Giorgio Armani will launch a flagship e-tail store on Tmall to sell its high-end cosmetic products in China, the company announced at the end of December last year. It will also partner with Luxury Pavilion, a subsidiary of Tmall featuring luxury brands, to provide customers with first-hand, exclusive sales called "Tmall Super Brand Days" (天猫超级品牌日) this month. It seems that in recent years, Western luxury brands have become increasingly eager to join China’s e-commerce platforms.
So what will the Giorgio Armani Tmall partnership bring about this time? Here are some of our best guesses.
In August when the Luxury Pavilion was first launched, only 17 brands, including LVMH’s Zenith, Guerlain and Rimowa; La Mer; Burberry; Hugo Boss; and Maserati, were invited to participate in the platform’s first-phase sales. As for consumers, the access to the Luxury Pavilion was invitation-only, which means Alibaba had filtered out customers in advance based on their previous transactions on Taobao. The more one has spent on Taobao, the more likely one will be invited to the Luxury Pavilion.
Therefore, even though joining Tmall may help Giorgio Armani expand its presence in China, the effort might be limited, given that such an e-tail store will only be available to select luxury consumers. Of course, differentiating individual shoppers is the best way to maximize profits and is in fact quite popular in the industry. But doesn’t this also indicate routine profiling and discrimination from the retailer? Will it be a good policy in the long run?
Western high-end cosmetics brands usually cost more in China due to import tariffs, and sometimes certain brands are not even available in local bricks-and-mortar stores, which forces many Chinese customers to turn to daigou (代购, shopping agents), who go abroad to buy goods to resell in China, for cheaper deals and purchases.
By launching a flagship store on TMall, Giorgio Armani will make it easier for Chinese customers to order products directly from its authorized e-retail website – otherwise, these Chinese customers might step up their purchases through daigou in other countries or from other platforms. However, it's still not clear the pricing Giorgio Armani will offer to Tmall customers. If prices are not competitive compared to the price that a daigou can offer, customers may very well avoid using the platform.
More anti-counterfeiting efforts?
Despite e-commerce platforms’ relentless efforts to fight against counterfeit goods, it is impossible to make each e-commerce site completely fake-free. Hence, selling products through a flagship store directly from the brand will help provide a quality local resource for Chinese fashionistas – in this case, the Giorgio Armani fans.
However, even if Giorgio Armani manages to deal with the fake goods issue, it may still face another challenge: how to combat counterfeit goods. Look-alike goods are often hard to examine and can exist in all corners of the e-commerce world. For example, Kering, which owns brands including Gucci and Yves Saint Laurent, has filed law suits against Alibaba for allegedly selling counterfeit (note: not fake) goods on the platform.
The post-90 generation, who have grown up and matured with mobile technology, is now a driving force for the online luxury purchase industry, according to the latest report on China’s e-luxury market by Secoo and Tencent. Giorgio Armani’s e-tail will certainly cater to such groups, but will it appeal to all customers?
Many consumers from older generations still prefer visiting bricks-and-mortar stores, especially when it comes to luxury cosmetics shopping. In all fairness, most consumers still want to try on lipsticks or find the perfect foundation color match before any expensive purchase.