BEIJING, April 29, 2011 /PRNewswire-Asia/ -- Gilt has become a synonym for luxury e-commerce in the US and across Europe by building out portals based on their invitation-only + discount + luxury brands formula. Now, the luxury e-commerce wave is sweeping across China. Research shows that the web has become the luxury product buyer's second-most commonly visited locale for learning about luxury products, after bricks and mortar stores. More and more companies are taking advantage of the Gilt business formula to expand into the sector, which has witnessed increasing venture capital inflows.
VIPStore (Vipstore.com), one of the earliest luxury B2C online verticals in China, established a strong footprint due to its advantages in service, operating model and resources. The e-tailer received tens of millions of dollars in investment from a group including GSR Ventures, Taishan Invest AG, Green Pine Capital Partners and a Hong Kong-based syndicate in the first quarter of 2011. As a leader in China's luxury e-commerce market, its fast growth is a showcase for the market's huge potential.
Strong market demand is driving the fast growth of China's luxury market, and the market's exponential growth has provided considerable room for businesses based on the Gilt formula, such as VIPStore, to gain increasing popularity in China. "China is expected to replace Japan as the world's top luxury goods market in 2015 as it reaches annual sales of US$27 billion, and the country will account for 20 percent of global luxury sales," international management consulting firm McKinsey & Company said in its research concerning the emerging market.
"The country's luxury goods market made up ten percent of worldwide demand in 2010 compared with only one percent in 1998. The percentage of Chinese consumers who are buying luxury products as a personal indulgence is growing fast - up to 36 percent in 2010 from 25 percent in 2008. The 13 million middle class households with incomes between 100,000 yuan (US$15,248) and 200,000 yuan (US$30,497) offer the biggest growth opportunity," the McKinsey report showed.
China has become an emerging luxury market with the highest growth potential, which is proved by the strong growth in both sales volume and the number of consumers. "There are only four countries featuring two-digit growth in luxury consumption worldwide - Brazil, Russia, India and China -, and China's growth is the fastest among them," said Allen Yang, CEO of VIPStore.
Founded in 2009, VIPStore, has outrivaled competitors to become the most popular luxury e-commerce platform in China. Allen Yang said, "There are two reasons. First, we provide consumers a full array of services by having adopted the invitation-only sales model. The model, which leverages a consumer's pride in their social status and financial prowess, has become increasingly popular across the globe. Our consumers, for the most part, are young, white collar and entrepreneurial. They are concerned about the privacy of their personal data. Invitation-only meets the concerns they have about the security of this information."
"Second, VIPStore has established a global supply chain system and an advantageous pricing model based on the successful Gilt formula. The online retailer has established long-term solid partnerships with more than 500 luxury goods manufacturers and distributors worldwide, including Dior, Prada, Gucci, Burberry, Estee Lauder and Chloe."
Luxury goods, high-end products as they are, are typically expensive. VIPStore's price advantage in supply chain allows them to make luxury goods much more affordable for the buying public. The website is very popular among consumers as it serves as a bridge linking luxury goods and consumers by effectively eliminating the premium charged by resellers. The retailer's 60 percent compound growth rate in sales offers strong proof of the feasibility of the Gilt model in China.
Although the luxury market globally has been hurt by the Japan earthquake, China's luxury market continues to maintain its growth path. For this reason, industry insiders believe that global luxury groups will speed up efforts to adjust their marketing strategies in China and attach greater importance to the country in a move to counterbalance the shrinking of the Japanese market.
According to Allen Yang, the Chinese government has put in place a series of favorable policies with the aim of boosting the development of e-commerce overall, which, in turn, also will benefit China's luxury e-commerce businesses. The two factors collectively will help grow the sector in China, while providing new opportunities for VIPStore's aggressive expansion. As Chinese luxury buyers are increasingly returning to domestic outlets for these purchases, Gilt-oriented VIPStore expects to see a new round of fast growth.
About VIPStore Technologies Limited
VIPStore, China's largest high-end e-commerce platform providing fashionable products, is co-created by the country's excellent e-commerce teams and the top international investment institutions. It is the sister website of BuyVIP.com – Europe's most successful online outlet providing top branded products - in mainland China.
VIPStore, established in September 2009 and headquartered in Beijing, has offices in Los Angeles and Paris. Its global product supply chain network covers Europe, North America, Australia, Japan and South Korea. The website has received direct selling licenses from over 500 international luxury brands worldwide. It promised to sell products at super low discounted prices of up to 70 percent to 30 percent and to provide entirely genuine products. All products provided by the website are licensed genuine products of brands and the products' quality is underwritten by China United Property Insurance Company. All products on the website can be shipped to the customers without freight charges and customers can make payments on receipt of the products, and can return or exchange products within a week, without any conditions
Every day, VIPStore holds over 10 online thematic special offer campaigns on branded products for its members. In addition, the website holds off-line thematic and private special offer campaigns on luxury brands, keeping up with the international fashion trend, allowing consumers to have respectful and private shopping experiences.
SOURCE VIPStore Technologies Limited