Samsonite learns to capture Chinese market with ecommerce
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Samsonite learns to capture Chinese market with ecommerce

With its hordes of newly minted middle class travellers, China should be a gold mine for worldwide luggage market leader, Samsonite. But, this was not always the case. In the first half of 2016, Samsonite saw sales fall by 5.2% in the country. Luckily, Samsonite figured it out – and the second half of 2016 saw double-digit growth for the company.

Just over a month into 2017, and Samsonite is up by almost 13%!

samsonite chinese market graph

Source: Yahoo Finance

The transformative factor in Samsonite’s Chinese performance was simple: ecommerce. Samsonite’s CEO Ramesh Tainwala, said “the first half was difficult,” for Samsonite, because “it took us time to understand how ecommerce works.”

The shift to purchase luggage online is not particularly new, but the industry has been somewhat protected from it, as many travellers buy their bags at the airport itself. This is particularly true of Samsonite, which has developed a business model that relies, in part, on it being the ‘go-to’ luggage retailer in airport spaces.

However, Chinese consumers have adopted ecommerce far faster – and to a far greater degree – than their western counterparts. China may credibly be seen as a symbol of ecommerce’s potential in the west – the country’s online transactions last year exceeded $3 trillion. That’s larger than the entire economy of the United Kingdom – which is itself the fifth largest economy in the world.

Despite Samsonite’s success in the second half of last year, the company still has misgivings about ecommerce’s effect on pricing. Tainwala said: “we have to explain to the ecommerce players that they are offering enough advantages to consumers through convenience, through range shopping,” and added “we don’t want to grow ecommerce at the cost of our current model.”

However the company approaches the ecommerce revolution going forward, it can’t be denied: in the second half of last year, they got it very, very, right.

Disclosure
Dominion holds Samsonite in its Global Trends Luxury Fund.



If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.