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Luxury E-Tail Grows in China, But Distribution Can’t Keep Up

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With $190  billion in online sales last year, there’s no denying that e-commerce is big in China–according to global management firm McKinsey, China is now the world’s second biggest e-commerce market. But as the new sector has grown, China’s third-party logistics providers and delivery services–especially when it comes to luxury goods, which require special care–have been overwhelmed by demand.

Distribution and delivery services in China are generally known as both fast and cheap, especially in major metropolitan areas. But as Chinese consumers buy more full-price luxury goods online, quick-and-dirty methods may displease big spenders. Shoppers have reported  slow delivery, bad service, broken packages and lost goods.

A host of luxury e-commerce companies have appeared on the Chinese market in recent years, including Yoox, Neiman Marcus and net-a-porter. Last week, likely in response to the unpredictable quality of Chinese shipping facilities, Neiman’s announced plans to stop shipping from China to China, opting to ship only from the U.S.

Some analysts suggest that logistics providers, unable to meet the rapidly rising demands of apparel companies wishing to ship in China, are taking on too many clients, and fail to properly package garments. In the meantime, hundreds of opportunistic new logistics companies have sprung up, often lacking the necessary experience.

“When you buy something from a high-fashion brand, you want to have the same experience as when you are buying in the store,” said Andre Suguiura of LifeStyle Logistics, which specializes in services for fashion retailers. In China, he explained, logistics companies who once shipped only hardier goods, like plastic toys, are now dealing with expensive garments. “They do not know how to handle them,” he said.

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