sl site performance in china report
TRANSCRIPT
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August 2011
Why Luxury Websites AreDisappointing Chinese Consumers
(And Why This Matters to You)
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WHY LUXURY WEBSITES ARE DISAPPOINTING CHINESE CONSUMER
Copyright Strangeloop Networks Inc. 2011 2
PREFACE
While many global markets today areflat or shrinking, China is booming. Thissuccess extends to luxury brands, whichare struggling to stay afloat elsewhere intodays tenuous economic climate.
In 2009 during the low point of theglobal recession the sale of luxurygoods in China grew by 16%. Analystshave forecast that China will comprise 20percent of global luxury sales by 2015,surpassing Japan as the worlds single
largest luxury market.
To leverage the popularity of Europeanluxury brands, labels like Louis Vuitton,Gucci, and Hermes have more than
tripled their bricks-and-mortar presencein mainland China. At the same time,however, many of these same luxurybrands are failing to deliver an optimalonline experience to their growingChinese market.
BRAND OWNERS IGNORETHIS DISCONNECT AT THEIROWN PERIL.
According to a recent McKinsey report,The internet has rapidly become thesecond most important consumer touchpoint for luxury categories suchas fashion.
And Chinese shoppers have not yetreached their peak of projected spending
Recent studies show that these shopperare moving online in unprecedentednumbers. Mainstream consumers ofluxury goods are getting younger.Three-quarters are under 43 years old,with more than half between the agesof 25-28. These shoppers are as tech-savvy and demanding as young peopleanywhere else in the world.
China being the second largest market in the world for luxurygoods means that no established or aspiring internationalluxury brand can ignore the Chinese market.
Ronald Degen, International School of Management (2009)
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KEY FINDINGS
At Strangeloop, we conducted a study of 100 leading international luxury brands websitesto determine how they perform for a typical visitor in urban China. (For details, seeMethodology at the end of this report.)
Average load time for a luxury goods website in Jiangsu,China: 16.2 seconds
Number of sites that were blocked or non-functional: 1(helmutlangjournal.com)
Percentage of sites that use a content delivery network(CDN) to accelerate page load times: 29
Among the five slowest sites, the number that use a CDN: 0
Among the five fastest sites, the number that use a CDN: 0
Proportion of sites with a specific Chinese URL: 3 out of 10
Percentage that offer a Chinese language option: 36
FIVESLOWESTSITES:
Escada - 58.811
Frederic Fekkai - 54.277
Movado - 49.657 Emanuel Ungaro - 44.742
Boucheron - 41.811
FIVEFASTESTSITES: Halston - 1.942
Fred Leighton - 2.259
Givenchy - 2.329
Gianfranco Ferre - 2.757
Mikimoto - 3.041
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WHY RETAILERS SHOULD BE CONCERNED ABOUT
THEIR ONLINE PRESENCE IN CHINA
THREE FACTORS ARECONVERGING TO MAKE CHINAA POWERHOUSE OF ONLINECONSUMER ACTIVITY:
1. China has emerged as a majorglobal consumer of luxury goods.
In 2010, Chinas luxury goods consumptionreached US$6.5 billion, maintainingthe worlds fastest growth rate for threeconsecutive years. [Goldman Sachs]
By 2015, China is expected to overtakeJapan as the worlds largest consumer ofluxury goods. And by 2020, Chinas luxuryconsumer base is expected to expand from80 million to 180 million people. [McKinsey]
THE ROLE OF THEINTERNET IN CHINA
In 2010, online sales accountedfor more than 10% of retail sales inShanghai.
This demonstrates the impact ofthe internet on ecommerce in moredeveloped markets. It is also anindicator of the future potential of onlineshopping in China. [DDMA]
One in four Chinese internet userswill not purchase a product beforeresearching it online.
Shanghai consumers reported thatonline information was the largestinfluence on the final decision for 34%of all products purchased in 2010.[DDMA]
Luxury brands, to continue or become successful, must winin China to continue winning in the rest of the world.
