Wen 丨 Han Xiyan
Is luxury e-commerce a false proposition? After the suspected failure of "Wanlimu", this topic was brought up again.
Recently, according to media reports, the luxury e-commerce brand "Wanlimu", which has spent a lot of money on the market, has basically failed, and the internal focus has begun to shift at least to the children's offline quality education project "Wanlimu Children". In the first half of last year, "Wanlimu" played the slogan of "ten billion subsidies", but still failed to reverse the market situation.
In fact, this is not the first luxury e-commerce platform to have problems, before it, there are also siku, catwalk network, Shangpin network, privilege network...
In 2020, the sales of the Chinese mainland luxury goods market achieved a high growth rate of 48%, and the market consumption scale reached 346 billion yuan. Some practitioners told Pencil Road that in the context of the growth of the entire luxury industry in China, luxury goods and e-commerce are divided into three major factions after the combination: vertical e-commerce, integrated e-commerce and second-hand luxury trading platforms.
However, under the dual pressure of external competition and internal problems, the luxury e-commerce market can be described as chaotic. Some signs now are that under the pressure of large-scale comprehensive e-commerce such as Tmall and JD.com, the space for vertical e-commerce is getting smaller and smaller.
However, it is worth noting that through live streaming with goods, the second luxury platform is more favored by capital and ushers in a new period of growth. The relevant person in charge of a certain second luxury platform said that the unit price of live broadcast customers on its platform is 3 times the unit price of regular customers.
This makes people have to re-examine, is luxury e-commerce a false proposition or a real proposition?
Note: The content of this article is mainly from the reporter interviewed by pencil road and the public information on the Internet, and the arguments are inevitably biased and not deliberately misleading.
Luxury e-commerce = pseudo-proposition?
Another luxury e-commerce company is in deep danger. According to Tech Planet, Qudian's previous high-profile luxury e-commerce "Wanlimu" has now failed.
It is understood that in the "Wanlimu" Mini Program, all beauty products have been removed from the shelves, leaving only a small number of shoes and bags, most of which are previously unsold inventory goods. The report also mentioned that not only is the goods no longer updated, Wanlimu has been in a state of internal shutdown, leaving only a few operation personnel to maintain the status quo.
At the same time, employees who were previously recruited to open up the luxury e-commerce market were either required to resign or transferred to the new project "Wanlimu Children".
There are traces of the fall of the Purpose of Ten Thousand Miles.
On March 19, 2020, Qudian launched the Wanlimu project on the eve of its sixth anniversary, announcing that it intends to leverage the luxury e-commerce market through tens of billions of subsidies. Wanlimu insists on self-operation of the whole station, the buyer team is stationed overseas, the global source of goods is directly purchased, and Luo Min, founder and CEO of Qudian, also said that he intended to "bring more changes to the global luxury e-commerce industry".
However, in the actual operation, in the three quarters after its establishment, although the sales revenue of Wanlimu was growing, the comprehensive sales and marketing costs were still in a state of loss.
In fact, Qudian has long shifted the focus of Wanli from luxury e-commerce to children's education. Around August last year, the "Wanlimu Children' Project" was launched, and in January this year, Xiamen officially launched the first Wanlimu Children's Growth Center. According to the latest information disclosed by Qudian, "Wanlimu Children focus on the comprehensive quality education of children aged 0-9 years old, and help Chinese children to enlighten their interests in sports, art, expression, thinking and other fields."
A practitioner in the field of e-commerce analyzed the pencil road, burning money is difficult to last, and even repeatedly fell into the "sale of fake doors" questions, coupled with the business scale has not seen significant efficiency, under the superposition of various factors, may be the reason why Qudian chose to give up the purpose of Wanli.
Wanlimu is not the first well-known luxury e-commerce company to be poorly managed. Luxury e-commerce since 2009 has experienced brutal growth, financing boom, and has also encountered several reshuffles, players are deeply involved in the shortage of capital chain, layoffs, structural shrinkage and other issues, but also many star players died in competition.
In January this year, Secoo issued an announcement that it had received a privatization offer from founder, chairman and CEO Li Rixue. Siku, which has been listed for less than three and a half years, has not been recognized by the capital market, and its market value has seriously shrunk and its stock price has been depressed for a long time. At the time of listing, it was priced at $13 and had a market capitalization of approximately $670 million. Today, the stock price is only $2.50, and the market value is $177 million.
