Ali, Jingdong And Tencent Tripartite China Luxury Electric Business War Situation?

In October 26th,

(hereinafter referred to as YNAP) signed the whole

In

A small bomb was dropped inside.

There are several key figures in this cooperation.

From the sales point of view, YNAP is the world's largest luxury electric business, with about 950 high-end fashion brand partners.

YNAP group's e-commerce platform Net-A-Porter and Mr Porter, which sells products for the next season, will be located in Tmall luxury platform Luxury Pavilion. Alibaba group provides technical services, payment, logistics and other basic support and data services, consumer insights and other services and assistance for the joint venture company.

This means that through cooperation with YNAP, Alibaba has indirectly won the licensing of nearly 1000 fashion brands, though Gucci, Louis Vuitton and Prada are still not listed.

The tripartite confrontation has become a trend.

In fact, cooperation between Alibaba and YNAP has long been a clue.

If China has Alibaba and Jingdong's cat and Dog Wars, then the competition between luxury goods giant YNAP and luxury electric business Farfetch is also a topic frequently discussed in the fashion circle on the other side of the ocean.

Turning the clock back to a year ago, Jingdong announced in June 21, 2017 that it invested in the UK luxury electric business Farfetch and became one of its largest shareholders.

As soon as the news came out, there were rumors that Alibaba intends to invest in YNAP, and the two sides will join hands to meet the enemy.

Some people analyzed that the peak group held YNAP in 2018, that is to say, Alibaba will cooperate with YNAP.

Sure enough, a year passed, and the rumors came true.

The group will rely on Alibaba's e-commerce resources to allow more brands to enter the Chinese market. Alibaba has also approved the official licensing of nearly 1000 fashion brands through the group.

On the day of the signing ceremony, Johann Rupert, the chairman of the group who had just returned from the European office and South Africa, was personally present enough to show that they attached great importance to the cooperation.

Indeed, this cooperation has almost updated the layout of China's luxury electric business.

Now, apart from Alibaba and Jingdong, Tencent is also making continuous efforts in the field of luxury goods. China's luxury pattern has basically formed a tripartite trend: Alibaba and Alibaba have successively worked with foreign e-commerce platforms with resources to seize luxury goods in the platform mode.

And Tencent, through WeChat's social shopping mode, attracts luxury brands to enter WeChat mall or launch WeChat applet directly.

Although WeChat has joined the luxury electronics business war for a short time, the team on the luxury battlefield has been completed, and the smoke is gradually rising.

There is no doubt that China is already the fastest growing market for luxury goods in the world, and the growth of online consumption of luxury goods in China has been far below the line.

In the next few years, this is a market worth fighting for.

According to the latest report of Boston consulting company (BCG), China has accounted for 32% of the global luxury market, and the proportion in 2024 will rise to 40%. In 2016 to 2017, China's luxury goods consumption growth rate reached 43%, far below the 19% growth rate.

Although China's luxury online consumption is developing rapidly, the proportion of total consumption of luxury goods in 2017 is only 9%, which is still much larger than Bain Consulting's forecast of 25% in 2025.

Over the past few decades, luxury goods online has developed to the most mature stage. Standing on the top of consumer goods Pyramid, the online industry is just beginning, and there are still possibilities.

Luca Solca, head of luxury banking in Paris bank, has said that the big black hole in online sales is China, because there are still many things to do.

Alibaba and Jingdong have already caught up their own power cards, and the way of electricity supplier docking is obviously more efficient. This kind of Sino foreign cooperation has reduced the resistance of many Chinese local businesses directly to the traditional luxury brands.

Jingdong took the lead in finding a luxury electric business partner in 2017, investing $397 million in Farfetch and becoming one of its largest shareholders.

Farfetch was founded in London in 2008 by Jos e Neves. Currently, there are more than 3200 global brands on the platform, with 375 luxury brands and 614 boutique retailers.

More importantly, Farfetch's shareholders include Fran ois-Henri Pinault's investment group, Vogue magazine's parent company, Kangtai Nash group and Chanel group.

Shortly after investing in Farfetch, Kai Yun group's brand Balenciaga, Saint Laurent, Alexander Mcqueen, Pomellato entered Jingdong's luxury platform TOPLIFE.

Kai Yun group and Alibaba have been in constant friction since 2015. The group's brands Gucci, Balenciaga and Saint Laurent have sued Alibaba for indulging in fraud.

Although Kai Yun group revoked its lawsuit against Alibaba in 2017, it is not hard to see that the group that has already tied up with Alibaba will probably give priority to cooperation with Jingdong in the future.

