The Cettire Ltd (ASX: CTT) share price has jumped this morning after announcing a partnership with the largest e-commerce retailer in China, JD.Com.
The market has gotten into a buying frenzy, with the Cettire share price up 13.25% to $2.65.
Cettire is a reseller of luxury fashion including clothing, shoes, accessories and beauty products.
CTT share price
Why is the Cettire share price jumping today?
Cettire will attempt to replicate its explosive growth in the world’s largest luxury goods market.
The global market for luxury items is expected to be $600 million by 2025, with China accounting for 25% or $150 billion.
Commenting on the expansion, founder and CEO Dean Mintz said:
“Our entry into China is a significant milestone towards our goal of being the world’s largest luxury destination. China represents a vast market opportunity and it is core to our strategy to make our world class proposition available to additional markets”
No statement was provided by JD.Com.
It is expected Cettire will be available to Chinese customers in the second half of 2022.
Partnership opens door to China
JD.Com most comparable company is Amazon.com Inc. (NASDAQ: AMZN).
It has 550 million active users and is China’s largest online retail platform.
The business provides merchants with an online platform to sell products to consumers and a distribution network to warehouse and deliver goods.
The JD-Cettire partnership will enable Chinese consumers to access Cettire’s platform and customer support.
“JD.Com will help to drive traffic, brand awareness and accelerate growth for Cettire in the market upon entry”
“There is further scope for Cettire to leverage JD.Com’s extensive local logistics capability, which provides one of the largest fulfilment infrastructures globally”
It should be noted JD.Com already has an extensive luxury offering, with direct deals with brands such as Louis Vuitton and Givenchy.
Engineering hub
To accelerate the launch into China but separate from the JD.Com partnership, Cettire commenced hiring for senior technology positions in late 2021.
The team will be working on features specific to the mainland China market.
My take
Today’s announcement is the second in as many weeks that Cettire will be expanding into a new market.
The first was beauty in January. Today it’s moving into China.
Given the business nearly tripled sales in its most recent result, its interesting Cettire has chosen to keep expanding rather than establish its market dominance.
Local e-commerce site Kogan.com Ltd (ASX: KGN) is adopting a similar strategy, with little success so far.
FurChina is a much bigger beast compared to entering another English-speaking market. It will require significant investment in support in addition to brand awareness.
In summary, I’d be cautious of baking in too much of the Chinese opportunity into the Cettire share price.
