the online purchase experience in china: local champions...

LUXURY GOODS

The Online Purchase Experience in China: Local Champions Dominate

25 JANUARY 2017 at 06:01* We continue our analysis of how the luxury goods brands perform online. We shift our focus to

China, after having tested the Italian and US markets The Online Purchase Experience Ranking,

The Online Purchase Experience Ranking: From Milan to New York City

Cracking digital luxury in China is vital…

The Chinese are not only the most important nationality for luxury goods but also the most digitally

advanced consumer population: digital development is happening at lightning speed – look at the

demise of physical retail formats like hypermarkets, the broad acceptance of digital payment

solutions like WeChat Pay and Alipay, and the high e-commerce penetration in FMCG.

…but digital China is different The quality of the online purchase experience in China is in the same ballpark as that of the USA.

But digital China is different: mobile is key (not email), standard delivery in 1-2 days is expected as

a given, social media is idiosyncratic (The Shopping Guide: Bloggers in China) – all this demands

dedicated solutions and investments.

Local champions dominate – while western luxury retailers and brands lag behind

Local champions like Tmall (Alibaba), WeChat (Tencent) and JD (Tencent stake) and Secoo

dominate the scene, and lead on Physical Customer Engagement touch points (WeChat and

Tmall), as well as Digital Customer Engagement touch points (Secoo, JD, Yintai). YNAP seems

weak, with Mr Porter trailing. A similar picture holds true in the off price channel.

Local champions converting to authenticity would put pressure on the sector to shape up

The practice of local daigous mixing foreign sourced authentic products and fakes has prevented

digital luxury from taking off in earnest. Issues remain, as our field research has confirmed, and

Chinese consumers remain concerned (China Reality Check: Luxury and the Online Boom). A

more convincing transition to authenticity by local champions would confront luxury brands with

tough choices, making digital essential and unavoidable.

Luca Solca

(+44) 203 430 8503

Melania Grippo

(+39) 02 89 63 1724

Guido Lucarelli

(+39) 02 89 63 1726

Specialist sales

David Tovar

(+44) 203 430 8677

Contactlab

Marco Pozzi

(+39) 02 28 31 181 [email protected]

Francesca Borgonovo

(+39) 02 28 31 181 [email protected]

Xian Zhang

(+39) 02 28 31 181 [email protected]

Kuiling Song

(+39) 02 28 31 181 [email protected]

* Date and time (London Time) on which the investment recommendation was finalised. It may differ from the date and time of broad dissemination on the website.See Appendix (on p65) for Analyst Certification, Important Disclosures and Non-US Research Analyst disclosures.

https://www.exane.com/Link!docExternal.action?cmd=69723339263d6c3d646132356c316f356f3d313667266734




Exane BNP Paribas Research & Contactlab Luxury Goods 25 January 2017 page 2

Contents

Executive Summary _______________________________________ 3

The Online Purchase Experience in China: Local Champions Dominate _______________________________________________ 4

Detailed Results _________________________________________ 13

Digital Touch Points __________________________________________________ 13

Ordering ___________________________________________________________ 13

Purchasing Communications ___________________________________________ 31

Return Communications _______________________________________________ 34

Physical Touch Points ________________________________________________ 36

Delivery ___________________________________________________________ 36

External Packaging __________________________________________________ 39

Internal Packaging ___________________________________________________ 44

Documents inside Packaging ___________________________________________ 48

Return Procedures ___________________________________________________ 53

Methodology ___________________________________________ 56

Appendix ______________________________________________ 59

Websites __________________________________________________________ 59

About the collaboration with Contactlab ___________________________________ 64

Contactlab presentation _______________________________________________ 64


Executive Summary

We continue our analysis of how the luxury goods brands perform online. We shift our

focus to China, after having tested the Italian and US markets The Online Purchase

Experience Ranking, The Online Purchase Experience Ranking: From Milan to New

York City. In this research we have focused our attention on the purchase experience

for sales channels rather than brands. We have analysed the main Chinese e-tailers

operators and a few brands that own a proprietary e-commerce websites in China.


The Chinese are not only the most important nationality for luxury goods – representing

c.30% of global demand – but also the most digitally advanced consumer population:

digital development is happening at lightning speed – look at the demise of physical

retail formats like hypermarkets, the broad acceptance of digital payment solutions like

WeChat Pay and Alipay, and the high e-commerce penetration in FMCG.

…but digital China is different

The quality of the online purchase experience in China is in the same ballpark as that

of the USA: in both markets, the panel reaches c.50% of the potential, measured on 65

different criteria. But digital China is different: mobile is key (not email), standard

delivery in 1-2 days is expected as a given (while a challenge for brands, given

astonishing logistics complexity), social media is idiosyncratic (The Shopping Guide:

Bloggers in China) – all this demands dedicated solutions and investments.

Local champions dominate – while western luxury retailers and brands lag

behind

Local champions like Tmall (Alibaba), WeChat (Tencent) and JD (Tencent stake) and

Secoo dominate the scene, and lead on Physical Customer Engagement touch points

(WeChat and Tmall), as well as Digital Customer Engagement touch points (Secoo, JD,

Yintai). YNAP seems weak, with Mr Porter trailing. A similar picture holds true in the off

price channel too, with local players like Mei ahead of western peers. This delay is very

worrisome, if FMCG is a guide to the shape of things to come in luxury too.

Local champions converting to authenticity would put pressure on the sector to

shape up

The practice of local daigous mixing foreign-sourced authentic products and fakes has

prevented digital luxury from taking off in earnest. Issues remain, as our field research

has confirmed, and Chinese consumers remain concerned (China Reality Check:

Luxury and the Online Boom). A more convincing transition to authenticity by local

champions would confront luxury brands with tough choices, making digital essential

and unavoidable. While this seems far away today, things in China change quickly.










The Online Purchase Experience in China: Local Champions Dominate


The Chinese are not only the most important nationality for luxury goods – representing

c.30% of global demand – but also the most digitally advanced consumer population:

digital development is happening at lightning speed – look at the demise of physical

retail formats like hypermarkets, the broad acceptance of digital payment solutions like

WeChat Pay (Tencent) and Alipay, and the high e-commerce penetration in FMCG.

