Nasdaq-listed Chinese firm Secoo Holding Ltd, which claims to be Asia’s largest online integrated luxury products and services platform, has taken a 10 percent stake in CNSC’s new Nanjing downtown post-arrivals duty free store, due to open soon.
According to Duty Free Expert (The Moodie Davitt Report’s partner in B2B WeChat program i免税中国 “Love Duty Free, Love China”), the investment cost $1.8 million (RMB 12 million).
“Secoo’s investment is just for the Nanjing store,” a CNSC spokesperson told The Moodie Davitt Report. “The soft opening date for the store will be in late June or early July.”
CNSC (full name, China National Service Corporation for Chinese Personnel Working Abroad) is owned by powerful state-backed pharmaceutical health group Sinopharm – ranked number 194 in the Fortune Global 500 rankings for 2018.
As reported, CNSC has embarked on a protracted expansion drive in support of the Chinese government’s mission to maximize domestic consumption. In the downtown sector (where it operates 12 post-arrivals duty free stores), CNSC is upgrading 11 shops through 2020 with firm plans to open more stores in the coming five years.
This year alone CNSC will refurbish stores in Dalian, Chongqing, Nanjing, Zhengzhou, Hangzhou and Harbin.
Secoo, founded in 2011, said that it generates higher average transaction values than other major e-commerce online platforms in Asia, citing a recent report by research firm Frost & Sullivan. Secoo’s focus is on luxury products and services, sold through the Secoo.com website, mobile applications and offline experience centers. The business offers more than 300,000 SKUs, covering over 3,000 global and domestic brands.
Secoo has already opened five offline experience centers in popular shopping destinations and central business districts in mainland China, Hong Kong and Malaysia. It is also cooperating with brand boutiques, such as Versace, to allow customers to pick up products in-store that they have ordered on Secoo’s online platform. Several top-tier global brands, including Tod’s, Salvatore Ferragamo and Versace, directly supply Secoo.
Secoo Holding went public on the U.S. Nasdaq exchange on September 22, 2017, with an original valuation of around $640 million. Secoo’s gross market value reached $1.1705 billion (RMB 8.0481 billion) in 2018, up 52.9 percent year-on-year. Total revenues reached $783.6 million (RMB 5.3876 billion), a rise of 44 percent.
Comment: Secoo’s investment in CNSC, albeit a small stake in only one store, is intriguing, writes Martin Moodie. Secoo prides itself on guaranteeing authenticity of product and on integrating the online to offline shopping opportunity. By investing in CNSC, a pure traditional retail play, it will be reaching out to large numbers of returning Chinese travelers, encouraging them to take advantage of their generous post-arrivals duty free allowances. That also spells good news for CNSC, which is keen to increase both consumer and brand awareness of the post-arrivals channel.