23 August 2019

A world of O2O potential awaits luxury vendors

Most online-to-offline (O2O) applications are about directing customers to suppliers of daily necessities, whether those providers are restaurants, stores or other outlets. But there’s one segment that could offer the biggest potential for this kind of platform: luxury goods.

The advantages of online retailing are well known. Without the need to maintain a physical network of shops, e-tailing promises big savings on rent and payrolls, so the pricing of goods can be more competitive. But the biggest barrier is winning over customer trust.

In the case of items like clothes and books, the trust issue is limited, but that changes with big-ticket items, which customers are a lot more reluctant to buy online.

In a forum organized by the Hong Kong Trade Development Council, the head of Shenzhen-based jeweler Zocai talked about how O2O helps solve this problem.

Zocai makes 70 percent of its sales online and uses its site to draw customers to its brick-and-mortar outlets. Once buyers get comfortable with the brand through the product and after-sales services, it’s a lot easier to convert them into online shoppers.

About 470 billion yuan (US$76.4 billion) was spent on jewelry on the mainland last year, of which less than 3 percent was done over the internet.

During the trade council event, Zocai chairman Wu Tao said young customers born in the 80’s or 90’s are more inclined to learn more about the products by finding information from company websites directly.

Rather than passively waiting for customers, this online shopping trend gives jewelers the chance to open up a whole new way of marketing and sourcing clients by analyzing hit rates and the demographic data of online surfers. It also helps them launch targeted campaigns.

In addition to detailed information of each jewelry piece, shoppers can also get promotional coupons by booking an appointment on the website before visiting a Zocai shop.

Shoppers now spend on average 7,000-8,000 yuan on each purchase on Zocai’s website, according to Wu.

Entrepreneurs may want to draw from Wu’s practical experience of this hybrid model to find their own way to combine the merits of brick-and-mortar outlets and their online sites.

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EJ Insight writer

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