What is failing China’s luxury e-commerce unicorn amid a luxury boom?
From China’s largest luxury e-commerce platform to a debtor complained by thousands, Secoo’s downswing has puzzled many, given that the continuous growth of the luxury industry in China and e-commerce has become commonplace that also draws in global luxury brands.
The birth of China’s first luxury resale platform
Founded in 2008, Secoo started off as an e-commerce platform for second-hand luxuries. Apart from sales activities, it also provides product appraisals. Within eight years, the business had grown into Asia’s largest online transaction platform based on GMV (Gross Merchandise Volume), as per the Frost & Sullivan Report.
To source goods of better quality, Secoo had thirstily sought partnerships with global labels. By the year 2017, the platform specialising in luxury clothing and accessories for men and women had become home to international brands including Burberry, Hermes, and Bulgari.
Following its debut in Nasdaq in 2017, Secoo had entered the “golden time” in the business’s history, with GMV hitting 13.8 billion RMB ($2.17 billion) in 2019 after three years’ consecutive growth. But the tide turned when it entered the year 2020, and the pandemic seems to be the go-to reason of blame for any business downturn.
The double whammy of global rivals and China’s e-commerce platforms
While traditional luxury brands were hit hard as local physical stores were forced to close as a result of nationwide lockdown and their overseas arms saw a sharp drop in footfall of mainland Chinese luxury buyers due to restricted international travel. It is thought that the disruptions of the pandemic to an online-based business like Secoo would be minimum. But that is not the actual cause for the brand.
The business has soon found itself in fierce competition with global luxury brands rushing into the e-commerce battleground in a bid to make up for the loss from offline sales. Instead of being a front runner in the race, Secoo has quickly lost market share to these new players, causing a sluggish growth in its user base.
While the nature of extravagant purchase has restricted the business’s reach to niche target consumers who are rich in personal wealth and share the value that is offered by luxury products. Now, these limited resources are shared with internationally renowned brands.
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