“The number of consumers grew by 153% on Tmall Luxury Pavilion in 2021”
TMall Luxury Pavilion, the powerful Chinese e-commerce platform of the giant Alibaba continues to grow. The Zero-Covid policy has further accelerated online shopping conversion. Janet Wang, General Manager of TMall Luxury explains why Chinese customers will continue to invest in high-end luxury items.
By Cristina D’Agostino06 septembre 2022
Since its launch in the summer of 2017, online retail platform TMall Luxury Pavilion - owned by Chinese giant Alibaba - has now surpassed 200 luxury brands on its site. Janet Wang, Vice President of B2C Retail Business Group of Alibaba Group and General Manager of Tmall Luxury, is the driving force behind this transformation and is now a key figure in China's luxury sector. When she arrived at TMall in 2010, she set in motion the ideas that would make TMall Luxury Pavilion the leading platform for luxury goods against its competitors, including TopLife, the luxury goods sales site developed by JD.com. Having previously developed digital sales for the Zara brand in eleven countries in Asia, she will return to Alibaba in January 2021 to take up the position of Vice President of B2C Retail Business Group of Alibaba Group and General Manager of Tmall Luxury. In an exclusive interview for Luxury Tribune, Janet Wang gives the keys to understanding a Chinese market that is extremely segmented in terms of geographical regions, cultural specificities, languages and consumer groups. Diversifying investments is therefore fundamental for a successful establishment in China. TMall Luxury Pavilion has made this its specificity, the millions of data of its digital customers being the Grail sought by luxury brands.
What was the revenue growth of Tmall Luxury Pavilion in the 1st half of 2022, when the physical stores were partially closed due to pandemic?
Year to date, we have continued to see strong demand for luxury products despite lockdowns in China. In fact, we are seeing more consumers than ever before investing in upmarket goods, matched by an ever-increasing number of new products available to purchase online. For example, over the past two months, we hosted two major shopping events, the 6.18 Mid-Year Shopping Festival and the “Qixi Festival” (the Chinese Valentine’s Day), which saw more than 200 luxury brands participate and, collectively, launch more than 20 000 new products. Looking ahead, we expect both consumer demand and the number of new luxury products launched in China to increase.
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Which luxury sector has the largest market share on Tmall Luxury Pavilion? And with what percentage of growth?
During Qixi Festival, gifting emerged as a key trend – particularly amongst Gen Z consumers. In 2022, the total number of gifts purchased by consumers born after 1995 surpassed that of those born after 1985 for the first time and the proportion of men making gift purchases rose from 57 percent in 2021 to 70 percent in 2022. Bags and jewellery were the core categories for gifting and transactions in women’s clothing, sports and other trend categories increased. Demand for home furniture also increased significantly, rising by more than three digits year-over-year. We also saw the sales of hard luxury watches priced at over 100’000 yuan grow significantly as more women are choosing value-retaining, hard luxury watches for gifting.
How many new foreign brands have started business on Tmall Luxury since January2022? And how many in total on Tmall Luxury Pavilion, all areas outside China?
Tmall Luxury Pavilion is today home to more than 200 of the world’s most premium luxury brands. It is also the first platform in China that carries products from the five major luxury groups - LVMH, Kering, Chanel, Hermès and Richemont. In 2022, the platform has welcomed Bvlgari and Berluti from LVMH, Brunello Cucinelli, Moncler, Jil Sander and Amiri. In 2021, the number of consumers on Tmall Luxury Pavilion grew 153 % versus 2019, and the gross merchandise volume on the platform rose by 309%.
What new selling practices on Tmall Luxury Pavilion appeal most to users since January 2022?
As luxury shopping becomes accessible for younger generations, as well as residents of China’s lowertier cities, new lifestyle and consumption trends are emerging among these consumer groups. The recently published Tmall Luxury Strategic Consumer White Paper points to growing digital awareness among Chinese luxury shoppers as well as a move towards buying luxury goods as an investment. Six distinct types of Luxury Platform consumers have been defined, from stay-at-home mothers with high disposable incomes to young trend setters who use the digital platform to explore luxury products. During the last Chinese 6.18 Mid-Year Shopping Festival (June 2022), double-digit growth in average transaction value was reported on Tmall Luxury Pavilion. VR and AI-powered digital tools have allowed luxury buying to become more intimate than ever before. Tmall Luxury Pavilion allows consumers to virtually try on clothing, view 3D jewelry renderings, and receive one-on-one consultations from their living rooms. One-on-one livestreams also allow sales associates to engage with customers individually in private sessions. French luxury Maison Cartier and the British fashion house Burberry are among the first brands to use this feature.
