Can JD.com’s New Luxury Site ‘Toplife’ Beat Alibaba’s ‘Luxury Pavilion’?

China’s second-largest e-commerce website JD has officially announced the launch of its first-ever luxury online platform, “Toplife”, according to a public announcement released by the firm on October 10. The new site is a full-price online shopping platform which allows international luxury labels to set up flagship stores selling products directly to affluent Chinese consumers.

Luxury labels including La Perla, Emporio Armani, Rimowa and Trussardi will be the first group of users on Toplife. More brands are expected to join the site in the coming weeks.

The development signals JD’s efforts to further compete with its key rival, Alibaba Group, to achieve a leading position in the country’s luxury market, a sector that Bain & Company expected to see growing around two to four percent to reach approximately $305 billion this year. In August, Alibaba inaugurated “Luxury Pavilion“, a new section within its business-to-consumer site Tmall for premium and luxury brands to connect with a pre-selected group of super-wealthy customers.

“Like Tmall’s Luxury Pavilion, JD.com’s Toplife creates a space separate from the e-tailer’s mass-market platform in order to provide the high-end online experience that luxury brands require,” said Liz Flora, editor of Asia-Pacific research at the New York-based digital intelligence firm L2.

JD’s Toplife and Alibaba’s Luxury Pavilion offer a great deal of similar service to luxury brands; both providing brands who work with them with additional offerings such as customer service, delivery, marketing and branding expertise.

Moreover, both platforms stress the need to connect online-to-offline (O2O) experience for luxury shoppers in China. Luxury Pavilion ultimately aims to test out Alibaba’s “New Retail” business model, which utilizes new technology to create more customized and interactive shopping experiences for consumers.

Toplife, on the other hand, considered an O2O connection as an important step for JD’s luxury expansion going forward. Ding Xia, President of JD Fashion, told Jing Daily that “omnichannel solutions are definitely something we are experimenting with, especially for fashion where fit and look are so personal.”

“We are working on allowing consumers to order multiple pieces of clothing or accessories through our white glove service and keeping only the ones that are exactly what they want. That’s what a luxury experience needs to be, online-offline,” she added.

However, there are also remarkable differences between the two platforms of which luxury brands need to be aware.

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Exclusivity or Not

Alibaba’s Luxury Pavilion is an exclusive site to which wealthy consumers can only gain access if they are invited by Alibaba. Toplife is open to the public.

The sense of exclusivity created by Luxury Pavilion’s invitation-only mechanism seems to fit more with the spirit of luxury brands, who traditionally justify their premium pricing and top-notch image by offering an exclusive experience. Through inviting consumers who have demonstrated a certain level of purchasing power in the past, Alibaba helps luxury brands select customers they want.

When questioning if an open platform can fulfil the same need, Ding said “our unparalleled big data lets us identify those most likely to appreciate the offer and micro-target. JD has always attracted users focused on quality and service over price, so this is a natural fit for the high end of our user base.”

More Autonomy and Independence?

Compared to Alibaba, JD seems to give more autonomy to luxury brands. According to Ding, Toplife is a stand-alone luxury website that is separate from JD’s main e-commerce platform. Luxury Pavilion, on the other hand, is a sub-section of Tmall site.

“Super luxury brands don’t want a small corner of an all-categories site, so we built Toplife as a stand-alone, truly luxury shopping experience,” said Ding. “Brands and consumers can see this is a totally different model that changes the game.”

In addition, JD emphasizes that luxury brands have full control of how they want their flagship stores to appear.

Value-added Logistics Service

Luxury brands who work with JD’s Toplife can also use the company’s self-operated nationwide logistics network. Earlier this year, the e-commerce giant initiated a premium delivery service called “JD Luxury Express” to improve the overall shopping experience for their customers. Luxury shoppers from China’s major cities such as Beijing, Shanghai, Guangzhou, Shenzhen and Chengdu will receive their online orders in less than 24 hours by delivery persons who wear suits and white gloves.

Speedy delivery service is believed to be much valued by Chinese online consumers no matter if they purchase luxury items or not.

Until now, the launch of Luxury Pavilion and Toplife by Alibaba and JD respectively indicates China’s top two e-commerce giants both have recognized one of their major obstacles expanding in the luxury arena, that is, the lack of fashion and luxury DNA as a mass-facing platform.

As L2’s Flora put it, “Tmall and JD.com have struggled to attract official partnerships with luxury brands due to perceived brand image incompatibility.”

According to L2’s Digital IQ Index: Luxury China 2017, only 24 percent of luxury brands had official stores on Tmall and only 10 percent operated them on JD.com as of June 2017.

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E-Commerce

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