Ronald Degen, International School of Management (2009)
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2. Chinese consumers are goingonline in unprecedented numbers.
As of June 2010, China had 420 millioninternet users more than five times asmany as in India and nearly twice as manyas in the U.S. and it was adding 6 millionnew users every month. By 2015, there willbe more than 750 million internet users inChina. A significant number of these will bemobile internet users. [McKinsey]
WHY RETAILERS SHOULD BE CONCERNED ABOUT
THEIR ONLINE PRESENCE IN CHINA
PROFILING CHINAS LUXURYCONSUMERS: WHO ARE THEY?
Mainstream consumers of luxurygoods in China are getting younger.
Those in the 25-28 age range withmonthly incomes of more than 10,000yuan (US$1521) account for more thanhalf. While their European counterpartsare generally over 40, and those in theU.S. are over 60, Chinese luxury goods
consumers are primarily in the 18-50age group. This implies a far more rapidfuture growth in Chinas luxury goodsmarket than in those of Europe or theU.S. [World Luxury Association]
Traditionally loathe to offer their products directly online forfear of diluting their brand, many luxury brands arefinding theyhave little choice but to establish a robust online presence.
McKinsey, Understanding Chinas Growing Love for Luxury, March 2011
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3. Chinese shoppers have not yethit their projected peak of onlinespending.
We have only begun to see the impact ofChinese consumers on global ecommerce.Only a third of Chinas internet userscurrently shop online, compared withtwo-thirds in the U.S. Chinas online retailmarket expanded by 117 percent in 2009,from $19 billion to $39 billion. That makesit the worlds second biggest, after the U.S.
($156 billion). And it is expected to getmuch, much bigger. [source: iResearch]
PROFILING CHINAS LUXURYCONSUMERS: WHAT ARETHEY BUYING?
Chinese luxury goods consumersgenerally indulge in small personalitems, such as clothing, perfumes,watches, and leather goods.
Apparel is the most popular shoppingcategory in China, accounting for 36percent of Chinese consumer goodsspending. Personal digital productswere next, accounting for 29 percent.The most owned luxury fashion brandsin China are Lacoste, Valentino,Chanel, and Bally. The top luxurybeauty brands are Este Lauder,Lancme, and Guerlain.
WHY RETAILERS SHOULD BE CONCERNED ABOUT
THEIR ONLINE PRESENCE IN CHINA
Chinas online retail market expanded by 117 percent in2009, from $19 billion to $39 billion. And it is expected toget much, much bigger.
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Despite the rapid pace with which Chinese shoppers are moving to the internet, veryfew brands are investing enough in their websites to deliver the fast, convenient onlineexperience their customers are quickly learning to demand.
THE AVERAGE LUXURY WEBSITE TOOK 16.2 SECONDS TO LOAD.
Strangeloop conducted a study of 100 leading luxury brands websites to determine howthey perform for a typical visitor in urban China. (For details, see Methodology at the endof this report.) Our research found that the average home page took 16.2 seconds to load.This is eight times slower than the optimal page load time of 2 seconds, as defined both byusability expert Jakob Nielsen and by Forrester Consulting. [Forrester]
HOW WEBSITES ARE DISAPPOINTING
CHINESE CONSUMERS
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While most web users around the world use modern browsers, which are designed torender todays complex web pages faster, 60% of online shoppers in China use InternetExplorer 6. This is despite the fact that IE6 poses security risks for users and delivers a suboptimal online experience.
There are several reasons behind why the majority of shoppers still browse via IE6:
Over 90% of software in China is pirated, which deters users from upgrading theirsoftware and accepting browser updates.
Many commonly used Chinese websites have been constructed and tested to worksolely with IE6.
Online banking in China is exclusively via Windows and IE6.
While Microsoft has recently stepped up its efforts to eliminate Internet Explorer 6 worldwidvia its Internet Explorer 6 Countdown campaign, it is expected that IE6 will continue tobe installed by default in China for the next several years, until Windows 7 takes over theChinese market.
