Secoo can prove value despite stumble doing first trading day

By Dong Feng Source:Global Times Published: 2017/9/24 20:33:39

Chinese luxury e-commerce company Secoo Holding on Friday began trading in the US, and its shares tumbled about 23.08 percent on the first day. Expert said that it will take time for investors to recognize Secoo's value.

"Given that there are many knockoffs in China, it might take the luxury sector longer to win over investors," Cao Lei, director of Hangzhou-based China e-Business Research Center, told the Global Times on Sunday. "After all, players in the luxury sector need to re-build their reputation."

There are many industry players that compete against Secoo, Cao said, with three major categories: integrated e-commerce platforms such as Alibaba's Tmall, and; vertical platforms such as and and omni-channels developed by the traditional luxury brands.

Despite the tumble in the company's shares, the potential is huge. Data from the China e-Business Research Center showed that in 2016, the domestic e-commerce market was worth more than 10 trillion yuan ($1.51 trillion), the largest in the world.

There is huge potential for profit in China's luxury goods market. In recent years, luxury goods' online sales showed rapid growth, and going online has become a major trend for the sector.

Luxury sales will grow 6 percent to 8 percent in Chinese mainland in 2017, a report from management consulting firm Bain & Co forecast, as efforts to bring prices in line with other regions encourage consumers to make more luxury purchases at home, according to a report by Bloomberg News in May.

"The demand in third- and fourth-tier markets is increasing," Cao said.  "From 2012 to 2016, consumers' demand for luxury goods and services in these cities expanded at a compound annual growth rate of 15.4 percent, more than twice as fast as in first- and second-tier cities."

Cao suggested that Secoo could raise its game by building trust and shortening the transaction cycle through cooperation with overseas brands. Secoo could also develop online-to-offline channels, Cao said.


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