From 2017 To 2022: Five Years Of Tmall Luxury Pavilion So Far

China’s netizens were online, browsing and purchasing, well ahead of the game. And Alibaba was right there with them. Already a giant in the country’s e-commerce ecosystem since the 2000s, in 2017 its marketplace Tmall announced a new endeavor which, at the time, was pretty out there: a bespoke online destination for lovers of finery, stocked by the luxury houses of the world. Enter Tmall Luxury Pavilion. Back then the launch was viewed with a level of skepticism, but by 2020 Alibaba had become the first domestic platform to officially partner with five luxury groups — which helped secure credibility. As the pandemic hit, it felt like a new label was dropping every day. In 2021, Paul Smith, Tom Browne, and Bogner all joined while 2022 saw Brunello Cucinelli, Moncler, Lemaire, Messika, and more sign up. Five years on, Jing Daily assesses where Tmall Luxury Pavilion currently stands in light of radical changes to the local landscape. Up to now On a call from Hangzhou, Janet Wang, general manager of Tmall Luxury, has given up her evening to talk shop. With her striking blonde bob, she certainly looks the part. This is now her second time working for Alibaba, having been lured back in January 2021. Now, she acts as the custodian to over 200 brands and counting (“Jil Sander and Bulgari are two of the most recent to onboard”). Alongside “innovation,” the aim behind the platform is the determination to be “a bridge between online and offline,” she says. Brands curate their digital storefronts on Tmall Luxury Pavilion as they would on their official websites. By integrating their latest campaigns into the visual designs, they create this visual seamlessness strengthening the bridge that Wang mentions. There, they can benefit from Alibaba’s over 800 million users — granted, only a fraction of these will be high-net-income shoppers and these exact figures aren’t disclosed. What is, however, is that over 50 million customers engaged in special activations from September 2021 to 2022. The number of consumers on Tmall Luxury Pavilion grew 153 percent from 2019 and the gross merchandise value (GMV) on the platform rose by 309 percent. Within that, millennials are the biggest spenders on the app (accounting for around 67 percent of GMV generated in 2021) while the share of luxury spending among shoppers born after 1996 rose from 15.6 percent in 2020 to 17.5 percent in 2021. According to Xuan Wang, partner at China agency Tong Global, these statistics come as no surprise. The marketplace benefits from an inbuilt awareness: it’s the first e-commerce name to come to mind. Simply put, “if Chinese consumers want to shop at the biggest and most trusted mall, then Tmall is the top choice.” Another attraction is, of course, its massive GMV on both Taobao and Tmall; this secures “enough traffic to always guarantee a positive sales outlook,” he adds. The latest data shows consumers are 70 percent women as of early 2022, and buyers who make over three purchases generate more than half of the website’s transaction volume. But it’s not just a case of build it and they will come. These partnerships require vast budgets and also trade partners to fully unlock the platform's offerings. Linda Yu, general manager of marketing agency Red Ant Asia, notes that big companies have to invest in “the extras” offered by the Luxury Pavilion (such as activations, virtual KOLs, online gallery exhibitions, digital pop-ups, and third-party trade partners). “So, this is part of that experience for these brands. They must have deep pockets and big ambitions.” Pandemic acceleration But now we come to that — the once-in-a-lifetime event of COVID-19. Upending life globally, the outbreak was, conversely, a godsend to the digitization of the luxury industry. “The pandemic really accelerated digital transformation in the luxury industry. In these years, China has undergone unprecedented growth and we grew our base by 150 percent, and transactions by 300 percent,” Tmall’s figurehead states. Even though the country experienced short setbacks during the time, Alibaba remained “confident.” Luxury group Richemont launched Cartier in January 2020, which coincided with the beginning of the pandemic. Frank Vivier, chief transformation officer, at Richemont, explains how “we set up this strategic partnership with Alibaba as we needed a Chinese partner to help us tap into the fast-paced digital transformation across China, and we recognized that Alibaba was the leading digital platform business.” He remarks that “online shopping innovations, powered by an impressive digital ecosystem and very rich data,” are “critical to the future growth of maisons as they continue to reinvent the customer journey.” Richemont also bravely decided to launch Watches & Wonders in China on Tmall just as the rest of the world was shutting down. “No one imagined we could do that and we were worried ourselves. But Tmall’s team helped us onboard and execute our first exhibition, which was not just a trade show but a customer exhibition, a shopping event, and is now annual — and very successful." The future Over the years, the innovations have continued. Cartier and the likes of Burberry have launched videocalls and livestreaming, newer additions to Tmall Luxury Pavilion. To mark the fifth anniversary, Alibaba introduced an augmented reality (AR) fashion show, a Meta Pass (which confers priority digital access to products), as well as an immersive extended reality (XR) exhibition. Dior and Gucci have been among those to benefit, taking the chance to host virtual runway shows. Tmall’s AI Ayayi has partnered with over 30 high-end labels for local marketing campaigns including Burberry, Prada, and Louis Vuitton. Tmall’s Wang thinks these innovations “have set it apart from other players.” The Hangzhou giant is maintaining its luxury dominance despite the changing landscape, and “interest remains high,” Wang affirms. COVID-19 still dominates policy, causing unexpected closures which can impact physical malls instantly. But in 2021, Beijing issued anti-monopoly rules targeting the few tech giants that accelerate diversification. And consumer shifts have gone into overdrive with the arrival of Gen Z. Another point of note for Xuan Wang is the media landscape. “The segmentation of KOLs, the regeneration of internet celebrities or ‘Wang Hong,’ and the emergence of virtual icons and NFTs totally alter the way a brand engages its audience.” To face this, Alibaba has, by Janet Wang’s own admission, done a lot to convince traditional luxury that “the metaverse shouldn't be a buzzword or simply eye-catching.” It needs to have value for consumers. She asks, “As the NFT in China isn’t transactional, how do you create value for the customer?” This point illustrates how Alibaba’s innovations mean it’s often more than one step ahead of the houses that are simply playing catch up. Wang laughs, “You are reading my mind…But we really do believe our value goes beyond the purely transactional — this continues to bring newness to the consumer.” Is it really that easy? Yu for one is adamant that in terms of scale and experience, Tmall “doesn't really have competitors.” She agrees that, of course, JD.com is continuing to evolve its luxury experience to perhaps steal consumers, but “the ones worth noticing are secondhand luxury e-commerce platforms like Hong Bulin” (which completed 100 million or 728 million RMB in round C financing, and saw income double this year when compared with last). As the world becomes ever-more virtual, new challenges and competitors are a certainty. But Alibaba’s been there since the start. It’s not going away anytime soon.

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From 2017 To 2022: Five Years Of Tmall Luxury Pavilion So Far