There are obstacles, of course. "Compared to those from around the world, especially luxury shoppers from USA and Europe, Chinese online shoppers need more coaching time in terms of interpreting the culture, the story of luxury and fashion brands, especially for emerging high-end brands," says Zhao. What this means is that the new Chinese fashionistas might not know what they really want, even if they can afford to buy almost any high-end label.
So on September 15, Shangpin will try to address this obstacle by launching an online editorial magazine. The company has actively been recruiting fashion editors in New York and Europe who can also speak and write in Mandarin. This strategy for providing style-related content could prove lucrative if it steers Shangpin's readers toward purchasing. In a survey conducted this year among 1,200 middle class respondents in 24 cities in tier-one and tier-two cities mainland China, audit and advisory firm KPMG found that nearly 70% of respondents said they search online for information on luxury brands at least once a month. Thirty percent do so more than once a week. These stats suggest that Shangpin's target customer likely will be hungry for the type of online editorial content Shangpin plans to provide and, ideally, buy it as shopping advice.
Zhao pays attention to trends not only in fashion but also in business. His initial experience was not in the rag trade, but in the world of Chinese financial institutions. Having moved to the United States in 2000, he worked at Hewlett-Packard (HPQ) and other U.S. companies, focusing on e-commerce during its early days. In the mid-2000s, he returned to China as an entrepreneur and decided to apply what he learned and the connections he made in both finance and e-commerce, forming a company called Vansky, which worked with Chinese banks to create online software and services.
Then, inspiration struck: he came up with the idea of Shangpin, which in itself is a business idea with obviously huge potential, simply given the optimistic trends in China's luxury market. But the real innovation behind Shangpin is Zhao's idea of inviting lists of wealthy customers of three banks he worked with -- China Construction Bank, China Minsheng Banking Corporation (China's first privately held, and not state-owned bank) and Hua Xia Bank -- to become members of Shangping. This exclusive membership to the shopping site is pitched as a special service to them, and they are encouraged to invite friends to become members too. This luxury-focused special service for affluent bank customers echoes the concept of Citi Private Bank Art Advisory & Finance, which since 1979 has offered art collecting advice to wealthy, private banking customers of Citi (in fact, Shangpin vice president M. Claire Chung, based in Europe, once worked for this arm of Citi in New York).
Given the tactics that Shangpin has borrowed and adapted, it might seem to some observers that the company is an example of an ultra-high-end, entrepreneurial version of what in China is known as Shanzai culture, or the practice of copycat innovation. But to be fair, top American companies such as Google (GOOG) and Apple (AAPL) are not always the first in their fields of success, either; Google wasn't the first search engine, and Apple wasn't the first to create MP3 players—they improved on the work of their predecessors. Zhao will say specifically that the company is "inspired from the success of Gilt and Vente Privee" but that he and his colleagues "are not just copying; we made a lot of other innovations or micro-innovations to fit the nature of online luxury shopping." These include Shangpin's extensive customer service offerings and the idea of creating a content arm that would educate high-end Chinese buyers about the labels that they plan to purchase.
Besides, looking at the data on the rise of luxury consumption in China, it might turn out that trailblazing e-commerce sites such as Gilt Groupe, Vente Privee, Net-a-Porter and countless others would be wise to learn from Shangpin, too.