Figure 1: In China digital development is happening at lightning speed

Online apparel and footwear sales penetration by country

Source: Euromonitor

Figure 2: The Chinese are not only the most important nationality for luxury goods but also the most digitally advanced consumer population

Chinese internet users (10,000 persons) and internet penetration rate

Size of the mobile internet users in China (10,000 persons) and as a percentage of total internet users

Source: CNNIC, Statistical survey on internet development in China

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2009 2010 2011 2012 2013 2014 2015 2016

China Japan USA Western Europe United Kingdom

30%

35%

40%

45%

50%

55%

60%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Number of internet users Internet penetration rate

60%

65%

70%

75%

80%

85%

90%

95%

100%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Number of internet users Internet penetration rate


Figure 3: Age structure of Chinese internet users

Source: CNNIC, Statistical survey on internet development in China

Figure 4: Chinese digital growth is causing the demise of physical retail formats like hypermarkets (1/2)

Quotes from meetings in China

In offline FMCG, 25 out of 28 categories are declining. Only few of them recover online. EUR 2.3trn to be generated, over the next five years. This increase in consumption is driven mostly by the upper middle class; young people and services and low tier cities. Social media is key in purchasing. Hypermarkets are very negative. Brick & Mortar logistics are down, even more Hypermarkets are shutting down. Local retailers pay with 120 days delay (!). There is no liquidity. Ferrero derives c.15-20% of online sales in China; product personalization is key. The range on Digital is different from the range offered in the physical stores.

Source: Exane BNP Paribas proprietary field research in China

0%

5%

10%

15%

20%

25%

30%

35%

<10 10-19 20-29 30-39 40-49 50-59 >60


Figure 5: Chinese digital growth is causing the demise of physical retail formats like hypermarkets (2/2)

Urban FMCG market value (RMB bn)

2012-2015 CAGR 2012-2015 market share (RMB bn)

Source: Bain, Kantar Worldpanel Note: Notes: Hypermarket refers to stores with more than 6,000 square meters; the hypermarket channel includes only the top 72 named hypermarket retailers, representing 80% of total hypermarket channel (based on 2015 revenues); super/mini refers to stores from 100-6,000 square meters; CVS includes chain and individual convenience stores and is defined by being open for more than 16 hours a day; grocery refers to stores with less than 100 square meters; other includes department stores, free market, wholesales, work unit, directsales, specialty store, overseas shopping and others

Figure 6: There is a broad acceptance of digital payment solutions like WeChat Pay (Tencent) and Alipay (Alibaba)

China’s mobile-payment market

Source: iResearch, The Wall Street Journal 22/05/2016

(5%)

0%

5%

10%

15%

20%

25%

30%

35%

40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

Super/Mini Hypermarket Grocery CVS E-Commerce Other

1,068 1,146 1,209 1,251


…but digital China is different

The quality of the online purchase experience in China is in the same ballpark as that

of the USA: in both markets, the panel reaches c.50% of the potential, measured on 65

different criteria. But digital China is different: mobile is key (not email), standard

delivery in 1-2 days is expected as a given (while a challenge for brands, given

astonishing logistics complexity), social media is idiosyncratic (The Shopping Guide:

Bloggers in China) – all this demands dedicated solutions and investments.

Figure 7: E-Commerce in China table by brand (Jan-2017)

Source: Contactlab analysis

Figure 8: The panel reaches ca. half of the overall maximum potential in China. Scores are better on Digital Touch Points (51% vs 54% in the US) vs Physical Touch Points (46% vs 44% in the US)

Source: Contactlab analysis Note: This research includes Burberry (Tmall, Burberry.cn, Secoo, JD.com, Yintai.com, Mr Porter); Montblanc and Chanel (WeChat), Armani and Tod’s

BrandMonobrand

Ecommerce

Flagship online store on

Tmall

Official online store on

JD.com

Official online Store on

Secoo.com

Armani YES Ca 100 Watches YES YES

Balenciaga YES NO YES YES

Bottega Veneta NO NO YES YES

Brunello Cucinelli YES NO NO NO

Bulgari NO NO Ca 25 Perfumes YES

Burberry YES YES YES YES

Cartier YES NO Ca 30 Watches YES

Céline NO NO NO YESChanel Beauty NO NO YES

Coach YES (Quit in 2016) YES YES

Dior Beauty NO NO YES

Dolce&Gabbana YES NO YES YES

Fendi NO NO YES YES

Ferragamo YES NO YES YES

Givenchy YES (IOS APP) NO YES YES

Gucci NO NO YES YES

Hermès NO NO Ca 20 Perfumes YESHugo Boss YES YES YES YESLoro Piana YES NO NO NO

Louis Vuitton NO NO NO YES

Michael Kors YES NO YES NO

Moncler YES NO YES YES

Prada NO NO YES YES

Ralph Lauren NO NO YES NO

Ray-Ban YES YES YES YES

Saint Laurent NO NO YES YES

Swatch NO NO YES NOTiffany NO NO YES YES

Tod's YES YES YES YES

Tory Burch YES NO YES NO

Valentino YES NO YES YES

Zegna NO NO YES YES

PHYSICAL TOUCH POINTS 481 46%

DIGITAL TOUCH POINTS 399 51%

Total Panel 880 48%

Online Purchasing Experience

AxesOverall Panel Score Score over Maximum Potential %




Figure 9: Panel performing better on Communication-related criteria, while trailing on Payment Methods and Return Options


Figure 10: Chinese operators give preference to Mobile contact points, European to Emails


Figure 11: Chinese customers expect Online Chat Assistance, Product/Brand/Service Reviews, Standard Delivery in 1-2 days and full spectrum of Payment Methods


