Alibaba Group’s business-to-consumer online marketplace Tmall unveiled its “Luxury Soho” channel on April 20, marking China’s largest e-commerce giant’s entrance into the luxury outlet business. The new initiative, in parallel with Alibaba’s Luxury Pavilion, a site created for high-end brands on to sell on Tmall, is expected to increase high-end brands’ digital footprint in post-COVID-19 China.
“Luxury brands have a specific lifespan. Tmall, as the main platform for luxury partners’ digital operation, provides various solutions for different scenarios,” according to Weixiong Hu, vice president of Alibaba Group and general manager of Tmall’s apparel fashion business unit. To maximize the life cycle of luxury products, iconic products and new launches are highlighted in Alibaba’ Luxury Pavilion, while seasonal items with mark-downs can be accessed in Luxury Soho. To date, brands such as Coach, Giuseppe Zanotti, and Versace can be purchased on the outlet channel.
The Jing Take:
Under the COVID-19 crisis, many global luxury players are facing an overstocked inventory, while China, the world’s largest luxury market, has seen an early rebound of luxury business. Tmall is attempting to capitalize on this with the launch of Luxury Soho, which could become an inviting digital channel to sell unsold products without diluting a brand’s identity.
Before the pandemic, luxury brands were mainly unwilling to discount their unsold products, with companies like Burberry even going so far as destroying its unsold items to prevent them from being sold cheaply. However, more and more consumers are becoming conscious of environmental-friendly and sustainable issues after going through the COVID-19 global trauma. Luxury conglomerates have recognized this and are embracing — far more than they normally would have before the pandemic — discounting stock as one approach of returning to business. For example, Kering acknowledged that they will be discounting seasonal products later this year in last week’s Q1 earning call. Given this, Tmall’s Luxury Soho might provide an ideal solution for brands to adapt to this new reality.
The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.