Further ahead, Shangpin.com, which once threatened to "convince" Ali and JD.com, fell directly.
The question of whether luxury vertical e-commerce is a false proposition has not been broken.
The space for vertical e-commerce is getting smaller and smaller
Returning to the pure luxury industry, the market situation is not as bad as imagined.
On the contrary, the growth momentum is clear. In 2020, the sales of the Chinese mainland luxury goods market achieved a high growth rate of 48%, and the market consumption scale reached 346 billion yuan. Some analyst reports predict that in 2025, China is expected to become the world's largest luxury goods market, and the domestic luxury goods development space is still very large. Luxury online trading also has a lot of room for development. The data shows that in 2021, the penetration rate of the online luxury goods market will reach 13%.
Luxury growth and access to the internet are established trends. In order to enrich their SKUs and improve profitability, e-commerce giants have already entered the luxury category. For example, during last year's Singles Day, more than 1,000 new luxury products chose to debut on Tmall luxury. Comprehensive e-commerce platforms such as Alibaba and JD.com continue to increase their layout, and these platforms quickly seize market space with their advantages in traffic and funds.
"In fact, in the transformation of luxury brands to touch the net, it is also more inclined to the integrated platform. This tilt of upstream resources in the supply chain also further compresses the living space of vertical platforms. An e-commerce industry practitioner told Pencil Road.
Regardless of market-level competitiveness, bargaining power at the supply chain level, or other capabilities, luxury e-commerce as a "middleman" is difficult to compete with integrated platforms.
He introduced that as a "middleman", the price will inevitably be higher than the flagship store model, and neither the brand owner nor the consumer has a reason to choose the "middleman". What's more, the size and sense of security that giants have are more likely to attract consumers to tilt. From a scale perspective, the profitability of integrated platforms will be better than that of vertical platforms.
A typical case is that Farfetch, a luxury e-commerce platform from abroad, has gathered investment from three major factories in China, JD.com, Tencent and Ali. According to the earnings report, Farfetch's GMV in the first quarter of 2021 increased by 50% year-on-year to $916 million, and the loss narrowed to $19.196 million. It is worth noting that Farfetch's transaction volume from third-party platforms has accounted for 85% of e-commerce GMV, far exceeding its own platform. This third party refers to the Tmall flagship store, WeChat Mini Program and other sectors.
The living space of luxury e-commerce in the cracks is getting smaller and smaller, does luxury vertical e-commerce really have room for growth? The above-mentioned e-commerce industry practitioners expressed doubts.
In addition, during the COVID-19 epidemic in 2020, with the impact of the epidemic on physical stores, many luxury brands have taken the initiative to cooperate with Tmall and JD.com, making it more difficult for luxury vertical e-commerce.
From the perspective of the development path of the existing vertical luxury e-commerce platform, it basically extends from simple sales to offline services, second-hand luxury goods identification, recycling and consignment, etc., and the pure luxury vertical e-commerce has almost ceased to exist.
Live broadcasting has become a new growth point for second luxury transactions
Would it be a better business model to cut into the second-hand market without trading first-hand luxury goods?
The traditional second-hand luxury goods industry relies on information asymmetry to earn the difference, and it is difficult to generate a sticky sense of user trust. With the transfer of the trading scene to online, a second-hand luxury goods trading platform based on consignment models has been developed. The income of the consignment model comes from the service fee, the valuation is transparent, the platform matches the transaction to reach, and the sales rate is improved.
Corresponding to the growth of the luxury goods market, the circular economy of second-hand luxury goods consumption is also gradually expanding. According to the "2021 China Second-hand Luxury E-commerce Platform Consumption Insight Report", 55.4% of the second-hand luxury purchase channels of Chinese consumers in Q1 2021 will come from second-hand luxury goods trading platforms.
When young users buy second-hand luxury goods, they can not only find cost-effective products, but also complete the luxury entry experience and realize the user education of luxury categories. In this closed loop of buyer consumption, a good consumer experience and product experience are the important factors for whether they will continue to explore the consumption of luxury goods in depth, rather than the completion of the transaction behavior itself.
Moreover, young people have become the main group of second-hand consumers, they pay more attention to the product itself, and the social experience brought by the purchase of luxury goods is not its main need. A wider audience and a label that meets the low price of e-commerce. As long as the crisis of trust can be eliminated, the second-hand luxury goods market seems to be more in line with the positioning of luxury goods on the Internet.