At present, through cooperation with Farfetch, Jingdong is likely to have won many brands of Kai Yun group, and Farfetch has also obtained Jingdong's logistics, finance, technology and social media resources through deep cooperation with Jingdong.

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Looking at Ali, the YNAP it chooses is also the undisputed giant in the field of luxury electronics.

Group sales in fiscal year 2017 has exceeded 2 billion US dollars, becoming the largest volume of luxury electric business in the industry.

YNAP was merged by Italy electricity supplier Yoox and British electricity supplier, among which Yoox and Net-A-Porter were founded in 2000. In 2010, the peak group bought Net-A-Porter with 350 million euros. In 2015, the peak peeled off Net-A-Porter and merged with Yoox through the way of stock exchange. YNAP became the world's largest luxury electric provider and listed in Milan.

At the beginning of 2018, the peak group held a YNAP 49% stake. In May, the group announced that it had fully held YNAP. After the completion of the acquisition, the YNAP group was privatized, but it continued to operate independently.

Net-A-Porter is the originator of the fashion business. Natalie Massenet, the founder of the British fashion magazine "Tatler", runs the website into an online fashion magazine that is easy to purchase. The content shopping guide is the strong point of Net-A-Porter. The elaborate content product has attracted a number of loyal high-end customers.

The important business of Yoox is to develop an e-commerce platform for luxury brands. For example, the online stores of luxury brands such as Bottega Veneta, Saint Laurent, Balenciaga and so on are managed by Yoox.

Data based exchange of interests

After more than ten years of development, YNAP, which combines the two electricity suppliers, has officially licensed more than 900 brands including LVMH group and some of its open brands. After being purchased by the group, YNAP also held resources such as Cartier, Montblanc, Alfred Dunhill and other luxury watches.

It can be said that the advantage of YNAP lies in its high quality content and a large number of brand resources.

However, since 2017, the growth rate of YNAP has been slowing down, and YNAP has adopted the traditional mode of inventory retailing, making the integration between resources such as brands, websites and inventory become more complex and prone to the situation of unsalable merchandise. For this reason, the integrated electricity supplier platform originally launched in 2018 has been postponed to 2019.

YNAP has begun to look for new growth points in the Chinese market due to slower growth and over weight.

However, YNAP and many other brands

The share of e-commerce in China's luxury market is still far behind the world.

According to BCG's latest report, the luxury consumption of multi brand luxury websites in China accounts for only 8%, far below the global 32% ratio.

At the same time, Tmall, Jingdong and other e-commerce platforms occupy 51% of China's online luxury market share.

This means the existence of Alibaba and Jingdong. It is very difficult for foreign suppliers to open up the market in China alone, which is the fundamental reason for the formation of the alliance pattern.

In order to further develop the Chinese market, YNAP gave up its own fight and allied itself with Alibaba.

Although many brands have publicly expressed concern about Alibaba's counterfeit problem, the cooperation between YNAP and Alibaba may still be a better result.

Alibaba can give YNAP not only to help its brands enter China, but also to provide basic support for technology, payment and logistics, as well as data and consumer insight services.

Alibaba does need YNAP.

In August 2017, Tmall launched the luxury Channel Luxury Pavilion. At present, nearly 80 brands such as Burberry, Marni, Versace, LVMH and so on have already entered Tmall.

In April this year, Tmall announced that it plans to build a communication bridge between luxury brands and post-90s, 00 new generation consumers, and 100 million new middle class in three years.

In order to achieve this goal, Alibaba finally joined hands with YNAP, which is rich in brand resources.

Nowadays, Alibaba has acquired many brand resources of Jaeger Le Coulter watches, such as Jaeger Le Coulter, MontBlanc, Vacheron Constantin, Cartier and so on. Jingdong is holding advanced jewelry brand resources such as Buccellati.

It is not hard to see that Alibaba and Jingdong, who are contributing to the watch and jewelry industry respectively, have already targeted the high net worth population with net asset value of more than 6 million RMB. This also means that the two luxury wars have escalated, and the electricity supplier has become a channel that luxury brands can no longer ignore.

This will lay a strong high-end crowd data base for Chinese local businesses, and the commercial value behind it will become increasingly difficult to estimate in the future.

In this digitally driven world, the seemingly contention of brand as the core is essentially a data dispute.

Therefore, both Jingdong and Alibaba want to win more luxury brands for their own platforms, so as to absorb more consumption data and crowd portraits with different characteristics and labels.

