Major challenges

Serge Hoffmann, a Hong Kong-based partner at Bain & Co, pointed out that sound delivery services and friendly online trading have played a vital role in building a critical mass of Chinese users.

Logistics is of the utmost importance for online business in China. For foreign apparel vendors, the one thing they have is their brand, said Jeff Baum, senior vice-president at Manhattan Associates Asia-Pacific, a company that facilitates supply chains.

For instance, if Zara is handling online orders from its Spanish headquarters, maybe it takes longer for them to deliver, Baum said. But if they can redistribute through the marketplace, it means that somebody has bought a lot of their stuff and can sell it online for them.

"If people manage to get Zara from someone else who delivers faster, they might probably shop there first," he added.

Also, how local players usually beat their foreign counterparts is through free shipping. Zara exempts delivery fees on minimum purchases costing 299 yuan ($47.70). Uniqlo charges 7 to 15 yuan per order, depending on different geographical areas.

In comparison, outlets on Tmall often offer time-limited free shipping and Vancl waives fees starting from purchases costing 99 yuan.

Baum believes this is an e-commerce environment in which Chinese customers have become "spoiled" by the local players being able to deliver faster, cheaper and more locally than any foreign brand.

However, there is a bright side for the more expensive foreign brands because they are more conscious about delivery quality and service. They rely on customers being more willing to pay more for transportation, Groeber said.

"For local players, who are still in their infancy, cost control will outrival service level and quality of delivery. That is the trade-off they have to face," he said.

The other significant element is to create a unique and friendly online environment.

For brands that already possess an established brand reputation in China (such as Zara or H&M), the challenge is easier - because they have already built awareness and esteem - than it is for brands starting from scratch such as Forever 21, Djurovic said.

The most important thing is to focus on how to make the brand's e-commerce experience truly relevant and innovative.

In essence, the challenge is how to avoid being just a "me-too" site with similar services to other local players such as Moonbasa or Vancl. Brands should evolve so that the core idea of the brand is fully expressed in the e-commerce experience.

"For example, one core aspect for a brand such as Zara was the sleek store settings, which were greatly valued bu customers. When looking at Zara's online platform, the "sleekness" concept is reflected through the way items are displayed, the image background, the angle of the photographs and more," said Djurovic.

What also matters is the way retailers interact with shoppers and invest in value-added services, such as offering a souvenir or discount coupon, said Baum. It is often the advantage Chinese businesses possess.

Foreign fashion brands should integrate fast search functions, use intricate promotions and, more importantly, launch China-specific products that are unique to the original sites, said Groeber.

"What we are seeing is the growing tension between an authorized site on Tmall and the company's original site. If merchants can sell certain stuff only through the original channel, there will be less dependency on Tmall in the long run," he said.