Japanese fast-fashion retailer Uniqlo makes an e-commerce shift
July 22, 2015 04:04 PM
E-commerce represents 5-10% of the global sales of Uniqlo, says a spokeswoman for parent company Fast Retailing, and the Japanese fast-fashion retailer is taking steps to strengthen both online sales and ties between its web sites and stores.
One of those steps was signing an agreement in June with Accenture plc to build a global, cloud-based system that would connect the retailer’s stores and web sites. Another was to stop selling online in China on JD.com, one of the country’s major e-retail sites. The two moves are related, the spokeswoman says.
“We are developing a new global e-commerce strategy and we found operating a store on JD.com is not in alignment with our strategy,” she told Internet Retailer. “This was a three month-trial. Uniqlo and JD.com both worked very hard on this project.”
As for the Accenture deal, she said, “This is our first step to create a new global e-commerce strategy.”
The move to end the JD.com trial is noteworthy because China has been a bright spot for Uniqlo while it’s struggled in other markets, notably the United States, where the retailer’s operating losses mounted during its fiscal third quarter, which ended May 31.
“Greater China (Mainland China, Hong Kong and Taiwan) and South Korea reported another strong performance, with increases in revenue and profit outstripping estimates,” the company said in summarizing its third quarter results. Uniqlo China opened 78 new stores and closed 10 stores, bringing the total number of Uniqlo stores in Greater China to 442 at the end of May 2015, the company says.
While Fast Retailing does not break out e-commerce sales by regions, the spokeswoman says web sales account for 6% of the company’s revenue in China, in line with the 5-10% worldwide. Fast Retailing is No. 111 in the Internet Retailer China 500. The company projects revenue of 1.650 trillion yen ($13.3 billion) during its current fiscal year.
The termination of the test with JD.com raised some eyebrows in China where Uniqlo continues to work closely in e-commerce with JD.com’s chief rival, Alibaba Group Holding Ltd.
Uniqlo has operated a branded store on Tmall.com, one of Alibaba’s two big China online marketplaces, since 2012. Uniqlo also operates its own e-commerce site in China, but one that relies on Alibaba’s technology to handle purchases. When a consumer clicks a Buy button on a product page of Uniqlo.cn, the site direct the buyer to a checkout page on Tmall.com. The Uniqlo spokeswoman says the company has no plans to alter its relationship with Alibaba.
That has led to speculation that Alibaba and its largest investor, Japanese investment firm Softbank, may have pressured Uniqlo to end the test with JD.com, Zhang Chuan, a former executive at JD.com and Alibaba, said on his account on Chinese social network WeChat.
Another observer says that’s not the most likely explanation for the Uniqlo ending its test of selling on JD.com.
“There are three likely explanations for the closure,” Zhang Zhouping, a senior analyst at the China E-commerce Research Center, says. “First, Uniqlo is changing their web strategy in China. Second, the sales results are not good. The last, pressures from JD.com’s rivals. I think the most probable reason is the first one.”
Alibaba Group has denied that it, or its executive chairman Jack Ma, had anything to do with this move of Uniqlo. "The allegation that Jack or Alibaba executives exerted pressure to get Uniqlo to take down its JD store is completely untrue and baseless," an Alibaba spokesman says.
Alibaba also confirmed that neither Alibaba nor Ma have any stake in Uniqlo.
However, Uniqlo’s founder and president Tadashi Yanai is an external board director of Softbank and holds 120,000 shares in Softbank, according to Softbank’s website.
Softbank, in turn, is a major investor in Alibaba Group and its founder and chief executive officer Masayoshi Son is known to be a friend of Ma’s.
JD.com is No. 1 in the Internet Retailer China 500. Alibaba Group is not ranked in the Internet Retailer China 500 because it is not a merchant itself. Rather, Alibaba operates China’s two biggest online marketplaces, Taobao and Tmall, which together account for about 80% of online retail purchases in China.
Uniqlo, which began selling online in the United States, in 2012, won Newcomer of the Year honors when the Internet Retailer Excellence Awards were handed out in Chicago last month, based on the retailer’s fast online growth in the U.S. market.