E-commerce in China: Tmall’s luxury pavilion sets the pace

Unlike other luxury goods markets, e-commerce plays a huge role in China, given that the market size of cross-border retail e-commerce sales there is expected to exceed $140 billion by 2021 (according to eMarketer).

China already accounts for about one-third of global luxury goods sales, and its share is growing. In general – according to Bain & Co –  in 2017 sales of luxury goods hit 142 billion yuan and Chinese shoppers accounted for 32% of the 262 billion euro global luxury market.

And these figures are expected to increase: China’s share of global luxury spending is seen reaching 44% of the global market by 2025 (source: McKinsey).

(Source: LaPresse/AP)

Considering the profile of the average Chinese consumer, their enthusiasm for buying online is not actually surprising: they are young (age dropped from 35 to 25) and way more connected than their Western counterparts (China is the most connected country in the world!).

Moreover, Chinese consumers approach the online channel as if they were going to the mall with their friends: this is why the aim of Chinese e-tailers has always been to provide a rich alternative to traditional shopping.

Luxury brands have started to understand the importance of this channel and tried to enter this world full of new opportunities.

The clearest example yet of how Chinese luxury shoppers can flock to specially-tailored online experiences is Tmall, a B2C online retail site operating in China and owned by the Alibaba Group, with more than 550 millions of customers.

                   (Source: Journal du Luxe)

When asked who is their target client, the answer is clear: in between 26 and 30 years old, with a bachelor degree, married with children and pets.

The average annual expenditure of the Chinese consumer on Tmall is about 90,000 yuan (almost 15,000 euros ) per year. Their clients love shopping online and – especially –  Made in Italy luxury products.

Considering all these factors, in 2017 they decided to open their luxury pavilion: an exclusive space, invitation-only, where brands can sell directly to consumers and have full control over the experience. It is considered the most important platform online for millennials (44%) and today carries more than 80 brands including Valentino, Versace, Ermenegildo Zegna, Moncler, Moschino, Giuseppe Zanotti, and Maserati.

Last December, Tmall unveiled a new app with a sort of Maison store. The aim of this new format – as Lili Chen, general manager of Tmall luxury pavilion recently said in an interview – is to “let luxury brands digitally embody their unique brand stories, heritage, savoir-faire, and innovations, as well as their in-store atmosphere and energy. Moreover, it is a way to help them engage with online luxury consumers – mainly the ‘always connected’ generation – and provide them with the best tailored, immersive shopping experience close to the one that they would get by shopping in a brick-and-mortar store”.

This is the ultimate goal of the Chinese online giant. As Jack Ma – owner of Alibaba – once said: “We were able to sell online 100 Maserati and 100 Mercedes in 18 seconds. (…) The Canadian Prime Minister called me and asked me to help them sell their famous lobsters. In 5 hours we sold 96,000, and in Vancouver, they ran out of lobsters for three weeks, but Chinese people were thrilled.”

Now it’s up to brands to understand the magnitude of this channel and the possibilities connected to it.










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