Ordering - Information required 76%

Return Communications 64%

Purchasing Communications 60%

Delivery 58%

External Packaging 54%

Return - Easiness/Friendliness 50%

Ordering - Quality Features 48%

Internal Packaging 46%

Documents inside Packaging 43%

Ordering - Payment Methods 38%

Return - Quality Features 34%

Online Purchasing Experience

CriteriaScore over Maximum Potential %

Purchasing

ChannelPurchased Brand Phone Email address Ordering

Delivery (focus Brand,

excluding Courier)Return

Armani ArmaniCompulsory cell or fixed

phoneCompulsory Email Email from Armani Email

Tod's Tod'sCompulsory cell or fixed

phoneCompulsory Email Email from Tod's Email

Burberry BurberryCompulsory cell or fixed

phoneCompulsory Email Email from Burberry Email

Mr Porter BurberryCompulsory cell or fixed

phoneCompulsory Email Email in English from Mr Porter Email

Yintai.com Burberry Compulsory cell phone NO NO SMS from Yintai.com SMS/Email

Info required Actual channel used

Tmall

(Burberry flagship

store)

BurberryCompulsory cell or fixed

phoneNO NO NO SMS

SMS/Phone call

Secoo

(Burberry official

store)

BurberryCompulsory cell or fixed

phoneNO NO SMS from Secoo SMS/Email

JD.com

(Burberry official

store)

Burberry Compulsory cell phone Optional NO NO

WeChat message

WeChat

(operated by

Chanel)

Chanel Compulsory cell phone NO WeChat message NO

Online Chat assistance HIGH √√Product/Brand/Service reviews HIGH √√√Alipay / WeChat Pay HIGH √√√ All brands via Alipay

Delivery in 1-2 days HIGH √√√ Only Burberry

Return Easiness HIGH √√√ Yes

Quick Buy Option MEDIUM Only JD.com √√ Yes

Points/voucher MEDIUM √√√Instalment payments MEDIUM √√√Cash on Delivery MEDIUM √√√ Only Armani

"Pay by someone else" option MEDIUM Tmall

Contacts points on External Box MEDIUM √√√Promocode LOW √√ Yes

International Credit Cards LOW Only Tmall √√ Yes

Gift option LOW √√ Yes

Purchasing Features

Relevance for Chinese

Fashion&Luxury

customers

Chinese Ecommerce

operators

European Ecommerce

monobrand Mr Porter


Local champions dominate – while western luxury retailers and brands lag

behind

Local champions like Tmall (Alibaba), WeChat (Tencent) and JD (Tencent stake) and

Secoo dominate the scene, and lead on Physical Customer Engagement touch points

(WeChat and Tmall), as well as Digital Customer Engagement touch points (Secoo, JD,

Yintai). YNAP seems weak, with Mr Porter trailing. A similar picture holds true in the off

price channel too, with local players like Mei ahead of western peers. This delay is very

worrisome, if FMCG is a guide to the shape of things to come in luxury too.

Figure 12: Overall Burberry direct or via Tmall performing better. Mr Porter performing poorly both on digital and physical touch points. WeChat performance depends very much on the brands sold


Figure 13: Tmall and WeChat leading on the Physical Customer Engagement axis, Secoo leading on the Digital Customer Engagement axis

The Online Purchase Experience Matrix – China 2016


Burberry Mega-Brand Burberry 1 99 4 44 4 55

Tmall E-Tailer Burberry 1 99 6 38 1 61

WeChat Social platform Montblanc 3 96 7 36 2 60

Armani Premium Armani 4 92 5 43 6 49

Secoo E-Tailer Burberry 5 90 1 53 8 37

JD.com E-Tailer Burberry 6 88 3 47 7 41

Tod's Runner-Up Tod's 7 87 8 35 5 52

Yintai.com Department Store Burberry 8 83 2 49 10 34

WeChat Social platform Chanel 9 79 10 22 3 57

Mr Porter E-Tailer Burberry 10 67 9 32 9 35

RANKING SCORE RANKING SCORE

THE ONLINE PURCHASE EXPERIENCE RANKING

BRAND OVERALL DIGITAL CUSTOMER ENGAGEMENT TOUCH POINTS PHYSICAL CUSTOMER ENGAGEMENT TOUCH POINTS

Purchasing Channel Channel Category Purchased Brand RANKING SCORE

Armani

Tod'sMr Porter

Tmall

JD.com

Secoo

Yintai.com

WeChat (Montblanc)

WeChat(Chanel)

0 10 20 30 40 50 60 70 80 90 100

0

10

20

30

40

50

60

70

80

Physical Customer Engagement Touch Points

Dig

ita

l C

usto

me

r E

nga

ge

me

nt To

uch

Po

ints

Min Score Max Score

Min

Score

Max

Score

Burberry

Avge

Avge


Figure 14: Overall, Chinese operators are performing better on the digital side while lagging behind on the physical side. Digital ecommerce experience is still basic on WeChat


Chinese Ecommerce

channels1 90 1 47 3 43

WeChat 2 88 3 29 1 59

European Ecommerce

channels3 86 2 39 2 48

AVERAGE SCORE

THE ONLINE PURCHASE EXPERIENCE RANKING

OVERALLDIGITAL CUSTOMER ENGAGEMENT

TOUCH POINTS

PHYSICAL CUSTOMER ENGAGEMENT

TOUCH POINTS

RANKING AVERAGE SCORE RANKING AVERAGE SCORE RANKING


Local champions converting to authenticity would put pressure on the sector to

shape up

The practice of local daigous mixing foreign-sourced authentic products and fakes has

prevented digital luxury from taking off in earnest. Issues remain, as our field research

has confirmed, and Chinese consumers remain concerned (China Reality Check:

Luxury and the Online Boom). A more convincing transition to authenticity by local

champions would confront luxury brands with tough choices, making digital essential

and unavoidable. While this seems far away today, things in China change quickly.

Figure 15: All Chinese operators pay significant attention to authenticity on product pages and include brand product tags

Authenticity assurance


Purchasing ChannelGuarantee of Authenticity on

product pageBrand product tag Security tag for return

Armani Official brand website YES YES

Tod's Official brand website YES NO

Burberry Official brand website YES YES

Mr Porter NO NO NO

JD.com

(Burberry official store)Remark on product page

YES

(Burberry and JD.com)NO

Secoo

(Burberry official store)Icon on product page

YES

(Burberry and Secoo)NO

Yintai.com Remark on product page YES NO

WeChat

(operated by Chanel)Official brand website YES

YES

(Plastic wrap should not be

opened)

WeChat

(operated by Montblanc)Official brand website YES NO

Tmall

(Burberry flagship store)

Official brand website plus

authenticity remark on product pageYES YES




Figure 16: All Chinese operators are disclosing ‘Made in’ on product pages, while surprisingly Armani, Montblanc and Chanel miss the opportunity.

