In a move to probe Chinese and international markets, Macy’s Inc has invested $15 million in VIPstore, a leading online retailer of luxury and fashion goods, which operates China- based e-commerce site omei.com. From Spring 2013, Macy’s will sell items from its private brand collection I.N.C. directly to Chinese shoppers via the site.
Founded in 2009, VIPstore also operates established flash sales site jiapin.com. Its website omei.com offers brands such as BCBG, Guess, Calvin Klein and Italia Independent, and will sell Macy’s I.N.C. brand before introducing other private labels.
Macy’s CEO Terry Lundgren said there is “significant long-term opportunity internationally” for Macy’s.Online initiatives allowed them to test overseas markets before opening stores: “That’s a very different decision than us building a bricks and mortar store, which is permanent, which is expensive and a bit of a bet.”
Jon Bond, VIPStore’s head of business development said the move was “a smart way to introduce Macy’s biggest selling brand in the US” to the Chinese market: “It will be the only way to buy the I.N.C. brand in China.”
Although Chinese and overseas shoppers have been able to buy on macys.com since last year, the company has no namesake stores outside the United States. However buyers on omei.com will be able to avoid import duties and tariffs with orders shipped through Chinese warehouses, while orders on macys.com are supplied from the US.
According to Macy’s spokesman Jim Sluzewski, the site offers further convenience to Chinese shoppers: “omei.com is in Chinese,” while macys.com is only available in English.
Detractors, including 25 year old Zoe Chan from Chongqing, have voiced doubts: “Chinese people prefer brands they are familiar with.” In a country where many retailers do not allow returns or exchanges, and with customers being unable to try apparel before purchase, Macy’s may face competition from retailers such as H&M which have a physical presence in China. However company officials say omei.com does offer returns and exchanges.
Macy’s internet sales comprise approximately 7% of total sales, with online sales rising 39.6% last year. According to Zia Daniell Wigder, an analyst with Forrester Research, the value of e-commerce sales in China is expected to reach $169 billion this year, and $356 billion in the Asia Pacific region in 2016.
An increasing number of Western retailers such as Dallas based Neiman Marcus Group have been investing in Chinese e-commerce websites. However, in it’s first foray into a foreign market and with little knowledge of Chinese online consumer behaviour, only time will tell if Macy’s will find success among China’s 173 million online shoppers. In the meantime VIPstore, one of a huge number of similar online retailers in China, is cashing in on a lucrative deal.