase in coming year. Growing availability of Web access, improving understanding of online applications, high online shopping, and complementary services and increasing investment by companies will support the growth in number of online customers in China. Besides, the annual growth of online B2C sector is expected to cross 100% in next two year.
 
Under the present challenging economic times, offline stores have lost their charm and online sales have picked up momentum due to price advantage and will attract more and more cost-conscious customers.
 
While online sales has been gradually making inroads to people buying style, it has made them to ponder upon concerns while purchasing; for instance – sellers’ reputation, post sales service, price, delivery and other buyers’ feedback. In fact, post sales services, seller reputation and other users’ opinions are the three elements that determine the level risk in online purchase.
 
However, some analysts argue that the Chinese people avoid online purchases because they are culturally more conservative savers who do not buy on credit. They believe that e-commerce will not be firmly grounded in China; its citizens don’t trust vendors because of fear of poor quality and piracy.
 
But a deep analysis of changing demographic trends gives a clear picture of Chinese people relationship with online shopping and its growing complexities.
 
According to a Research Analyst at RNCOS, “Change in the perception of people is enabling online shopping to firmly root itself in China. The willingness of generation next to trust online purchases and outburst in the number of credit cards gives a clear message that the online shoppers should exploit the transforming buying style.”

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