Smaller cities shopping more on online luxury platforms

A recent study conducted by the Boston Consulting Group says there will be 220 million affluent consumers, who are from households earning between $20,000 to $1 million, in China by 2020, and 75 percent of them will live in "smaller" cities.

Fashion analysis website fashionbi.com's marketing manager Marivi Avalos Monarrez indicates these people are the main consumers of online luxury platforms like net-a-porter.com.

"Now speaking in terms of online shopping, the trend is pointing again to consumers in smaller cities. It is now estimated that 250 million Chinese consumers will shop online this year and the average shopper in a fourth-tier city in China will spend 50 percent or more of their income on e-commerce than those in top-tier cities," Monarrez says in an e-mail interview with China Daily.

Zhao Shicheng, CEO and president of shangpin.com, agrees. He says most of the consumers are in the second- and third-tier, like Changsha in Hunan province, Hangzhou in Zhe-jiang province and Shenyang in Liao-ning province, and even smaller cities.

He adds these consumers are between 25 and 40 years old.

The website's statistics show the consumers who like to click to buy at home in smaller cities contributed 40 percent of the total sales early last year, but at present, it makes up 51 percent.

Multi-brand shopping mall Lane Crawford enjoyed a good growth in sales from its online platform in China's southwest cities after it opened an online service, and that is the main reason that it has put Chengdu, the capital of Sichuan province, on the list to open a new store, instead of metropolises like Guangzhou or Shenzhen.

These consumers prefer to buy affordable luxury products, particularly expensive garments, handbags, and accessories, not high fashion like haute couture, jewelry and watches.

These products are usually priced under 100,000 yuan ($16,700). In shangpin.com, the highest price tag in the bag catalog is 52,900 yuan - for a limited-edition LeBoy evening bag from French luxury house Chanel. On yoox.cn, the most expensive item is a medium-size black and gray fur bag from Dolce & Gabbana, with a price tag of 49,920 yuan.

Affordable luxury is the new lifestyle among consumers in the smaller cities, according to shangpin.com's Zhao. He finds many of these customers, unlike before, are getting more sophisticated. They are gradually abandoning products with big logos, but becoming more interested in the quality and styles they like.

Zhao Lin, e-commerce analyst with China Internet Network Information Center, says with the development of the Internet, consumers in smaller cities have more approaches to products from luxury houses.

However, they are not in the stage of consuming haute couture and jewelry because of their lifestyles. A typical example is a housewife in Changsha, Hunan province, who might be in desperate need of a luxury Alexander McQueen handbag to take to work, but she might not need an Alexander McQueen evening gown, because there are seldom occasions for her to dress up.

Another inevitable trend among these consumers is they are much more dependent on information from social networking services.

"And one special characteristic is the fact that people living in these cities use their online and digital resources to follow and stay up to date with their favorite fashion and luxury brands," fashionbi.com's Monarrez says.

Fashionbi tracks online shoppers' behavior and tracks more label key words that become extremely active in Sina Weibo during international fashion weeks.

Shangpin.com's Zhao concurs. He says many of the website's customers are "grouped" by WeChat, Weibo and QQ Zones.