Listed on the capital market, projects with second-hand luxury goods transactions also seem to be more popular with investors. In 2021, when luxury vertical e-commerce is in a slump, the second-hand luxury goods sector has frequently obtained financing.
"In fact, the demand for second-hand transactions has always existed, and the emergence of new forms such as live streaming has further expanded the development space." The relevant person in charge of a second-hand luxury goods platform said to Pencil Road.
He also said that with the exploration of live streaming with goods, the performance of the platform has increased greatly. This growth is not just one or two individuals, the recent red Bolling released the "2021 China second-hand luxury e-commerce platform consumption insight report" shows that from 2019 to 2020, the length of time spent watching live broadcasts by second-hand luxury users showed a significant upward trend, and the unit price of red Bollinger live broadcasters was three times the unit price of regular sellers.
Live streaming has become one of the trends in the industry. For example, Feiyu first started from the live broadcast of foreign light luxury niche commodities, and through long-term experience in luxury live broadcasting, it also allowed itself to gain a place in the second-hand luxury e-commerce track. In addition, platforms such as Secoo and Fat Tiger are also cutting into the live broadcast track.
In the eyes of many people, categories such as second-hand luxury goods are naturally suitable for live broadcasting. On the one hand, the live broadcast room inherits the characteristics of offline consumers to physical luxury stores, providing buyers with a sense of exclusivity and one-on-one more interactive communication; on the other hand, the live broadcast room introduces the product with a professional anchor, which can display all the details and flaws of the product, supplemented by dynamic display to reduce the buyer's purchase decision threshold, and quickly promote the buyer to make a purchase decision.
However, along with it, live streaming has long had industry controversies of exaggerated sales, false sales, and impulse consumption, so there is a common after-sales problem with high return and replacement rates.
Previously, a bag of hard-to-find second-hand LV could sell 800 in a second-hand luxury live broadcast. A number of second luxury platforms have been exposed to the phenomenon of selling more than one package and injecting water to brush orders.
Destined to be slow and thin
In the early days of Shangpin's business, its founder Zhao Shicheng once called Lei Jun's phone, and Lei Jun put forward "four questions": The first question, can online payment be solved? The second question is, how to solve the problem of consumer trust in high-end online shopping? The third question is, how to solve the problem of brand licensing? The fourth question is, how to obtain high-end customers?
Among these problems, some problems have not been solved until today, whether it is luxury vertical e-commerce, integrated e-commerce and second-hand luxury brands, such as trust problems.
Although a series of problems represented by fake goods on e-commerce platforms have been effectively curbed in recent years, under the trend of huge interests, fake goods are still an industry problem that is difficult to completely eliminate.
Especially in the luxury industry, where the unit price is high and the profit margin is extremely high, the true and false even reach the degree of indistinguishable between male and female.
As long as you buy a fake luxury product, it will minimize consumers' trust in the e-commerce platform.
"Counterfeiting is the most terrible, and it is also the most influential on the development of this industry." Nalan Zhengxiu, the founder of Master Bao, previously told the media that as long as there are several fake sales incidents, it is easy for consumers to question the entire luxury e-commerce industry.
According to industry insiders, the main reason for this phenomenon is that the brand side is only responsible for the products sold in the store or counter, and is not responsible for the authenticity of the goods sold through other channels, and the identification conclusions reached by most third-party appraisal agencies are difficult to be recognized by the brand side.
In addition, there are still many "parallel goods" in the luxury market, that is, goods that are normally circulated in foreign markets, entered through the gray channel by merchants, and then sold in China. Although such goods are genuine, there are no documents such as customs declaration forms, commodity inspection certificates, etc., and there is no direct authorization from foreign brand owners, and there are many problems in after-sales and other aspects.
How to completely solve the problem of fake goods will become a threshold that luxury e-commerce must cross. In this regard, the industry analysis, luxury e-commerce should pay attention to two aspects: one is that the supply chain should be guaranteed, and the quality of products must be strictly controlled; the other is whether the price advantage can be sustained for a long time.
"In fact, the core of luxury e-commerce is to solve the problem of trust, which is destined to be a fine and slow work, not only to polish their own supply chain, but also to do a good job in the service of the whole chain, and it is not feasible to make fast money." Some professionals say so.