Will Luxury Players Embrace China’s D2C Revolution?

by Jing Daily

This article was firstly released by Jing Daily.

Luxury is an indulgence, love, and emotion. It is customization and highly-personalized services, and it conveys images of champagne and chocolate-dipped strawberries, not browsing internet pages until something grabs our attention. That’s what companies like Zara are for — to claim products that come at a fraction of what Chanel pieces cost.

The difference between a Zara silk blouse and a Chanel one is the emotions they awake in customers. For those emotions to be stimulated, most customers need guidance — and chatbots, machine learning, or specific algorithms can’t recreate that unique interaction.

But the landscape has changed with the rise of the Gen-Z consumer. While an old-millennial like me still favors outstanding personalization services, younger Chinese consumers are more pragmatic and experimental. And as the most tech-savvy generation, these trendsetters understand “emotions” and “love” differently than I do. They connect with videos, gifs, avatars, and virtual influencers and respond to video game-like graphics and engaging digital content.

They are also avid discount hunters who love promotional offers, so they are happy to remove the middleman and source directly if it guarantees them a more competitive price. So it’s not surprising that they are open to Direct to Consumer (D2C) trends.

American footwear brand, Rothy’s is a pioneer in the D2C business model. They took their strategy to China and developed a WeChat Mini-Program to sell directly to consumers. Azoya highlights how Rothy’s business model is reliant on the direct-to-consumer strategy, saying that “selling directly to customers and owning its own e-commerce channels and user data” helps Rothy’s adjust products to customer needs.

Another good example is Feelunique, which kicked off a six-day group-buying campaign on its mini-program in March. The brand invited customers to buy a set of six Caudalie skin supplement products at a 37-percent discount if they could convince a friend to purchase the same product at the same price. “Group-buying promotions like Feelunique’s lower new customer acquisition costs without spending on ads – over 90 percent of participants in this particular campaign were new customers,” says Insider TrendsRead the full article at Jing Daily.