RE-HUB: 2023 Shopping Index 2.0

199IT original compilation

The daigou market has grown by nearly 40% since 2019, with the market size across all sectors estimated to be $81 billion. The luxury goods industry plays a key role in the overall market, as this category is well suited to the daigou business, with cross-border price differences, scarcity, and exclusivity.

The daigou business has become more professional and has grown significantly in size. These “corporate” daigous can source products in bulk, disrupting brands’ strategies in the Chinese domestic market.

In 2020 and 2021, China's daigou channels were stimulated because global brands had excess inventory and were unable to cope with the decline in demand caused by the spread and fluctuations of the global epidemic. This led some brands to retain some bad habits in order to maintain sales targets.

Data (for top luxury brands in 10 major categories) shows that total revenues are around RMB 2 billion in August 2023. Taobao accounts for only 26% of total revenues, while Dewu is the market leader with 73%.

Revenue is concentrated on hero, evergreen style products, which most brands want to sell in stores. Price differences range from a premium to a 50% discount compared to China's recommended retail price. This is closely related to brand premium perception and the brand's focus on wholesale management.

Some products were sold below the tax-refund price at the head office retail outlet, highlighting that distribution/wholesale can be a key route to market.

The road to controlling the grey market is long and requires uncomfortable conversations across borders and industries, including management, organization, marketing, pricing and retail operations. Every journey begins with a small step, and we believe this warrants closer monitoring of the situation.

199IT.com Originally compiled from: RE-HUB Unauthorized reproduction is prohibited