In the run up to the release of our DeWu white paper, DeWu: the Crossroads of Chinese GenZ and Luxury Brands, we conducted an initial analysis into the top performing products for the big 5 luxury brands.
The Big 5 luxury brands – Louis Vuitton, Dior, Chanel, Gucci,and Hermes all have a significant presence on DeWu. Each of the brands have a large array of products listed and available to purchase, and in total generate significant revenue from Grey Market channels. Products on DeWu benefit from cross-border price arbitrage, tax rebates, currency exchange fluctuations as well as the possibility of accessing further discounts in channels such as department stores, resulting in a significant price difference. Consumer confidence in the channel is built through DeWu's strong communication and focus on authentication of products - whereby the product is shipped to DeWu, authenticated and shipped on - reflecting a Seller to Platform to Consumer model (S2P2C).
By looking at the Top 5 products from the Big 5 Luxury Brands we can uncover interesting insights about the platform and how it plays a role in the overall eCommerce landscape in China. For the purpose of our analysis we excluded beauty and skincare categories, but kept perfume due to its closer proximity with the brands mentioned:
Looking at the Top Five Louis Vuitton products one thing stands out – the presence of sneakers in the top five. While the Louis Vuitton Sneakers will undoubtedly be a great success for Louis Vuitton in retail outlets, it is unlikely to be so far up the top sellers list – the presence of three different colorways of the sneakers in the top five overall products on DeWu signifies the alignment of the sneakers category to the demographic of the audience using the app. The five top colorways combined make up for an impressive 290m RMB in claimed transfers throughout 2022.
Sneaker prices on DeWu hide one of the other interesting aspects about the category, the price differences as a function of size. In the cases of both the Black and Blue colorways - the smaller sizes are significantly more expensive than the listing price - with average mens sizes actually being at a discount. For the white colorway the smaller sizes are more readily available thus not driving the same overindex versus listing price that we see for the other two. These insights can help brands understand sizing demand and ensure availability of the correct size ranges to drive incremental profits.
The top two products for Chanel come from their perfume range. In this analysis we removed beauty and skincare – but we keep perfume. The Bleu de Chanel being the top product is interesting in that is it marketed to men – reflecting the demographics of DeWu skewing more toward a male audience. The perfume sells an average of 9,500 units a month at around 680RMB (versus a claimed listing price of 760RMB on Dewu for 50ml). In positions three through five, we see hero bag SKUs coming to the forefront. Noticeably for the Classic Flap collections we see significant premiums versus their listing prices - the third placed Mini flap increased in price significant throughout the year and at the time of writing now has increased even further.
The top five Hermes products are noticeably different in their composition than the other top brands. Due to the exclusivity and scarcity of many of their top products, the DeWu marketplace is primarily dominated by jewelry and perfumes. This shows the willingness of consumers to be part of the brand, but without the availability and / or financial ability to be able to purchase. The top overall SKU is the Terre d’Hermes men’s perfume, followed by three jewelry products. Bags are still relevant, with the Picotin coming in fifth, but overall, we see that over 35% of the total revenue in 2022 came from the jewelry segment (the largest single category contribution for the brand).
The other noticeable aspect is that many of the products within Hermes' portfolio actually sell at a significant premium versus their listing price - the Picotin sold at 33% above the average listing price, further highlighting the financial willingness of consumers to part with money to be part of a brand experience.
For Dior we also see perfume playing a strongrole with the top two overall products being from the category. In contrast to both Chanel and Hermes – the top product is a women’s perfume. Fourth and Fifth position are taken up by the classic monogrammed Book Tote and Saddle bag – the book tote was sold at an average 25% discount throughout the year and the Saddle 28%. These discounts can vary throughout the year reflecting changes in currency rates and other cross border factors -the maximum discount for the Book Tote was a huge 35%. In last place and similarly reflecting the more youth-oriented audience are the B27 oblique sneakers.
The top five Gucci products come as little surprise – the top five very closely reflects the top products in Gucci’s TMall flagship store. One noticeable difference and in line with our learnings from Louis Vuitton’s top products – the Screener sneakers play a much more important role. Ranked as the number four overall product on TMall – the sneakers sold approximately 1,900 net sales units on Tmall, on DeWu they generated 18,000 GMV units sold in 2022. While not an apple to apple comparison, the sheer difference in units is noticeable.
Additionally for Gucci we see higher average discount levels - reflecting the need for tighter pricing controls for the brand.
From analyzing the top products of the Big 5 luxury brands we can uncover some key interactions between brands and the DeWu audience of those brands:
1. The large revenue contribution from the sneaker sub-category within shoes gives us an insight into both the historical development of the platform (created for sneaker collectors in the first instance) as well as the current users of the platform – adding more credence to the fact that it is a platform for tapping into an overall younger audiencein China.
2. With the top product for both Hermes and Chanel (and the second top product for Dior) being a male perfume we can further deduce that DeWu skews slighlty more male than a typical eCommerce platform – this gives rise to the potential of focusing marketing dollars towards a more male audience.
3. In the case of Chanel and Hermes, the large over indexes versus listing price tell us that the platform is not just about price differentials but also consumers are hunting for exclusive products - brands can take control of this demand by identifying products to increase stock and availability of to control supply.
4. Prices on the platform fluctuate significantly but brands such as Dior and Gucci are often at significant discounts - further control of cross border pricing may help drive consumers from third party / grey market sales back into brand owned revenue streams.
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