As Alibaba’s efforts to bring foreign luxury brands onto its Tmall platform have met with slow success, the e-commerce giant is planning to leverage a new $100 million investment in flash sales site Mei.com to introduce more premium labels to the site.
The “strategic investment” that was announced this week appears to include an understanding that Mei.com sales will be featured on Tmall. According to Alibaba CEO Daniel Zhang, the company hopes “that Mei.com will exert its advantages to create synergy with Tmall.com in providing more premium luxury goods to consumers.” Meanwhile, Mei.com founder Thibault Villet stated that “together with Tmall.com, we will bring premium and trusted genuine brands to consumers. In the future, we see a significant opportunity to provide enhanced shopping experiences for Chinese customers in search of affordable fashion and luxury products.”
Formerly known as Glamour Sales, Mei.com’s focus on flash sales has synergy with Tmall, which is known for featuring low-price and affordable products. Mei.com’s flash sales cover an extensive list of fashion brands such as Kenzo, Michael Kors, Armani, and Versace, as well as cosmetics and home goods. Despite the fact that its goods are discounted, it has long branded itself as a luxury platform with sales of yacht vacation packages for Chinese New Year ranging from US$150,000 to US$338,000 and a limited-edition Maserati for US$486,000.
Tmall has been working to attract international luxury brands to its platform as it prepared for its U.S. IPO that was launched last year. Although it has many foreign cosmetics brands with shops on the platform, it has only seen a handful of fashion labels launch shops on the site, including Burberry, Calvin Klein, and Lacoste. Many premium brands have been wary of setting up shop on Tmall or similar platforms for fear of brand dilution thanks to its discount-oriented identity.
Alibaba has also been facing intense pressure to rein in rampant sales of fakes found on its platforms. The company was recently sued by luxury conglomerate Kering, which said that Alibaba has been “complicit” in the sales of fakes on the site. This came after China’s State Administration for Industry and Commerce published a white paper in January accusing Alibaba of failing to crack down on the sales of fakes, which was later removed but still sparked a U.S. lawsuit stating that the company had misled investors. Alibaba has responded to these accusations by stating that it has spent over $160 million and hired over 2,000 employees to crack down on counterfeits.
While featuring Mei.com sales on Tmall will dramatically increase visibility—and likely revenue—the sites will have to convince luxury brands that have stayed off Tmall that a flash sale on the platform won’t put the brand’s image at risk. It remains to be seen how the deal will be carried out and whether all the brands that currently sell on Mei.com will readily accept the heightened visibility.