‘Made in transparency’


Figure 17: Some concerns on Burberry Cardholder received from Yintai.com: completely plain, not even Burberry brand name embossed, while Burberry logo shown on website product page


"Made in" disclosure "Made in" disclosure "Made in" disclosure

on product page on product tag/box on product

Armani NO (vs yes US) Made in Italy Made in Italy

Tod's Made in Italy Made in Italy Made in Italy

Burberry Made in Italy Made in Italy Made in Italy

Mr Porter NO NO Made in China

JD.com

(Burberry official store)

Not specified (China or

other countries)Made in China NO

Yintai.com Made in China Made in China NO

Purchasing Channel

Tmall

(Burberry flagship store) Made in Italy Made in Italy Made in Italy

WeChat

(operated by Chanel)NO Made in France Made in France

Secoo

(Burberry official store)Made in Italy NO Made in Italy

WeChat

(operated by Montblanc)NO Made in Italy Made in Italy


Detailed Results

Digital Touch Points

Figure 18: Overall, Chinese operators leading on digital touch points, with Secoo first followed by Yintai.com and JD.com

Digital touch points – Ranking China 2016


Ordering

Figure 19: Significantly different approaches between Chinese operators, asking compulsory cell phone, and Europeans, asking compulsory Email address

Ordering – Information required


Information

RequiredQuality Features

Payment

Methods

Secoo E-Tailer Burberry 53 1 8 2 1 6 6

Yintai.comDepartment

StoreBurberry 49 2 6 1 5 6 1

JD.com E-Tailer Burberry 47 3 1 4 4 9 1

Burberry Mega-Brand Burberry 44 4 1 5 6 1 5

Armani Premium Armani 43 5 1 7 3 2 1

Tmall E-Tailer Burberry 38 6 8 2 6 9 7

WeChatSocial

platformMontblanc 36 7 6 9 2 2 7

Tod's Runner-Up Tod's 35 8 1 6 8 2 7

Mr Porter E-Tailer Burberry 32 9 1 7 10 2 1

WeChat Social

platformChanel 22 10 10 9 9 6 7

DIGITAL TOUCH POINTS – RANKINGS CHINA 2016

Purchasing

Channel

Channel

Category

Purchased

BrandSCORE

OVERALL

RANKING

ORDERINGPURCHASING

COMMUNICATIONS

RETURN

COMMUNICATION

S

Purchasing Channel Purchased Brand Ranking

Physical address

automatically

retrieved from

account

Phone Email address

Armani Armani 1 YES Compulsory cell or fixed phone Compulsory

Tod's Tod's 1 YES Compulsory cell or fixed phone Compulsory

Burberry Burberry 1 YES Compulsory cell or fixed phone Compulsory

Mr Porter Burberry 1 YES Compulsory cell or fixed phone Compulsory

JD.com Burberry 1 YES Compulsory cell phone Optional

Yintai.com Burberry 6 YES Compulsory cell phone NO

WeChat Montblanc 6 NO Compulsory cell phone Compulsory

Tmall Burberry 8 YES Compulsory cell or fixed phone NO

Secoo Burberry 8 YES Compulsory cell or fixed phone NO

WeChat Chanel 10 NO Compulsory cell phone NO

YES Compulsory cell phone Compulsory

Compulsory cell or fixed phone Optional

NO Not required Not required

ORDERING - INFORMATION REQUIRED


Figure 20: Chinese operators giving high relevance to Support via Chat, Customers Reviews and Guarantee of Product Authenticity on Product Pages

Ordering – Quality Features


Figure 21: Example of Yintai.com offering receipt preview with and without price

Gift option


Yintai.com Burberry 1 Free (no price tag) Remark on product page Made in China Products NO NOVisual aid for product

dimensionsYintai Voucher

YES (Personal or

Company)5

Official brand website plus

authenticity remark on

product page

Secoo Burberry 2 NO Icon on product page Made in Italy Products / Brands NO YES, web / app Secoo VoucherYES (Personal or

Company)4

JD.com Burberry 4 NO Remark on product pageNot specified (China or

other countries)Products NO YES, web /app JD points

YES (Personal or

Company or VAT)4

Burberry Burberry 5

Free (no price tag,

gift packaging, gift

message card)

Official brand website Made in Italy NO Only for gift NO NOYES (Personal or

Company)5

Tod's Tod's 6 NO (vs Yes US) Official brand website Made in Italy NO NO NO Promocode YES 5 (vs 3 US)

Armani Armani 7Free (no price tag,

gift message card)Official brand website NO (vs yes US) NO NO NO Promocode NO 7 (vs 4 US)

Mr Porter Burberry 7

Free (gift

packaging, gift

message card)

NO NO NO YES NO Promocode NO 5

WeChat Montblanc 9 NO Official brand website NO NO NO NO NOYES (Personal or

Company or VAT)

4 WeChat payment / Alipay, 9 other

banks

WeChat Chanel 9 NO Official brand website NO NO NO NO NOYES (Personal or

Company)6

YES - FreeYES, icon/remark on

product pageYES

YES, products,

services and brandsYES YES YES YES Yes 3 or less pages

YES - Extra cost YES, products Only for gift 4-5 pages

NO NO NO NO NO NO NO NO NO 6 or more pages

Tmall Burberry 2 NO

ORDERING - QUALITY FEATURES

Purchasing

Channel

Purchased

BrandRanking Gift Option

Guarantee of Authenticity

on product page

"Made in" disclosure

on product pageCustomer reviews

Packaging

info

Support via chat

during purchasing

Made in Italy 3

Extra touch in

purchasing process

Special price

optionReceipt Option

Number of webpages from product

page to purchase confirmation

NO YES, web /app Tmall points NOProducts / Services


Figure 22: Example of Mr. Porter offering gift message and personalized label option

