Date
12 December 2017
Burberry has to contend with grey-market vendors who sell goods at lower prices. Photo: Bloomberg
Burberry has to contend with grey-market vendors who sell goods at lower prices. Photo: Bloomberg

Burberry faces steep learning curve in online push

Burberry wants to ride China’s online shopping wave, so last month it opened a virtual storefront on Tmall, an Alibaba business-to-consumer (B2C) shopping site.

Three weeks after the store was launched, only 132 products were sold on the site, and 26.4 percent of the items were returned without any reason given, Xinhua reports.

The Tmall shop, the only online sales channel authorized by Burberry, sells the latest collections, which are synchronized with its official site. But so far the merchandise return rate, stunningly higher than Tmall’s average of 7.2 percent, is not too encouraging.

Industry analysts have come up with a few explanations.  First of all, consumers are understandably finicky about the items they buy because of the high price tags. It’s also likely that customers order more items than they actually want to buy in order to have more choices, and then return those that they don’t like, taking advantage of the store’s money-back guarantee.

The site also faces challenges from other e-vendors on Tmall. Many grey-market sellers buy luxury items outside China at lower prices, then resell the goods online at less than the official price.

One such seller told Xinhua the products they sell are generally 30-40 percent lower than those on official channels. For example, a classic Burberry tote bag sells for 8,250 yuan (US$1,323) at the official Tmall shop, but the same item can be had for only 5,600 yuan on the unofficial online shops.

Although customers buying directly from Burberry’s online store can rest assured they are getting the real stuff, the big price gap encourages many to go to other e-tailers.

– Contact the writer at [email protected]

CG

 

EJ Insight writer

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