Clearly, site owners who want to reach the Chinese market are challenged to createmodern feature-rich, content-rich websites that perform quickly even on dated browsers.
MODERN EXPECTATIONS MEET OLD BROWSERS
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CONCLUSION: IMPLICATIONS BEYOND LUXURY GOODS
Companies need to understand the rapidly evolving role ofChinese consumers in the marketplace, and they need tobe prepared to deliver the premium online experience thatthese consumers demand.
By every measure, global ecommerce is exploding, and nowhere isthis growth more apparent than in China. The luxury retail market is avanguard for retail in general, and the performance of luxury retail sitesis a canary in the coal mine of Chinese ecommerce. Right now, thecanary is not healthy.
The average luxury website takes 16 seconds to load for a typical visitor in urban China.At the same time, web users in China are among the most demanding in the world: 75%expect websites to load in 3 seconds or less. [Gomez] These consumers expect fast,content-rich, feature-rich websites, regardless of the fact that the majority of these users arusing dated browsers that slow down page speed.
How do you evaluate the quality of the online experience you are delivering to users inChina? Ask yourself:
How fast does your website load for a typical visitor in urban China?
How does your site measure up to the expectations of a Chinese audience?
Do your websites and web-based applications perform as intended across thebrowsers, devices and networks used by consumers in China?
We have only begun to see the impact of Chinese consumers on global ecommerce.Businesses that embrace this audience, offer the most usable websites, and provide thefastest, most consistent performance will emerge as leaders in their category.
HOW FAST DOESYOUR WEBSITE LOAD FOR VISITORS IN CHINA?Request your free performance report today.
www.strangeloopnetworks.com/test-in-China
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This study used WebPagetest a third-party tool that simulates real-world browserbehavior to measure page load times from a real users perspective to test each siteshome page via the WebPagetest server in Jiangsu, China, as the site would appear to avisitor using Internet Explorer 7 on DSL.
In some cases, WebPagetest was not able to render a result. These instances arerepresented as null in the test appendix. Each site was tested 10 times and the medianrun used.
METHODOLOGY
ABOUT STRANGELOOP
This report was compiled by Strangeloop, a leader in providing Web Content Optimization(WCO) solutions that enable companies such as Petco and Visa to speed up the page loadtimes of their websites and enterprise applications. An early entrant in the WCO space, thecompany was the first to market an automated solution the Strangeloop Site Optimizer to tackle the core of todays performance problem as a service via the cloud. Strangeloop
was also the first company to integrate Googles SPDY protocol into its product offerings.Site Optimizer, which is also available as a hardware appliance, simplifies Web ContentOptimization from a lengthy and complex coding process into an automated function. Formore information, visit www.strangeloopnetworks.com.
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SOURCES
DDMA, The Influence Online Information has on Chinese Consumer Buying Behavior, 201http://www.ddm-asia.com/en/published_reports/onlineInfoImpactStudy/introAndObjectives.php