Gift option


Figure 23: Guarantee of authenticity on product page

Example Tmall




Example JD.com



Example Secoo




Example Yintai.com



Figure 27: ‘Made in’ disclosure

Example Tmall declaring ‘Made in’ origin on product page



Figure 28: Example of JD.com not giving exact information about ‘Made in’ origin on product page

‘Made in’ disclosure



Figure 29: Example of Secoo declaring ‘Made in’ origin on product page



Figure 30: Example of Yintai.com declaring ‘Made in’ origin on product page




Figure 31: Example of Tmall offering both product and service reviews

Customer reviews


Figure 32: Example of Tmall product reviews on product page with brand reply

Customer reviews



Figure 33: Example of JD.com including product reviews on product page

Customer reviews


Figure 34: Example of Secoo includes reviews both on products and brands

Customer reviews



Figure 35: The example of Mr Porter

Packaging info


Figure 36: Example of Aliwangwang Messenger on Tmall

Support via chat during purchasing process



Figure 37: Support via chat during purchasing process

Example JD.com



Figure 38: Example of Yintai with very practical visual aid for product dimensions

Extra touch in purchasing process


Figure 39: Example of Tmall allows to accumulate points and Ask somebody to pay

Special price option



Figure 40: Example of Montblanc offering three types of receipt on WeChat: Personal, Company and VAT

Receipt Option


Figure 41: Example of JD.com stressing importance of security on payment confirmation webpage: Real Name Authentication and Beware of Fraud Notice

Purchase Confirmation on web



Figure 42: Example of Yintai.com promoting the app download on payment confirmation webpage




Figure 43: Example of Chanel payment confirmation on WeChat



Figure 44: Secoo standing out. Alipay/WeChat Pay widely adopted, Chinese operators giving attention to Cash on Delivery (Armani too), Instalment payment and ‘Pay by someone else’ option

Ordering – Payments


Purchasing

Channel

Purchased

BrandRanking

International

credit cards

Paypal

Platform

Alipay

Platform

WeChat

Pay

UnionPay

Network

Chinese Banks

Credit/Debit Cards

Bank

Transfer

Cash on

delivery

Instalment

payment

Pay by someone

else option*

Secure payment

notice

Secoo Burberry 1 NO NO YES YES YES YES ( 22 banks) YES YES YES NO NO

WeChat Montblanc 2 NO NO YES YES NO YES (23 banks) YES NO NO NO Yes

Armani Armani 3 YES NO YES NO YESYES (Around 20

banks)NO YES NO NO Yes

JD.com Burberry 4 NO NO NO YES YESYES (Around 130

banks)NO YES YES NO NO

Yintai.com Burberry 5 NO NO YES NO NO YES (3 banks) NO YES YES NO NO

Burberry Burberry 6 YES NO YES NO YES NO NO NO NO NO NO

Tmall Burberry 6YES (via

Alipay)NO YES NO NO NO NO NO NO Yes NO

Tod's Tod's 8 NO NO YES NO YES NO NO NO NO NO NO

WeChat Chanel 9 NO NO NO YES NO NO NO NO NO NO NO

Mr Porter Burberry 10 YES YES NO NO NO NO NO NO NO NO NO

*option stated on

check out

YES YES YES YES YES YES YES YES YES YES YES

Less than 5

NO NO NO NO NO NO NO NO NO NO NO

ORDERING - PAYMENT METHODS

International Payments Chinese Payments Payment Features


Figure 45: Example of Secoo offering a variety of local payment options: Alipay, WeChat payment and Instalment payment

Chinese Payments


Figure 46: Example of Tmall offering a variety of payments via Alipay platform: local credit cards, local debit cards and International bank cards

Chinese Payments



Figure 47: Example of Armani secure payment notice on purchasing page

Secure Payment Notice


Figure 48: Example of Montblanc secure payment notice on payment page

Secure Payment Notice



Purchasing Communications

Figure 49: Burberry has the most complete set of communications all via email. Chinese operators communicating less and only via SMS/Messages

Purchase communications


Purchasing

Channel

Purchased

BrandRanking

Order confirmation (Email,

SMS...)

Payment confirmation from

brand, not bank

Shipping

confirmationDelivery confirmation

YES YES

(Email, combined with

payment confirmation)

(Email, combined with order

confirmation)

Armani Armani 2 YES (Email) NO YES (Email) Phone call courier before delivery

Tod's Tod's 2 YES (Email) NO YES (Email) Phone call courier before delivery

YES

(SMS /Email/phone call by DHL

before delivery)

WeChat Montblanc 2 YES (Email) NO YES (Email) Phone call courier before delivery

Secoo Burberry 6 NO NO YES (SMS) Phone call courier before delivery

Yintai.com Burberry 6 NO NO YES (SMS)

YES

(SMS for delivery confirmation by

EMS courier)

WeChat Chanel 6 YES (WeChat message) YES (WeChat message) NO NO

Tmall Burberry 9 NO NO NO Phone call courier before delivery

JD.com Burberry 9 NO NO NO Phone call courier before delivery

YES YES YES YES

NO NO NO NO

YES (Email in

English)

PURCHASING PROCESS - COMMUNICATIONS

Burberry Burberry 1 YES (Email) Phone call courier before delivery

Mr Porter Burberry 2 YES (Email in English) NO


Figure 50: Example of Armani order confirmation via Email

Order Confirmation


Figure 51: Example of Chanel payment confirmation via WeChat message

Payment Confirmation



Figure 52: Example of Yintai.com sending SMS to inform customer that the order will be sent by EMS courier

Shipping Confirmation



Return Communications

Figure 53: Generally significant efforts both from Chinese (mostly via SMS) and European (mostly via email) operators. WeChat a bit behind

Return communications


Figure 54: Example of Armani complete two-step sequence via email



Armani Armani 1 YES (Email)YES (Email, combined with

refund)

YES (Email, combined

with product received)

Mr Porter Burberry 1 YES (Email in English) YES (Email in English) YES (Email in English)

JD.com Burberry 1 YES (Phone call) YES (SMS)YES (Phone call and

SMS)

Yintai.com Burberry 1 YES (SMS and Email) YES (SMS) YES (SMS and Email)

Burberry Burberry 5 NOYES (Email, combined with

refund)

