E-commerce has never been more crucial than during the COVID-19 outbreak.
The pandemic has seen global lockdowns, a decline in offline retail, and more shopping online. Luxury designers, brands, and fashion groups turn online to cope with the decrease in sales brought by this unprecedented global crisis.
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In the past, luxury brands were not quick to embrace e-commerce and focused on more traditional prestige and exclusivity. They also saw e-commerce as characterized by significant discounts and rejected the sale of counterfeit goods online (read more in the blog article on: Luxury Brand Counterfeit Industry in China).
The pandemic has prompted brands to explore new avenues. They turned their eyes to China, a vast country with the world’s fastest-growing luxury segment.
The luxury market in China
Chinese consumers power the global growth in luxury goods. McKinsey’s China Luxury Report states that in 2018, Chinese consumers spent $115 billion on luxury goods they had bought in China and abroad, which constitutes a third of the global luxury market. McKinsey forecasts that by 2025 they will grow to represent 40 percent of the world’s spending on luxury goods.
Chinese shoppers not only love luxury brands but attach a social significance to them, and Tmall offers them the opportunity to purchase authentic goods by global brands. This year, due to the pandemic, high-end consumers did not travel outside the country to buy luxury goods where they have no luxury import taxes and ended up spending more domestically. And digitally.
The most available and easy Chinese sales channels for global luxury brands are Tmall and rival JD.com, which offer brands significant e-commerce opportunities. Currently, Tmall is probably the leading platform for Western super brands in China, and it is likely to gain more traction in 2021.
Alibaba’s Tmall has positioned itself as the Chinese B2C platform for premium brands. Brands can choose between various options: Tmall Classic; cross-border marketplace Tmall Global (that launched an English-language website; and especially Tmall Luxury Pavilion, built to allow international luxury brands more ways to design their brand stores and offer their goods and customer experience to the Chinese market.
Though a few luxury brands opened flagship stores on Tmall a few years ago, like Burberry and Hugo Boss, the trend of flagship standalone super brand stores has become noticeable in 2019. Christian Louboutin Beauty, for example, launched a flagship store on Tmall’s Luxury Pavilion in the last quarter of 2019, making it the brand’s exclusive sales channel in China.
Yet, it seems like 2020 has seen an even more significant shift. Gucci, which was already selling digitally in China, has chosen Tmall for its next step in China and has recently joined Alibaba’s Tmall Luxury Pavilion for its fashion collections.
It is expected to launch Gucci Beauty on Tmall in February 2021. Luxury brand Cartier has launched its flagship store on Tmall Luxury Pavilion, as did Montblanc. Prada and Miu Miu opened their Tmall store and announced it is “a big event for the growth and expansion of the brands.” Balenciaga joined the platform, and so did Chloé almost at the same time. And the list goes on.
Another super brand that announced its cooperation with Tmall is Bvlgari, one of LVMH group’s brands on Tmall. It was also reported that Kering and Richemont, parent companies for many luxury super brands are developing a relationship with Tmall to expand their online presence in the lucrative Chinese market.
Richemont, with a portfolio that includes brands such as Chloé, Cartier, and Montblanc, has launched Net-A-Porter and Mr. Porter stores on Alibaba’s Tmall Luxury Pavilion in 2019. More importantly, it has been working with Alibaba on an e-commerce joint venture in online luxury fashion retailer Farfetch.
Online marketing on Alibaba
Joining Tmall, brands turn to Chinese luxury consumers and use Alibaba’s platform, technology, and marketing tools to target them.
Many of the new brands launched 11.11 or Singles’ Day promotions for the first time, boosting sales on Alibaba’s biggest sale of the year.
Savvy Chinese shoppers look for content and entertainment with multiple touch-points before they make a purchase. Tmall’s live-streaming option, for example, is a powerful marketing tool that may appeal to international brands.
Another example is a “cloud” pop-up store by Calvin Klein on Tmall, hosted by a known rapper and offering virtual experiences. The online outlet Luxury Soho launched in 2020 for out-of-season goods is another tool available to brands.
Online brand infringement
In recent years, Alibaba, which owns Tmall as well as Taobao and other platforms, has been known for its counterfeit problem. The e-commerce giant has made attempts to curb the sale of counterfeits and change its brand image.
Initiatives such as Alibaba’s Anti-Counterfeiting Alliance (which the company formed after the International Anti-Counterfeiting Coalition suspended its membership) has seen brands joining. Among them, premium brands Louis Vuitton, Michael Kors, Tommy Hilfiger, and Prada, to name a few.
Taobao, on the other hand, seems to still be plagued with counterfeits, and it is on the United States’ Notorious Markets blacklist published in 2020.
JingDaily has found that Alibaba’s Alipay users are exposed to counterfeits as fake items appeared under a section that implies the goods are branded items on sale, displayed next to authentic items from luxury Tmall stores.
Tmall does offer a reliable marketplace and more protection to Chinese consumers who wish to purchase authentic goods, yet shoppers can access Taobao and Tmall from the same platform.
Wiser Market: anti-counterfeit agency
The fight against counterfeits is far from over. The lucrative trade in fakes results in more sophisticated sellers imitating luxury brands and selling them as genuine items, using online platforms to expand their presence.
Where there is profit to be made, there are counterfeiters. Small and medium designer brands may find it harder to allocate the necessary resources for online protection.
Wiser Market is an online anti-counterfeit agency. our brand protection solution is designed to combat online counterfeiting and abuse on a large scale while achieving an exceptionally high success rate. We search and monitor globally to analyze and flag major brand infringements and effectively enforce, remove, and deter counterfeiters in China and around the world.
We are your trusted partner in the battle against counterfeits on online platforms.
At Wiser Market, we believe in a proactive brand protection strategy. Our superb brand protection services, from detection through analyzing to enforcing takedown actions, result in over 90% success rate in taking down counterfeits.
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