What percentage of growth do you expect for the 2nd half of 2022 on Tmall Luxury Pavilion?
We now look forward to our 11.11 Global Shopping Festival which is an exciting time for luxury brands who use this as a moment to create deeper, more meaningful relationships with existing and new customers. Last year, there were more than 100’000 new luxury products from more than 200 luxury brands which participated in the Festival. During 2021, it was close to 50% year-on-year increase. We anticipate high demand again this year.
The slowdown of China's economy is felt on the demand side. GDP growth is now at 4.1%. What is your observation on TMall Luxury Pavilion sales?
We have seen that there is still a lot of demand for luxury consumption in China. According to the latest analysis from Roland Berger, China's historical economic resilience shows that the social consumption level will experience a short-term decline followed by a long-term improvement in the post-epidemic era. China’s consumer market shows a bright long-term outlook. Through the pandemic, it’s clear that consumers value emotional connections. Gift exchange has long been a part of Chinese culture. In the digital era, this practice has transcended into online gifting as an important way for consumers to build a stronger emotional connection with one and other. As the “gifting economy” grows, it will become an important new driver for luxury consumption.
What is the number of users of the TMall platform and TMall Luxury Pavilion. And what is the growth target? with which target audience?
In the digital era, both platforms and brands need to fully understand consumers from a comprehensive and three-dimensional lens rather than a one-dimensional perspective. There is a myriad of individual differences, including personal consumption habits, lifestyles, and value propositions, that one must understand in order to effectively communicate and resonate with consumers. We can observe consumer categories on Tmall Luxury Pavilion in six major groups: chic elites; elegant & family-oriented; active youth; trendsetters; trend followers, and digital pioneers. The chic elites and elegant and family-oriented groups represent the heaviest-spending consumer groups. Trendsetters make up the fastest-growing group of core luxury consumers, while trend followers and digital-savvy youths are emerging groups with high spending potential.
What are the critical points that luxury brands need to integrate in their strategy to be successful on TMall Luxury Pavilion?
It is of key importance for brands to understand the Chinese consumer. There is a large number of high-quality consumers on Tmall Luxury Pavilion that range from Gen Z to more traditional luxury consumers. It is important for brands to pay attention to their specific wants and needs to provide the best online services and benefits. Localization is critical. It is only by understanding Chinese consumer behavior, and knowing what it is that consumers in China are looking for, that brands can set the right product strategy, know what content channel to use, and provide customer service at the level Chinese luxury consumers expect. Paying more attention to local festivals in China like Qixi and 11.11 Global Shopping Festival is of great importance, and actively cooperating with local Chinese designers and launching products containing Chinese cultural elements is typically welcomed. Finally, the use of digital technologies to continue innovating is key. With the development of new digital experiences such as the metaverse, brands need to localize their digital offerings to be tailored to Chinese consumers.
Western luxury brands are suffering more and more from backlash due to communication and image scandals in China. How do you explain it?
Alibaba does not comment on geopolitics.
What are the opportunities in the metaverse that TMall Luxury Pavilion wants to anticipate?
The Chinese consumers are rapidly adapting to digital consumption. Thus, we are seeing the fast adoption of new technologies. During the lockdowns, we saw a sharp increase in livestreaming and other virtual experiences such as AR, digital avatars and digital collectables. We will continue to explore existing and new technologies to help luxury brands build connections with their consumers in a lasting and unique way. In the field of the metaverse, Tmall Luxury Pavilion has also taken the lead in making a series of innovative explorations to create a virtual experience for brands to reach Chinese consumers across all touchpoints. We provide immersive 3D Shopping Experiences, and AR or VR try-ons for all the latest items. We launched the first online digital art gallery in China, with more than 20 luxury brands releasing digital collectables via Tmall Luxury Pavilion. We help luxury brands build their virtual presence on Taobao App and, through our partnership with Taobao Life, allow users to create different styles with luxury brands. More than 20 luxury brands including Burberry, Emporio Armani, and Max Mara have released more than 200 pieces of products on Taobao Life.
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