YES (Email, combined

with product received)

Secoo Burberry 6 YES (Email) NO YES (SMS)

Tod's Tod's 7 NO NO YES (Email)

Tmall Burberry 7 YES (SMS) NONO (only Alipay

notification)

WeChat Montblanc 7 NO NO YES (Email)

WeChat Chanel 7 NO NO YES (WeChat message)

YES YES YES

NO NO NO

RETURN COMMUNICATIONS

Purchasing Channel Purchased Brand RankingReturn request received

(Email, Phone call, SMS...)Products received

Refund confirmation

(from brand)


Figure 55: Example of JD.com Best practice with multiple communications with clients (SMS/Phone call)




Physical Touch Points

Figure 56: Burberry performing better via Tmall than directly. Apart from Tmall channel, European brands better than Chinese e-tailers/Dept. Stores and Mr Porter

Physical Touch Points – Overall Ranking

Source: Contactlab Analysis

Delivery

Figure 57: Striking performance from JD.com delivering in one day. Burberry also performing very well both directly and via Tmall. E-tailers pickup points widely adopted

Delivery ranking


External InternalDocuments

inside

Quality

FeaturesEasiness/Friendliness

Tmall E-Tailer Burberry 61 1 2 3 3 6 1 3

WeChat Social platform Montblanc 60 2 6 5 2 1 8 8

WeChat Social platform Chanel 57 3 6 1 1 2 10 7

Burberry Mega-Brand Burberry 55 4 2 2 10 2 1 3

Tod's Runner-Up Tod's 52 5 6 8 4 2 3 2

Armani Premium Armani 49 6 6 6 6 5 3 1

JD.com E-Tailer Burberry 41 7 1 10 8 7 3 5

Secoo E-Tailer Burberry 37 8 6 3 6 7 8 5

Mr Porter E-Tailer Burberry 35 9 4 8 5 10 3 8

Yintai.com Department Store Burberry 34 10 4 6 8 7 7 8

PHYSICAL TOUCH POINTS – RANKINGS CHINA 2016

Purchasing

Channel

Channel

Category

Purchased

BrandSCORE

OVERALL

RANKINGDELIVERY

PACKAGING RETURN PROCEDURE

COSTS

Purchasing

Channel

Purchased

BrandRanking

Declared standard delivery

performance during purchasing

Actual delivery performance from

purchase to arrival in Fujian province

Costs for standard

delivery

Delivery to

boutique/pick-up pointExtra effort

JD.com Burberry 1 Next day after payment 1 (from Guangzhou) Free YES, JD spot

Burberry Burberry 2 1-5 days after dispatching 2 (from Shanghai) Free YES, some boutiques

Tmall Burberry 2 Shipped within 3 days 2 (from Suzhou) Free YES, Tmall spot

Mr Porter Burberry 4 3-4 working days 4 (from UK) Free N.A. Signature at delivery option

Yintai.com Burberry 4 Not specified 2 (from Jinhua) Free NO Preferred delivery option

Armani Armani 6 3-5 working days 4 (from Shanghai) Free (promotion) NO

Tod's Tod's 6 1-2 days after dispatching 3 (from Shanghai) Free NO

Secoo Burberry 6 Not specified 4 (from Beijing) FreeYES, Secoo experience

center

WeChat Montblanc 6 Not specified 2 (from Shanghai) Free NO

WeChat Chanel 6 Not specified 2 (from Shanghai) Free NO

YES, declared 1-2 days FREE YES YES

YES, partial information 3 days

Not declared 4 or more Payment NO NO

DELIVERY

TIMING QUALITY FEATURES


Figure 58: Burberry – Example of pickup in store offering

Delivery to boutique


Figure 59: Tmall and JD.com – Example of offering pickup points

Delivery to pickup point



Figure 60: Yintai – Example of offering clients multiple delivery options

Extra Effort in Delivery



External Packaging

Figure 61: Chanel via WeChat standing out. Yintai.com and JD.com with poor effect at external box opening. Chinese operators exploiting External boxes for communications

External Packaging


Figure 62: Burberry using its usual black wrapping also on Tmall, Chanel adopting grey wrapping (vs no in US)

External Wrapping


Purchasing

Channel

Purchased

BrandRanking

External

Wrapping External Box

Effect at

external box opening

WeChat Chanel 1 YES White cardboard Chanel trunk with printed logo inside "Wow"

Burberry Burberry 2 YES White cardboard trunk "Wow"

Tmall Burberry 3YES (usual

Burberry)White cardboard trunk Plain

Secoo Burberry 3 NO Trunk with branded opening strip and Secoo cross channel contacts Neat

WeChat Montblanc 5 NO Havana cardboard box with bands "Wow"

Armani Armani 6 NO Havana cardboard trunk Neat

Yintai.com Burberry 6 NO Trunk with fashion touch and Yintai cross channel contactsBare

(Plastic filler upfront)

Tod's Tod's 8 NO Havana cardboard box "Wow"

Mr Porter Burberry 8 NO Havana cardboard box "Wow"

JD.com Burberry 10 NO Havana cardboard trunk with printed "JD Luxury" Non luxury

(Plastic filler upfront)

YESPlus

(high quality cardboard, logo inside, luxury/cross channel messages…)"Wow"

Cardboard trunk Neat

NO Standard cardboard box Messy / Bare / Non Luxury

EXTERNAL PACKAGING


Figure 63: Yintai.com fully exploiting the external box communication potential: fashion touch&feel and cross channel contacts (social/web/phone)

External Box


Figure 64: Secoo exploiting the external box potential: cross channel contacts (stores/social/web/phone)

External Box



Figure 65: International E-tailer Mr Porter giving very little attention to external box

External Box


Figure 66: Chanel luxury feeling

Effect at External Box opening



Figure 67: Burberry opening experience better directly than via Tmall



Figure 68: JD.com poor visual impact




Figure 69: Yintai.com poor visual impact




Internal Packaging

Figure 70: Chanel and Montblanc with a superior attention to Internal Packaging. Burberry via Tmall and Secoo much better than direct

