Online Pfer Of Luxury Brands In China: Jingdong And Alibaba

Luxury brands began to pfer online in China. Apart from a few brands choosing to provide e-commerce services on the official website of the brand, the major brands have also entered the online luxury platform, opening up a huge Chinese luxury consumer market in the form of flagship stores.

Online retail giants Alibaba and Jingdong certainly will not be absent. In addition to relying on their own resources to attract large brands to enter, they also set up a luxury luxury platform to join hands with international luxury business operators.

Specialized online luxury platform

Unlike the US Amazon, China's e-commerce giant is actively seeking cooperation with luxury brands.

Alibaba and Jingdong recently launched a specialized integrated luxury platform, including ultra secure warehouses, invitation loyalty programs, mobile e-commerce and other services.

These play a role. Alibaba's Tmall luxury Channel Tmall Luxury Pavilion can now provide more than 80 brands, including Martha Lahti, Valentino and Burberry.

Although brands like LVMH and Prada choose to develop e-commerce separately, others believe that the third party luxury platform can help them get better and faster access to Chinese consumers.

Strong combination

A recent survey by foreign media OC&C found that luxury brands began to pfer online in China.

Luxury platform Farfetch announced recently that it decided to merge its business in China with Jingdong's luxury e-business platform TOPLIFE.

Before that, Alibaba also signed cooperation with Wan Feng group's luxury platform Yoox Net-a-Porter.

First, the international luxury platform such as Shopbop, Farfetch and Yoox Net-a-Porter enjoys a high reputation among Chinese luxury consumer groups.

Although the trading level of these websites is still lower than that of China's main platforms, Chinese consumers score highly on the overall experience of these international platforms, ranking the top five, leading the large general platform and the luxury brand's own website.

The main reason for these high scores is that these international platforms can guarantee the authenticity of products, provide a wider range of brand and product choices, and ensure a more comprehensive luxury experience.

Surprisingly, these international platforms have successfully bridged the two trust gaps that have not yet been achieved by the main Chinese platforms.

First of all, the platform should let consumers believe that they can get authentic products with proper service and convenience.

Then, the platform needs to ensure that the products sold will be provided in the "same brand" environment, product links or luxury goods, so that they will not be interfered by non luxury promotion and advertising.

According to McKinsey, the vast majority of luxury goods stores are located in the top 15 cities in China, but 75% of the wealthy Chinese consumers live outside these cities.

Alibaba and Jingdong have the scale of providing retail business to consumers in second tier and three tier cities, which is lacking in luxury brands, and the platform also provides quality delivery services.

By betting on China's online platform, luxury brands recognize that online channels are important for people who are exposed to the Internet and customers outside big cities.

The result of strong cooperation is that cooperation between the brand of the group, including its Yoox Net-A-Porter and Alibaba platform, as well as the Farfetch and Jingdong of Kering Group, is also increasing cooperation.

At the same time, LVMH group also owns Secoo shares through its private equity investment department L Catterton, which is by far the most successful domestic luxury platform in China.

The largest shareholder of Secoo.com is Jingdong! The luxury circle seems to be very small.

China online luxury market

Euromonitor's data and OC&C analysis show that the share of online luxury brands in China is only 9%.

While other categories of clothing and footwear accounted for nearly 29% of the total, compared to the obvious low, while beauty and personal care accounted for 23%, even online packaged food accounted for 10% of the total.

The online share of this kind of online sales in China is relatively low (9%), while the share of other developed markets such as the UK (16%) and the US (15%) is also lower.

However, the share of online sales in any category in China is generally higher than that in other global markets.

That is to say, most of the growth of China's luxury goods market comes from online sales, developing at a speed of nearly 20%. Meanwhile, the total volume of luxury goods in fashion and accessories has increased by only 3% to 5% annually.

Such an analysis shows that there is room for development in the online luxury market.

In e-commerce, luxury brands have been cautious, especially in China.

For example, only half of the luxury brands surveyed by OC&C provide e-commerce functions on Chinese private brand websites.

However, this is starting to change: even Hermes recently announced the launch of e-commerce services in China.

At the same time, the number of luxury brands formally launched on Pavilion or Toplife, such as Tmall or Jingdong, on the three party websites or on both professional luxury electronic platforms, is still very small, mostly through the third party.

Among them, the most notable of these brands is Burberry, which has flagship stores on Tmall, while Fendi flagship stores are located in Jingdong.

So far, only a few luxury brands have been stationed in electronic platforms.

On the contrary, most brands tend to test the water through temporary Mini programs on WeChat. This mode enables them to reach new customers while maintaining complete control over the data so as to further develop CRM and assemble them into their online and physical stores. These functions are not satisfied by Tmall and Jingdong.

The behaviour of Chinese consumers is also changing rapidly.

Although only 1% of online shoppers only buy luxury goods online, 36% of Chinese luxury shoppers have bought luxury goods online and offline through the OC&C survey.

For Z generation customers (who were born after 1995), this figure is close to 60%, which is good news for brands, because Z generation customers are more willing to spend money on luxury products than the millennial generation (born between 1980 and 1994) and X generation (born in 1965 and 1979) and have strong growth in the future.

Surprisingly, surveys show that prices and promotions are not the key drivers of online luxury purchases.

Compared to price, convenience and choice are the main reasons.

Choice means something different for different generations.

X generation shoppers and millennials prefer a wide range of brand and product choices, while Z generation shoppers pay more attention to character, personality and unique design.

Their enthusiasm for independent designer brands such as Off-White, Vetements and Supreme also proves this.

Instead of getting what others already own, they want to buy the latest seasonal products to publicize their personalities.

Genuine products are the most important elements of X generation and millennial generation, while Z generation is slightly less sensitive to this factor, probably because they are not affected too much.

Choosing the right platform is very important for the luxury brands that are developing in China, because it will affect consumers' view of the brand.

Online, brand will consider the location of shopping malls, and online is also the case. Multi brand platform is needed to build truthfulness trust with the brand and guarantee the "clean" online environment.

Customers also require convenience under the experience driven by other categories. The Chinese version of international platforms such as Net-a-Porter or Farfetch is used by most people, and many people recognize their convenience.

Although the official website of luxury brands set up in China is the most trusted by customers, the level of service provided by them is lagging behind the third party platform.

The survey shows that better choices (more brands, products and exclusive products) and convenient, flexible payment options and easy return procedures are the key reasons for promoting online luxury purchases.

For offline shopping, consumers focus on authenticity, service (pre-sale and suggestion, after sale) and the overall shopping experience.

Merger channel

In the eyes of consumers, online and offline channels are no longer separate.

Businesses should provide complementary and interconnected experience, "need each other" to meet customer needs on different occasions, conveniently and seamlessly across multiple contact points.

The coexistence of the two channels and the blurring of lines between them are the guarantee of lasting and development in the market.

The challenge for luxury brands is to find the right balance between online and offline stores.

It is no longer the establishment of an e-commerce Department separated from other channels. It is an online and offline connection to create seamless, multi-point contact shopping trips.

It is necessary and inevitable for luxury brands to pform to full channel business models.

conclusion

Luxury goods are shifting from exclusive distribution (the limited retail of major cities) to more convenient and anytime patterns.

Looking ahead, luxury brands need to find new ways to create a sense of uniqueness.

This may include more personalized services and products, which are based on the data, delivery and packaging innovations captured by these luxury e-commerce platforms.