Luxury handbags join China’s super-hot sharing economy
Already popular in some Western countries, rental of luxury goods is new to China, where the business model faces tough competition from counterfeits
First there were car rides and bicycle hires. Then basketballs, umbrellas and mobile-phone chargers entered China’s “sharing economy”. Looking to cash in on this rising trend, entrepreneurs are looking for ways to get people comfortable with sharing an increasing variety of items.
And at least one of them has decided it is time for luxury handbags to enter the fray, despite the continuing availability of high-quality counterfeits in China.
High-end handbags from top-tier luxury brands ranging from Chanel, Dior, Gucci, Hermes and Prada to Louis Vuitton are now available for rent on a platform called “Dou Bao Bao”, which literally means “show off your handbags” in Mandarin. The platform, launched last month, is built on WeChat, China’s smash-hit chat app, and transactions are supported by WeChat Pay, one of the two big digital wallets in the country.
It could be a tempting proposition, especially for moderately well-off women who long for the lifestyles of the ultra-wealthy, as the monthly rental fees and deposits are considerably less than the original prices of luxury handbag.
Among the 15 brands on Dou Bao Bao’s shelves, Gucci’s Dionysus GG Supreme canvas hobo is the most reachable, costing only 99 yuan (US$14.50) per month with a deposit of 999 yuan. It sells for 7,500 yuan in the shops.
Meanwhile the rental ceiling is claimed by Chanel’s Le Boy shoulder bag, which costs 1,878 yuan per month and a deposit of 19,000 yuan, for a total equivalent to half of the retail price.
Besides the relatively low prices, Dou Bao Bao pledges that every handbag is 100% authentic, to combat a major concern for Chinese consumers, that they might be lent a fake product.
Though rental of luxury goods is already popular in the United States, Japan and the UK, it seems the business model just found its way to China by riding the heat of the sharing economy.
“Some luxury leasing companies overseas are growing very fast. They have strong profitability as well as a large [number] of paying users, and their valuation varies between US$100 million and $500 million,” Cheng Kaiwen, the founder of Dou Bao Bao, told the Securities Daily. “From this perspective, the capital market is optimistic about luxury sharing.”
The company is trying to send out a clear message that it wants to make luxury brands available to every young Chinese woman. However, before its arrival, some women had already found a way to lay claim to the lifestyle of the super-rich, via exquisite knockoffs.
“The demand for well-made counterfeits of luxury handbags has been growing in the past few years because of the improvement of people’s sense of esthetics,” said a vendor whose family name is Wang and who has run a wholesale handbag store called Pin Ou in the XBM International Clothing Wholesale City in Shenzhen for about seven years. “Whenever the big brands launch new [products], people come and ask if there are counterfeits ready.”
Wang thinks it is hard to tell whether the luxury sharing model will take away the consumers who once nourished the fake-bag industry in the future, but she believes high-quality knockoffs will still have their place. “Handbags are very personal. Some women may not be willing to use a second-hand bag, or to say it has been in multiple hands.”
Compared with spending nearly 2,000 yuan per month on a depreciated handbag that might not worth the rent, “I would rather use that amount of money to buy a superior counterfeit,” said Sun Li, a woman in her early 20s who works for a television station in Nanjing, Jiangsu province.
Sun does not believe the renting experience would provide her the enjoyment of actually owning a luxury bag that has not been in many other hands before hers. For her, the sharing model strips away the meaning of owning a luxury handbag.
Meanwhile at Dou Bao Bao, less than a month after its launch, 228 of the 296 handbags on the site have been labeled as rented out.
According to an article published by Falcon Angel Investor, the company received more than 10 million yuan in funding from domestic investors in June.