Internal Packaging


Figure 71: Secoo Best Practice: look and feel similar to Mr Porter, plus cross-channel contacts (Club, APP, customer service number)

Internal Box


Purchasing

Channel

Purchased

BrandRanking Internal box/bag

Effect at Internal

box/bag openingInternal wrapping Filler to keep product stable Product box Product wrapping and protection Extra touch Shopper bag

WeChat Chanel 1"Chanel luxury box" (white/black

smooth box with embossed logo)"Wow"

"Luxury"

(Chanel white branded tissue paper with sealing

wax for closure)

"Luxury"

(pleated tissue paper, very effective)"Premium branded box" (embossed Chanel logo)

"Plus"

(branded Chanel paperboard wrapping)

Perfume samples in

Chanel branded fabric

bag

NO

WeChat Montblanc 2Montblanc branded box (box with

logo)"Wow"

"Luxury"

(Montblanc branded paper wrap, branded ribbon,

white rigid paper box )

"Luxury"

(black small cut pleated premium paper,

effective)

"Premium branded box" (embossed Montblanc

logo)

"Luxury"

(branded Montblanc fabric bag)"Made in" navigator NO

Tmall Burberry 3

"Burberry luxury shopper bag"

(shopper bag with embossed

logo and ribbon

Neat NOYES

(white tissue paper)

"Luxury"

(made in England box with embossed Burberry

logo and ribbon)

"Luxury"

(tissue paper with branded Burberry sticker

plus branded Burberry fabric bag)

Yes

Tod's Tod's 4 NO n.a.

"Luxury"

(rigid Tod's branded textured cover, plus orange

tissue paper with ochre branded texture sticker)

"Luxury"

(crinkled orange paper, effective)

"Luxury"

(branded ochre box with Tod's branded ribbon)

"Luxury"

(brown fabric wrapping with embossed

Tod's logo)

NO

Mr Porter Burberry 5

"Mr. Porter luxury box"

(branded box with nice texture,

Mr.Porter signature)

"Wow"

(including client name on

sticker)

NOYES

(black tissue paper, effective)NO box

"Luxury"

(branded Burberry fabric bag)NO

Armani Armani 6"Armani luxury box"

(branded box with magnetic lock)Bare

"Tissue paper"

(white with black stickers)NO

"Premium branded box"

(grey textured box with embossed Armani logo)

"Plus"

(branded Armani tissue paper wrapping)NO

Secoo Burberry 6

"Secoo luxury box"

(box with nice texture,

embossed logo, cross channel

contacts)

Messy"Bare"

(trasparent plastic wrap)

YES

(plastic bubble wrap with Secoo logo,

effective)

NO box

(replaced by Burberry branded plastic bag)

"Luxury"

(branded Burberry fabric bag)NO

JD.com Burberry 8 NO n.a."Bare"

(trasparent plastic bag)

YES

(plastic bubble wrap with JD logo,

effective)

NO box


"Luxury"

(branded Burberry fabric bag)

Sunglasses as gift in

additional boxNO

Yintai.com Burberry 8 NO n.a. NOYES

(anonymous plastic bubble wrap)

NO box


"Luxury"

(branded Burberry fabric bag)Discount coupon NO

Burberry Burberry 10 NO n.a. NOYES

(white tissue paper cushion)

"Premium branded box"

(made in England box with embossed Burberry

logo)

"Plus"

(tissue paper with branded Burberry

sticker)

NO

Luxury feeling "Wow" Luxury feeling / Wow effect Luxury feeling / Wow effect Luxury/Wow effect Luxury/Wow effect - branded bag YES Yes

Brand name Neat Tissue paper Yes Premium (branded box) Plus - branded tissue paper

No box/bag Bare Bare / None None No boxPlain - plastic wrapping, unbranded tissue

paper NO NO

INTERNAL PACKAGING


Figure 72: Examples of effect at internal box opening (1/2)

Mr Porter ‘Wow’ effect with client name printed on label Montblanc ‘Wow’ effect


Figure 73: Examples of effect at internal box opening (2/2)

Tod’s best practice



Figure 74: Tmall offering the most luxury impact among Burberry purchases (1/2)

Product box comparison


Figure 75: Tmall offering the most luxury impact among Burberry purchases (2/2)

Product box comparison



Figure 76: Tmall best practice, including both tissue paper and fabric bag

Product wrapping and protection


Figure 77: Extra touch in Internal packaging (1/2)

Chanel including perfume samples JD.com including sunglasses as gift


Figure 78: Extra touch in Internal packaging (2/2)

Montblanc ‘Made in’ navigator to facilitate the understanding of Made in origin

Yintai.com promotion of Yintai Intime Retail with 30% off on first order



Documents inside Packaging

Figure 79: Montblanc standing out. Burberry direct better than via JD.com, Secoo, Yintai.com and Mr Porter

Documents inside packaging


Figure 80: Examples of Thank you message

Montblanc dedicated card Chanel dedicated card


WeChat Montblanc 1Yes, dedicated

cardNO "Luxury"

"Luxury"

(branded premium paper, neatly

folded)

YESYES

Montblanc warranty cardMade in Italy Made in Italy NO

Tod's Tod's 2 NO NO "Luxury"

"Luxury"

(branded premium paper, neatly

folded)

YES NO Made in Italy Made in Italy NO

Burberry Burberry 2 NO NO "Luxury""Plus"

(branded good quality paper)YES NO Made in Italy Made in Italy YES

WeChat Chanel 2Yes, dedicated

card inside folderNO NO

"Plus"

(branded good quality paper)YES NO Made in France Made in France

YES

(Plastic wrap should

not be opened)

Armani Armani 5

YES

(Mentioned in

order recap)

NO NO"Basic"

(loose and plain documents)YES

YES

Armani "Certificato di

autenticita"

Made in Italy Made in Italy YES

Tmall Burberry 6

YES

(Mentioned in

receipt)

NO "Plus""Basic"

(low quality paper and print)YES NO Made in Italy Made in Italy YES

JD.com Burberry 7 NO NO NO"Very basic"

(just return tag)

YES

(Burberry and

JD.com)

NO Made in China NO NO

Secoo Burberry 7 NO NO NO"Basic"

(plain one page document)

