Hermes, Chanel and Louis Vuitton unlikely to sell on Kakao

Kakao's gift shop selling luxury items / Screen captured from Kakao Talk

By Kim Jae-heun

The “big three” international luxury brands ― Hermes, Chanel and Louis Vuitton ― are unlikely to sell products on Kakao's mobile e-commerce platform, despite the increasing number of users flocking to it.

The Kakao platform is being successfully used by 1.5- and second-tier luxury brands, and local retailers such as Lotte Tops that have been selling designer boutique items such as clothes and bags. More specifically, the retailers sell gift coupons for nearly 30 brands, including Gucci, Prada and Yves Saint Laurent. However, the top brands' items are not available via the coupons.

Hermes, Chanel and Louis Vuitton are well-positioned to use the channel run by the country's top mobile app operator. But it's fair to say that these top brands are not weighing in on any move as they want to keep “loyal customers” by exclusively selling the products through their own channels.

Regarding any possibility of using the platform, all three brands downplayed this, although Kakao remains quite hopeful.

“Nothing specific has yet to be decided, however, we aren't ruling out the possibility of selling the three brands' items on our platform,” a Kakao official said. He added that the platform has seen a considerable rise in the sale of luxury items such as jewelry and cosmetics. “Those in their 20s are our biggest customers,” the official said.

As the COVID-19 pandemic is still spreading in South Korea and people remain indoors, businesses that have traditionally relied on “physical sales” have actively taken to online platforms helping them increase revenue and sales.

Even after the outbreak, however, the top three brands in Korea were reluctant to use online shopping malls despite the fact that sales at offline stores were falling.

Chanel, Louis Vuitton and Hermes said their management philosophy lies in inviting customers to boutiques and letting them experience items before purchasing them. However, some analysts say they will have to take their words back “sooner or later” and join the emerging trend by opening online shops as soon as possible.

When Kakao started selling gift coupons for Gucci, Prada and Celine, earlier, some market watchers thought it had made a poor business move and that no one would purchase coupons with a face value of several thousand dollars to give as gifts. However, Kakao's sales during the first quarter jumped 217 percent in the luxury goods category, year-on-year.

Lee Jae-suk, a chief buyer at Lotte Tops managing the imports of luxury items sold on Kakao said it saw 31 percent sales growth in May this year from January. Lotte Tops is a select shop operated by Lotte Shopping that imports luxury goods from French fashion houses' headquarters. Starting in March, it has expanded its sales item options by 20 percent on Kakao to now sell 350 luxury products and plans to increase its range even further.