Forrester Consulting, eCommerce Web Site Performance Today: An Updated Look AtConsumer Reaction To A Poor Online Shopping Experience, August 2009
http://multichannelmerchant.com/whitepaper/0831_Akami_ecommerce_whitepaper/
Gomez, What Users Want from Mobile, July 2011http://www.gomez.com/wp-content/downloads/19986_WhatMobileUsersWant_Wp.pdf
Internet Retailer, What you dont know about browsers can hurt your conversion rate,February 2011
http://www.internetretailer.com/2011/02/15/what-you-dont-know-about-browsers-can-huyour-conversion-rate
iResearch, China Online Shopping Market Rapidly Develops in 2010, June 2011http://www.iresearchchina.com/view.aspx?id=9170
Jakob Nielsen, Website Response Times, June 2010http://www.useit.com/alertbox/response-times.html
KPMG, Luxury brands in China, March 2007http://www.kpmg.com/cn/en/IssuesAndInsights/ArticlesPublications/Pages/Luxury-brandsChina-200703.aspx
McKinsey, Understanding Chinas Growing Love for Luxury, March 2011http://www.mckinsey.com/locations/greaterchina/InsightsChina_LuxuryGoods.pdf
Ronald Degen, Opportunity for Luxury Brands in China, 2009http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531562
World Luxury Association, Psychological Trends of Luxury Consumer Behavior on ChinasMainland, 2010
http://www.womenofchina.com.cn/html/report/1800-1.htm
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APPENDIX
COMPANY NAME WEBSITE USEOFCDN
FIRST VIEWLOAD TIME
Anna Sui http://www.annasui.com.cn/zh-cn/index.html No 10.122
Anne Klein http://www.anneklein.com/ Yes 32.439
Annick Goutal http://www.annickgoutal.com No 14.5
Asprey & Garrard http://www.asprey.com No 12.649
Audemars Piguet http://www.audemarspiguet.com/ No 0
Badgley Mischka http://www.badgleymischka.com/ No 4.3
Balenciaga http://www.balenciaga.com/int/en/Default.aspx?nav=/edition-exclusives/&lang=cntrad
No 4.443
Bally http://www.bally.com/ No 19.978Balmain http://www.balmain.com/ No 33.962
Barry Kieselstein-Cord http://www.kieselstein-cord.com/ No 16.499
Baume Mercier http://www.baume-et-mercier.com Yes 11.646
Bedat & Co http://www.bedat.com/ No 8.925
Bill Blass http://www.billblass.com No 7.807
Bob Mackie https://www.bobmackie.com/ No 23.66
Borghese http://www.borghese-asia.com/html/chi/index.php
No 19.905
Bottega Veneta http://www.bottegaveneta.com/ Yes 12.865
Boucheron https://www.boucheron.com No 41.811
Bulgari http://zh-tw.bulgari.com/ Yes 39.659Bulova http://www.bulova.com/ No 40.592
Burberry http://www.burberry.com/ Yes 11.982
Calvin Klein http://www.calvinkleininc.com Yes 3.781
Carolina Herrera http://www.carolinaherrera.com/ No 3.784
Cartier http://www.cartier.cn/#/home Yes 7.266
Cerruti http://www.cerruti.com/ No 0
Chanel http://www.chanel.com/ No 30.391
Chloe http://www.chloe.com/#/cht Yes 3.774
Chopard http://www.chopard.com/ No 11.569
Christian Dior http://www.dior.com/ file/prehome_new/index.html#
Yes 37.268
Christian Lacroix http://www.christian-lacroix.fr/ No 9.634
Coach http://china.coach.com/online/handbags/Home-14001-14500-cn
Yes 11.803
David Yurman http:/ /www.davidyurmanstores.com/tcn/default.aspx
No 12.899
Dolce & Gabbana http://chi.dolcegabbana.com/?__utma=1.402231214.1300987996.1300987996.1301004916.2&__utmb=1.2.10.1301004916&__utmc=1&__utmx=-&__utmz=1.1300987996.1.1.utmcsr=%28direct%29|utmccn=%28direct%29|utmcmd=%28none%29&__utmv=-&__utmk=223317915
Yes 28.911
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APPENDIX
COMPANY NAME WEBSITE USEOFCDN
FIRST VIEWLOAD TIME
Donna Karan http://www.donnakaran.com/ No 10.284