YES

(Burberry and

Secoo)

NO NO Made in Italy NO

Yintai.com Burberry 7 NO NO NO"Basic"

(plain one page document)YES NO Made in China

NO

(not even Burberry logo

on product)

NO

Mr Porter Burberry 10 NO NO NO"Basic"

(loose and plain documents)NO NO NO Made in China NO

Yes, dedicated

letterYes

Luxury

feelingLuxury feeling YES YES YES YES YES

Mention in other

docPlus Plus

No No No/plain Basic/very basic NO NO NO NO NO

Security tag for

return

DOCUMENTS

Purchasing

Channel

Purchased

BrandRanking

Thanks

messageGift card

Documents

EnvelopeShipping documents Brand product tag Authenticity certificate


on product


on product tag/box


Figure 81: Burberry via Tmall including Thank-you message, while nothing is included on the direct channel

Thank you message


Figure 82: Product tag for Burberry purchases (1/4)



Figure 83: Product tag for Burberry purchases (2/4) - Two product tags included for purchase via JD.com


Figure 84: Product tag for Burberry purchases (3/4) – Two product tags included for purchase via Secoo. However no mention on ‘Made in’ origin



Figure 85: Product tag for Burberry purchases (4/4) – Only Burberry Product tag included for purchase on Yintai.com


Figure 86: Armani and Montblanc best practice

Authenticity certificate



Figure 87: Secoo giving very confusing price information: 1,050 RMB on product page vs. 2,000 RMB on tag attached to the product. Incidentally, Burberry officially says 1,500 RMB!

Pricing information



Return Procedures

Figure 88: Overall more strict return time limits in China: 7 days vs 20 in Europe and 30 in US. European operators offering Free Return. No monobrand exploiting Return or Exchange instore

Return procedure – Quality features


Figure 89: Tmall offering the possibility to return products to Tmall spot

Return to pickup point


Purchasing

Channel

Purchased

BrandRanking Max time for return request Costs Return instore

Exchange

instore

Reasons for

return

Burberry Burberry 1 30 days from delivery Free NO NO Asked

Tmall Burberry 1 7 days from receiving the products FreeReturn in Tmall

spotNO Asked

Armani Armani 3 7 days from receiving the products Free NO NO Asked

Tod's Tod's 3 7 days from receiving the products Free NO NO Asked

Mr Porter Burberry 3 7 days from receiving the products Free n.a. n.a. Asked

JD.com Burberry 3 7 days from receiving the products 8 Yuan Return in JD spot n.a. Asked

Yintai.com Burberry 7 15 days from receiving the products 22 Yuan NO NO Asked

Secoo Burberry 8 7 days from receiving the products 23 Yuan n.a. n.a. Asked

WeChat Montblanc 8 7 days from receiving the products 22 Yuan NO NO Asked

WeChat Chanel 10 7 days from receiving the products 13 Yuan NO NO NO

Within 4 weeks Free Yes Yes Asked

Within 2 weeksMinor extra

cost

Within 1 weeksSignificant

extra costNo No Not Asked

RETURN PROCEDURE - QUALITY FEATURES


Figure 90: European operators make the return procedure more friendly: instructions inside box (Secoo too), pre-printed labels

Return procedure – easiness / friendliness


Figure 91: Secoo best practice with visual aid

Instructions for Return


Purchasing

ChannelPurchase Brand Ranking

Instructions for return

(inside packaging)

Return label

pre-printedCourier pick-up booking

Pick-up

location

Armani Armani 1 Within the recap order YES Phone call courier Home

Tod's Tod's 2 Only web YES Phone call courier Home

Burberry Burberry 3 Within the recap order NO via Customer Care Home

Tmall Burberry 3 Within the recap order NO via Customer Care Home

JD.com Burberry 5 Only web NO via Customer Care Home

Secoo Burberry 5 Form with visual aid NO Phone call courier Home

WeChat Chanel 7 Within the recap order NO Phone call courier Home

Mr Porter Burberry 8 Only web NO Phone call courier Home

Yintai.com Burberry 8 Only web NO Phone call courier Home

WeChat Montblanc 8 Only web NO Phone call courier Home

Extra effort YESSame step

(Online / Customer care)

Courier c/o

Customer

Within the recap order

Only web instruction NOExtra step

(Phone call courier)

Post office /

other location

RETURN PROCEDURE - EASINESS / FRIENDLINESS


Figure 92: Armani and Tod’s are only brands to include pre-printed label to return products

Return label pre-printed



Methodology

Figure 93: Methodology


Figure 94: Scope of the Online Purchasing Process tested in China



Figure 95: Panel of 10 Online Purchases

3 Monobrands plus 4 E-Tailers, 1 Department Store and 2 via WeChat


Figure 96: Products purchased online – Cardholders and when not available Perfume (Chanel)



Figure 97: Majority of European brands offering Quick Buy option in China, only JD.com among Chinese players

Quick Buy option (Buy as guest, no Account Registration required)



Appendix

Websites

Figure 98: Armani adopting same look and feel for Chinese and US websites

Source: Company website

Figure 99: Tod’s adopting same look and feel for Chinese and US websites

Source: Company website


Figure 100: Burberry makes extra effort to personalize the website content

Source: Company website, The Telegraph 14 Jan 2017 (http://www.telegraph.co.uk/business/2017/01/14/chinese-pop-idol-helps-burberry-get-back-song/)

Figure 101: Mr Porter makes no effort to localize content, language and currency

Source: mrporter.com

http://www.telegraph.co.uk/business/2017/01/14/chinese-pop-idol-helps-burberry-get-back-song/

http://www.telegraph.co.uk/business/2017/01/14/chinese-pop-idol-helps-burberry-get-back-song/


Figure 102: Burberry official flagship store on Tmall with similar look and feel of Burberry website

Source: Tmall

Figure 103: Burberry homepage on JD.com with very Chinese look and feel

Source: JD.com


Figure 104: Burberry homepage on Secoo pretty basic

Source: secoo.com

Figure 105: Burberry homepage on Yintai.com looks pretty basic

Source: Yintai.com


Figure 106: Montblanc and Chanel shoppable offer on WeChat

Source: WeChat


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