Prior to that, the reason why luxury groups hesitated to enter the electronic business platform was that luxury goods themselves needed to rely on scarcity to provide premium capability. However, the electricity supplier leveled the efficiency of the supply chain. The essence of these two industries was contradictory.

The luxury goods group from Europe certainly knows this. In the past, these consumers' core information is in their own hands, and to what extent they open their databases will determine how well they cooperate with Chinese local enterprises.

At present, LVMH Group maintains neutrality in the war between Ali and Jingdong. Its watch brands are really flagship stores on Tmall and Jingdong.

Gucci, the most profitable brand of Kai Yun group, has not yet entered the Chinese electricity supplier. CEO Marco Bizarri says that both Taobao and Jingdong have counterfeit problems, so they are still on the sidelines.

Some luxury giants may even prefer to set up their own online platforms.

LVMH launched the luxury electric business 24 Sevres in June 2017. In addition to Dior, Louis Vuitton, Fendi and other 20 brands from LVMH group, Prada, Gucci, Maison Margiela and other non - Group brands also sell here.

In addition, LVMH invested two times in Britain in 2015 and 2018.

E-commerce platform Lyst, continue to increase the group's electricity business.

Rogerio Fujimori, a luxury analyst at Royal Bank of Canada, told reporters on the interface that luxury brands such as LVMH have strong financial resources and value customer data. Therefore, they are more willing to build their own e-commerce platforms.

"At present, those who cooperate with Alibaba and Jingdong are brands that are more easily accepted by consumers and have a wider distribution of commodities. As for LV and Chanel, I do not think they will enter these platforms in the short term."

Fujimori said.

Although LV, Dior and other LVMH Group brands have not yet entered the Chinese e-commerce platform, LVMH has set up the LVMH digital strategy group to support its brand online development.

Fujimori told the interface news that digital strategy group can directly communicate with Alibaba, Jingdong and other electricity providers in the form of company, and strive for more resources for LVMH's brand. It is much better than a single brand to directly communicate with the electricity supplier.

At present, luxury brands such as Dior and Hermes have not yet entered Alibaba and Jingdong, but they have collaborate with third platforms.

Unlike Alibaba and Jingdong's e-commerce platform mode, WeChat attracts the entry of luxury brands with the concept of social shopping.

Although WeChat is a new force in the luxury online market, it has been killing a special road in the past two years.

The characteristics of WeChat's small program running away are very compatible with the pop-up flash store concept of luxury brands nowadays, and the pressure of a time limited flash shop on the brand online platform is much smaller than that of a Tmall flagship store. Therefore, although Valentino and Tiffany did not enter Tmall, they launched a flash store on Tmall luxury platform Luxury Pavilion in May and August respectively.

For luxury brands, WeChat and other social media may be more suitable for setting up flash shops, for example, Burberry's flash shop is currently only available in WeChat, Instagram, Line and Kakao (Korea red communications App).

More and more luxury brands begin to cooperate with WeChat. On the one hand, they value WeChat's own user traffic.

BCG's latest report shows that mobile terminals have taken up more than half of the attention of Chinese luxury consumers, while WeChat's super app has occupied most consumers' mobile phone usage time.

On the other hand, for luxury brands, WeChat, which hosts a large amount of user information, can also become a place and warehouse for mining data outside consumers' purchase time. This will help them occupy other time outside customers' consumption, thus forming more in-depth consumer insight and personalized service, and more conducive to brand customer relationship management.

After all, establishing deeper stickiness and relationships with consumers is more important than promoting a purchase.

WeChat's social attributes also give more imagination to online sales of luxury goods.

For example, Burberry and Dolce & Gabbana launched WeChat games on Tanabata to encourage users to forward their games to their friends and attach a limited time purchase link to the games, and the users who play games may be potential consumers of the brand.

In addition, fashion KOL can directly attach the brand WeChat to its public article.

The users who have just finished reading the products can access the purchase link of the applet from the reading link so as to achieve seamless social shopping.

But despite the WeChat's

It has been favored by luxury brands such as Dior, Burberry and Valentino, but the mode of social shopping is still very new. Many luxury consumers still dare not try it easily.

The latest research report of Sumo Heavy, an e-commerce consultancy, shows that 70% of respondents worry that there will be security risks in social software shopping.

The July issue of wealth magazine also showed that most of the respondents who held senior management positions in China would not use WeChat to track luxury brand information.

In order to dispel the consumer's doubts, WeChat needs to continue to improve the security of mobile payment and attract more high-end people to try WeChat's social shopping.

Therefore, the LVMH group and the wavering consumers, like the swaying states in the US general election, will decide the final trend of the war in the future.