The demand for luxury goods in China is growing at an increasing rate. China contributed only one percent to the global sales of luxury goods in 1998. It took 12 years to hit the 10% mark in 2010. But it will take just five more years to account for 20% of global sales of luxury goods by 2015 and become the largest market in the world for luxury goods. The top brands are rolling out stores in China but it is not enough to keep up with the growth in demand and is unable to reach the relatively smaller cities which contribute significantly to the total sales.
With the growing trend of online luxury shopping the luxury e-commerce wave that is sweeping across China is doing its best in bridging the gap between the demand and supply. Several of the sites have been able to replicate the Gilt business formula to expand into the sector and has attracted substantial funding. VIP Store is one of the first luxury B2C online verticals in China and has established itself as the market leader because of the first mover advantage. The investors are falling over each other to provide funding to the e-tailer. Just in the first quarter of 2011 GSR Ventures, Taishan Invest AG, Green Pine Capital Partners and a Hong Kong-based syndicate have provided the site tens of millions of Dollars.
The Gilt formula has clicked in a big way in China. The exponential growth in demand has given the scope to sites like VIP Store to grow along with it. Allen Young, the CEO of VIP Store revealed that China today has the fastest growing luxury market in the world and is expected to be worth $27 billion by 2015 according to a report by international management consulting firm McKinsey & Company. VIP Stores which was founded in 2009 has grown fast to become the most popular luxury e-commerce platform in China. They follow the invitation only sales formula backed by a global supply chain system. They have also established long-term solid partnerships with more than 500 luxury goods manufacturers and distributors worldwide, including Dior, Prada, Gucci, Burberry, Estee Lauder and Chloe.