Cross-border e-commerce is becoming a priority for brands, representing 736 billion dollars by 2022. Quite logically, marketplaces are the primary channel used, including for luxury brands, which are highly prized by Chinese consumers.
According to the Global Voices 2022 study, carried out by ESW among 14,000 consumers in 14 countries, France is the world's fourth-largest market for cross-border online purchases (14% of the global panel), after the United States (53%), which has just overtaken China (39%) and the UK (21%). In fact, French e-commerce sites are attracting more and more buyers around the world, led by the Chinese population (1.43 billion inhabitants!). French brands have thus contributed to the explosion in Chinese cross-border e-commerce, which has increased tenfold over the last five years according to Chinese statistics.
French luxury products are doing particularly well: 28%(1) of global consumers buy French brands. French luxury products are the most popular among buyers in China (52%). This trend is confirmed by the 2023 edition of the Hurun ranking, particularly in the beauty category, where the top 5 are exclusively French: Dior, Chanel, Givenchy, Yves Saint-Laurent, and Guerlain.
37% of buyers of luxury goods use marketing platforms
"You can't go to China without going through a marketplace", points out Michael Koch, a consultant specialising in cross-border e-commerce and author of the book "55 outils et 11 plans d'action pour réussir en e-commerce" (Vuibert, 2022): "These days, most consumers prefer to buy on marketplaces because of the variety of products on offer, as well as the possibility of comparing and filtering items according to price, score, delivery time, etc. Clearly, buyers are buying on marketplaces because of the variety of products on offer, as well as the possibility of comparing and filtering items according to price, score, delivery time, etc.". Clearly, shoppers are using marketplaces for convenience". Most French luxury brands are present on Tmall, the cross-border e-commerce platform of Alibaba, the market leader for luxury goods and services in China thanks to its size (800 million customers around 290,000 brands). Tmall offers luxury brands a variety of segments that are different from those of its competitors: Tmall Classic, Tmall Global, The Luxury Pavilion, etc. Enough to motivate Spain's Puig to take the plunge.
Especially as the Chinese perfume market has been growing at an annual rate of almost 15%. Over the next five years, this figure could even exceed 22%, three times the global growth rate of the fragrance market, according to the Kantar & Eternal Fragrance Report 2021. According to the study, only 5% of the Chinese population currently uses perfume. The other 95% are potential customers!
Puig joins forces with Tmall to educate Chinese shoppers about perfume
To develop this segment, Tmall has launched the Scent Visualizer, a technology developed by Puig. In practical terms, this tool displays the main olfactory components of a perfume, enabling the user to visualise, "literally", what the perfume smells like. "We have specially adapted the descriptions and visualisations of fragrances for the Chinese consumer, working hand in hand with Tmall", says Camila Tomas, Global Innovation & New Technologies VP Puig. The partnership quickly bore fruit: in just two weeks, the Puig Group recorded 5% growth in its GMV (gross merchandise value) on the digital channel. As Camila Tomas confirms: "We expect this first phase to be the start of a long-term collaboration that will elevate the perfume category for Chinese perfume lovers".
The Puig Group has ambitious targets. By 2025, it expects China to generate a quarter of its revenues! A forecast that echoes those of Morgan Stanley. "After a three-year hiatus, the reopening of China will boost luxury goods sales by 20% this year and account for 60% of spending growth by 2030," reads its latest report.
By interfacing with the major Chinese marketplace, Puig has chosen the most direct route to reach local consumers. However, there is nothing to stop it from opening a local site at a later date.
"The risk of cannibalisation between the marketplace and DtoC sales can be a deterrent for some. However, in my experience, the most I've seen is 10% cannibalisation. That just goes to show that it's not an issue". Michael Koch, consultant specialising in e-commerce.
For the time being, however, marketplaces remain the spearhead for brands wishing to launch their business in China. This is all the more true given that they are moving towards ever greater interactivity (live shopping, metavers, etc.) in order to appeal to younger consumers, who are increasingly keen on luxury goods.
For example, to date, 67% of the customers of Tmall's Pavilion Luxury (2) are Chinese millennials. Added to this are 17% of Gen-Z buyers (born between 1996 and 2010), up two points between 2020 and 2021. Although still small in number, they are the ones setting the pace.
Last year, for example, the total number of luxury gifts purchased by consumers born after 1995 exceeded those born after 1985 for the first time on Tmall's luxury pavilion. These younger consumers are also more willing to pay for experiences and have a greater desire to stand out from the crowd. This explains their greater willingness to visit brand sites when shopping cross-border!
The boom in cross-border e-commerce :
In France :
- 36% of e-merchant traffic
- Almost a quarter (23%) of their sales
Source: Shopify study, 2022
Worldwide:
- 17% of global e-commerce volume
- 736 billion in 2022
- 6,000 billion by 2030
Source: Forrester Online Cross-Border Retail Forecast, 2018 To 2023 - Global
Source: Forrester
(1) ESW "Global Voices: 2022" study
(2) Alibaba