Looking at luxury e-commerce from another perspective, the "temple library" in the growth period forges ahead

These are the best times and the worst times.

The development of science and technology has not only improved the quality of life of the public, but also promoted the development of consumption. According to the 2021 luxury industry analysis report released by Bain & Company, the total size of the global luxury market in 2021 will increase by 13% to 15% over the previous year, and the personal luxury market will break the pre-COVID-19 record, and the market size is expected to increase by 29%. Looking back at 2021, the luxury goods industry has mostly experienced a V-shaped recovery.

Although this vast market scale makes luxury e-commerce look "promising", from the current situation, the industry players represented by Secoo are not easy in the process of development.

The penetration rate of luxury e-commerce needs to be improved, and the growth period of the temple is stumbling

When it comes to luxury goods, it first originated in Europe after the end of the Middle Ages.

Europe, as the birthplace and gathering place of global luxury goods, such as L'Oréal, LVMH, Burberry, etc., has a strong luxury culture atmosphere. In addition, according to Savills' Global Luxury Retail Outlook 2019 Report, London ranks first among the top 5 cities in the world, accounting for 9.6% of the world's new luxury stores opened in 2018.

According to deloitte's 2021 Global Powers of Luxury Goods 2021 report, in the list of the world's top 100 luxury goods companies, the headquarters of the listed companies are mainly in Europe and the United States, while only 9 companies in China are on the list.

Judging from the data, the overseas luxury market is relatively mature, while the domestic market is still in the development stage compared to it. From the perspective of the luxury e-commerce industry, according to the analysis of luxury industry data released by Ai Media, the penetration rate of luxury e-commerce in China will gradually increase in 2016-2020, of which 6% in 2016, 11% in 2020, and 13% in 2021.

And according to the data of the Head Leopard Research Institute, the scale of China's second-hand luxury goods market accounts for only 5% of the entire industry market size, compared with the 20% or even 30% of developed countries.

Based on this background, most of the items on the luxury shopping platform come from abroad, so the pricing power is in the hands of the supply side, and it is difficult for the e-commerce platform to have the right to speak.

Secondly, in order to maintain their brand value, luxury brands generally do not sell on the more "civilian" e-commerce platforms in the eyes of the public. Although they also value digital channels, they will still prefer to sell their products through official websites, official apps or offline physical stores to strengthen their brand image.

Therefore, the brand side will find ways to shrink the wholesale channel, which also makes the development of many luxury e-commerce platforms more passive, with the catwalk network, the treasure network and so on have "fallen". On this track, Secoo can develop to this day still has a certain strength.

It is reported that Secoo provides users with more than 420,000 SKUs, covering more than 3,800 brands around the world. Relying on a proprietary database of high-end products, certification procedures and brand collaborations, Secoo is able to ensure the authenticity and quality of every product offered on its platform.

Because domestic luxury e-commerce is still in development, this also makes Secoo face a certain test in the growth of some core data. According to the financial report, Secoo's GMV 1 in the first half of 2021 reached 5.0278 billion yuan (US$778.7 million), compared with 6.1080 billion yuan in the first half of 2020.

If you look at it objectively, if the players of luxury e-commerce want to embark on the road of large-scale development, in fact, the outside world must give them enough time, after all, the increase in market penetration rate can not be solved overnight. Looking to the future, in the field of luxury e-commerce, how should we view the platform value represented by Secoo?

The track dividend has yet to be tapped, and it takes time for luxury e-commerce to usher in the spring

At present, there are many problems in the development process of the domestic luxury market, but it is undeniable that the track has great prospects.

According to the "2021 China Luxury Market Report" (hereinafter referred to as the "Report") released by bain & Company, a consulting agency, China is expected to become the world's largest luxury goods market in 2025. In 2021, the size of China's personal luxury goods market will double from 2019, and it is expected to increase by 36% year-on-year in 2021 to nearly US$73.6 billion (about 471 billion yuan).

(Source Bain & Company)

At the same time, from the perspective of consumers, the demand for luxury consumption by more and more users is also growing.

According to the "2020 Hurun Wealth Report" released by the Hurun Research Institute in February 2021, the number of "wealthy families" with assets of 6 million yuan in Chinese mainland has reached 3.99 million, an increase of 68,000 households over 2019, with a growth rate of 1.7%. It can be seen that the purchasing power of the Asian region, especially Chinese mainland, has shown a steady increase.

Despite the impact of the epidemic, in order to attract the return of consumption, the domestic tax exemption policy has continued to be relaxed, mainly reflected in the increase in quota and channel expansion. In 2011, the tax exemption policy for outlying islands was officially implemented, and since then, the quota has been raised, the variety has been expanded, and the coverage channels of outlying islands have been expanded.

In May last year, Secoo unveiled its Hainan International Business Strategy at the inaugural China International Consumer Goods Fair. Since the Ministry of Finance announced in 2020 that Hainan can include new products in the tax-free list and increase the amount of duty-free shopping, Hainan's development momentum has been strong. At the same time, according to the national "14th Five-Year Plan", Yangpu Port on Hainan Island will be built into an international container hub port in South China.

Based on the remarkable effect of the implementation of the tax exemption policy on Hainan's outlying islands, the development of the duty-free industry has accelerated. According to the report released by the Prospective Industry Research Institute, in 2020, the duty-free sales of Hainan Outlying Islands on the mainland increased to 27.479 billion yuan, an increase of 103.67% year-on-year; the number of shoppers achieved a growth of 19.2%, reaching 4.4837 million.

Through the new strategy of Hainan, Secoo is actually the first to seize the huge opportunity of the development of the Hainan Free Trade Port. In the future, Secoo will strengthen the richness of the product portfolio, and how to further deepen the global brand relationship and improve the global supply chain system is actually to enhance the technical empowerment of customers and brands.

In addition, Secoo also links live broadcasts with Kuaishou, and the data results are acceptable. According to a data from Northeast Securities, in March 2021, the luxury live broadcast base cooperated by Kuaishou and Siku was officially launched, and the final total popularity value exceeded 20 million, the live viewing popularity value reached 170 million, and the average unit price of popular brands reached 1226 yuan.

However, it should be noted that live broadcasting can indeed bring traffic to the platform, but it is somewhat contrary to the high-end sense of luxury itself, so whether its subsequent development can achieve greater results is still considerate.

But in any case, the positive prospects of luxury e-commerce have been reflected in the reaction of the capital market, according to the data of it orange, from 2020 to now, second-hand luxury e-commerce platforms in the primary market have attracted considerable capital attention, and emerging platforms have frequently obtained financing.

Overall, investors may be able to give more time to observe the luxury e-commerce platform represented by Secoo and look at the development prospects of the track from a long-term perspective.

epilogue

Wu Xiaobo once wrote in "Thirty Years of Turbulence": When this era comes, it is impossible to be sharp. All things grow freely, dust and dawn rise, rivers converge into rivers, nameless hills rise as peaks, and the heavens and earth are incomparably open for a while. It is foreseeable that as the luxury market matures, for the players represented by Secoo, they may also be able to welcome some changes in value.