Dooney & Bourke http://www.dooney.com No 22.696
Ebel Ebel http://www.ebel.com No 39.964
Elizabeth Arden http://www.china.elizabetharden.com/ No 13.856
Emanuel Ungaro http://www.ungaro.com/ No 44.742
Escada http://www.escada.com/ No 58.811
Estee Lauder http://www.esteelauder.com Yes 0
Fendi http://www.fendi.com/#/cn No 8.991
Ferragamo http://www.salvatoreferragamo.it/cn/ No 11.559
Fred Joaillier http://www.fred.com/ No 30.961
Fred Leighton http://www.fredleighton.com/ No 2.259
Frederic Fekkai http://www.fekkai.com/ No 54.277
Geoffregy Beene http://www.geoffreybeene.com/ No 29.966
Gianfranco Ferre http://www.gianfrancoferre.it No 2.757
Giorgio Armani http://www.armani.com/ No 4.218
Girard-Perregaux http://www.girard-perregaux.com/home-zh.aspx No 24.168
Givenchy http://www.givenchy.cn/ No 2.329
Gruppo La Perla http://www.laperla.com Yes 44.8
Gucci http://www.gucci.com/cn/home Yes 13.265
Guerlain http://www.guerlain.com Yes 18.148
Guess http://www.guess.ca/ Yes 10.147
Halston http://www.halston.com/ No 1.942
Hanro http://www.hanro.com/ No 0
Harry Winston http:/ /www.harrywinston.cn/v2/tw/main.php?lang=zh-tw
No 4.028
Helmut Lang http://helmutlangjournal.com/ N/A 22.331
Hermes http://www.hermes.com/index_cn.html No 9.493
Jean Paul Gaultier http://www.jeanpaulgaultier.com/ No 0
John Galliano http://www.johngalliano.com/ No 12.73
Joop http://www.joop.com/ No 37.159
Judith Leiber http://www.judithleiber.com/ No 17.331Karl Lagerfeld http://www.karllagerfeld.com/ No 7.762
Kenneth Cole http://www.kennethcole.com/ Yes 13.232
L.A.M.B. http://www.l-a-m-b.com/ No 5.267
La Mer http://www.cremedelamer.com/ Yes 33.486
La Prairie http://www.laprairie.com/lp/zh_cn/main.html Yes 26.795
Lancome http://www.lancome.com/ No 12.471
Liz Claiborne http://www.lizclaiborne.com/ No 5.374
Louis Feraud http://www.feraud.com/ No 17.709
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COMPANY NAME WEBSITE USEOFCDN
FIRST VIEWLOAD TIME
Louis Vuitton http://www.louisvuitton.com/cn/ flash/index.jsp?direct1=home_entry_cn0
4.888
Michael Kors http://www.michaelkors.com/ No 20.975
Mikimoto http://www.mikimoto.com.hk/en/home/index.htm No 3.041
Missoni http://www.missoni.com/ No 8.35
Montblanc http://www.montblanc.com.cn/index.php No 16.689
Montres Breguet http://www.breguet.com/cn/content/view/full/2 Yes 27.64
Moschino http://www.moschino.it/ No 3.821
Movado http://www.movado.com/ No 49.657Narciso Rodriquez http://www.narcisorodriguez.com/ No 5.486
Natori http://www.natori.com/ No 13.523
Nina Ricci http://www.ninaricci.com No 10.546
Oscar De la Renta http://www.oscardelarenta.com/ No 38.66
Patek Philippesa http://www.patek.com/ No 4.911
Piaget http://www.piaget.com.cn/ Yes 22.444
Prada http://www.prada.com/hans Yes 5.5
Ralph Lauren http:/ /global.polo.com/global/V2/default.asp?sto=532&cid=4&ab=int_fd_china
No 3.294
Randolph Duke http://www.randolphduke.net No 3.232
Ray-Ban http://china.ray-ban.com/ Yes 19.931Rolex http://www.rolex.com/zh-hant Yes 17.711
Shiseido http://www.shiseido.com.cn/ No 19.269
Tag Heuer http://www.tagheuer.com/index.lbl?lang=zh Yes 9.83
Thierry Mugler http://www.mugler.com Yes 8.931
Tiffany & Co http://www.tiffany.cn/ Yes 25.641
Tommy Hilfiger http://www.tommyhillfiger.com/ No 4.624
Valentino http://www.valentino.com No 16.061
Van Cleef http://www.vancleef-arpels.com/cn/van-cleef.html?zone=as
No 17.648
Vera Wang http://www.verawang.com/ No 6.335
Versace http://www.versace.com/cn No 16.334
Yohji Yamamoto http://www.yohjiyamamoto.co.jp/ No 1.954
Yves Saint Laurent http://www.ysl.com/ No 6.43