Tmall Luxury Pavilion playbook: How brands find success

During this recent fashion month, over a dozen luxury brands livestreamed their runway shows from Paris, Milan, and London on Tmall. Balenciaga captured an audience of 1.4 million with its latest catwalk, complete with futuristic sunglasses and a cacophony of screens. Valentino, which also livestreamed its show, leveraged Tmall’s raffle feature to distribute exclusive gifts, attracting an impressive 23,000 participants. Other brands saw the number of followers and members of their Tmall stores surge by more than tenfold compared to average days, according to Alibaba. Clearly, Tmall Luxury Pavilion has evolved beyond an e-commerce site, transforming into a hub for entertaining, educating, and engaging customers. It’s this dissemination of century-old luxury brand culture through cutting-edge technology that makes work exciting for its general manager, Janet Wang. Wang oversees the platform’s expansion, pushing the boundaries of China’s online luxury retail landscape. This involves implementing one-on-one video customer service through live broadcasting, exploring metaverse marketing through blockchain technology, and introducing new shopping experiences through 3D and AR. Under her tutelage, Tmall Luxury Pavilion has grown to host over 200 premium and luxury brands, with the most recent additions including LVMH’s Hublot and Tiffany & Co. Jing Daily spoke with Wang about who is driving luxury consumption on Tmall and how brands can achieve success in 2024. Thrifty women fuel luxury purchases According to Wang, over 70 percent of consumers on Tmall Luxury Pavilion are women born after 1995. Their shopping habits can be described as “very smart, marked by a blend of optimism and thriftiness.” While these women are willing to invest in luxury goods, believing in their appreciation, they still approach consumption with caution. “They care a lot about the experiential aspect and spiritual consumption, favor indulgent purchases that bring joy, and are concerned with emotional satisfaction and attractiveness,” Wang says. At the same time, “they exercise rational control over their consumption and personal and family finances, not missing out on 88 VIP membership points, Huabei installments, coupons, and shopping subsidies. They prefer to make purchases during seasonal changes and major promotions,” she adds. Wang’s advice for engaging this group? Fully utilizing livestreaming and other tools offered by Tmall to enhance their shopping experience. She also suggests that male-oriented brands pay attention to women, as they are often responsible for making purchases for the entire family. VICs remain loyal and resilient Very Important Customers (VICs) also represent a significant spending force, showing greater resilience in light of the country’s economic slowdown. In 2022, VICs who made more than three purchases on Tmall Luxury Pavilion contributed to over half of the platform’s sales. And in 2023, this group only grew in number, frequency of purchases, and average order value, fueling a further year-on-year increase of 30 percent in total transaction volume, per Alibaba. “Compared to average consumers, they have greater purchasing power, higher loyalty, are less likely to churn, and engage in online behaviors like return visits, ‘favoriting,’ and adding to cart more frequently, with a higher probability of repeat purchases,” Wang says. For brands looking to gain more VICs, Tmall Luxury Pavilion pledges to upgrade its tools in 2024, “guiding interested crowds to transform into fans of brand stores through numerous touchpoints, and then become highly interactive members.” With consumer demand becoming more personalized, Wang advises brands to create sophisticated, precise content that is relevant to target audiences while offering seamless consumption experiences that span online and offline channels. Digital a necessity, not nice-to-have However, digitalization is “not just about online sales,” the head of Tmall Luxury Pavilion points out. “Spreading brand culture is of utmost importance, and embracing innovative technology is an inevitable choice.” Luxury players can promote their brand culture by leveraging Tmall’s 3D and AR features, which enable precise replication and virtual try-on experiences for products online. Wang illustrates this with the example of the 2023 Watches & Wonders Geneva exhibition. While the week-long fair drew 43,000 attendees in person, the 3D exhibition on Tmall welcomed over 100,000 visitors on the first day alone. Another example she offers is the immersive 3D Jewelry City created for Christmas 2023, which drew inspiration from the world-renowned jewelry square, Place Vendôme in Paris. Over 500,000 visitors came to watch a Christmas tree lighting, download brand-specific wallpapers, and try on jewelry through AR. “They immersed themselves in the experience and willingly spent more time there, enjoying both the experience and the sense of acquisition,” Wang says. Despite the challenges surrounding China’s near future, such as low consumer demand and a challenging labor market, both members and non-members at Tmall Luxury Pavilion have expressed their intention to increase their investment in luxury goods in the first half of 2024. To meet this demand amid market uncertainties, luxury brands must continue to pursue innovation and excellence on their e-commerce channels. “We believe that digital transformation and upgrading are essential for the long-term value of luxury brands, enabling them to identify new opportunities faster and more nimbly, helping brands to navigate economic cycles and achieve sustained growth,” Wang says.

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Tmall Luxury Pavilion playbook: How brands find success