With Second China Foray, Ebay To Encounter Very Different E-Commerce Market
Xiu.com recently launched Ferragamo's official China online store
This week, news emerged that eBay, the world's "largest Internet marketplace," plans to make its second foray into the China market in partnership with high-end domestic e-tailer Xiu.com. According to Tech in Asia, the partnership will be officially announced on November 12 in Shenzhen, where Xiu is based:
Sources close to Xiu indicated that the eBay-Xiu deal will be a "strong cooperation," and they could not rule out the possibility of capital involvement – ie: investment by eBay into Xiu. There's speculation that ebay.xiu.com (which redirects to Xiu.com) will be eBay's new virtual storefront.
Xiu is a long-standing competitor in China's fierce B2C online shopping sector. Based in Shenzhen, Xiu came online in 2008, and is thought to employ about 1,000 people. It has wrapped up two rounds of major funding, but this summer there were rumors that it failed to close a significant series C round. Before that, the site had attracted an initial $ 20 million from KPCB China, and then an insane $ 100 million from both KPCB and Warburg Pincus.
What stands out most about this soon-to-be-announced partnership is the major players — up-and-coming aspirational luxury retailer Xiu.com and eBay — whose prior failure in China has long been held up as one of the most high-profile case studies for new entrants to the market. As Tech in Asia adds:
The eBay-Xiu hook-up will mark an interesting – if not dramatic – return to China for the Californian company. EBay is often held up as an example of how to fail spectacularly in the China market, after it tried to do things the Silicon Valley way when it entered China in 2004. Instead, Chinese consumers overlooked the auction site and instead jumped aboard the amateur shopkeeper platform Taobao, made by Alibaba Group.
We'll be keeping a close eye on eBay's second attempt at China, as the company will be (re)entering a very different market from the one it exited. However, eBay's choice not to go it alone and to team up with a rising star in the cut-throat B2C e-commerce market could just give it more of a fighting chance.
Lane Crawford stocks J. Crew collections online and in selected locations
This doesn't mean it will necessarily do well, however, as competition is far greater in the luxury e-commerce space. Recently, American and European heavyweights such as Macy's, Neiman Marcus and Net-A-Porter have announced full-price, O2O models for China and have teamed up with Chinese luxury sites including VIPStore's Omei, Glamour Sales, and Shouke. At the same time, individual brands like Coach, Zara, and J. Crew (in partnership with Lane Crawford) have expanded into the China e-commerce market over the past several months.
To compete, Xiu's domestic Chinese e-tail rivals have prioritized exclusive brand partnerships, with Shangpin collaborating with the likes of Sergio Rossi, M Missoni, Diane Von Furstenberg and Stuart Weitzman as well as more niche American labels like Cynthia Rowley, Laundry by Shelli Segal, Charlie Jade, Tracy Reese and label Milly. Chinese consumers themselves are also far more discriminating and demanding of perks — whether that means free shipping, liberal return policies, or hard-to-get exclusives — and they know they can get them.
Quite simply, what eBay is hoping to sell isn't as special now as it was just a few years ago. Luckily, Xiu.com has been working to increase its brand exclusives as well, teaming up with Ferragamo to launch the Italian brand's official China online store on October 11. So will eBay finally have a fighting chance, in partnership with Xiu.com — which, itself, faces intense competition from domestic and international competitors — or will its second China attempt leave everybody asking whether "the third time will be the charm"?
IDIOT SHOT IN THE BALLS! (10.5.10 - Day 523)
Comments