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Upscaling of sneaker brands threatens luxury fashion

adidas Yeezy sneakers

Chinese office worker Fan remembers when she carried both high heels and sneakers to work, how much her feet hurt after a long day of work on the heels and how her beloved sneakers saved the day.

Fan works as an HR Consultant in a tech firm in Beijing, she said she now wears sneakers in the office. “I can’t remember when it first started, but (wearing sneakers at work) definitely become more popular in recent years.”

Fan said fashion bloggers influence her choice of fashionable sneakers the most, and she shares the styles on her WeChat account. As she became more comfortable wearing sneakers inside and outside of work, Fan became more willing to spend upwards of $200 on each pair of shoes.

A report by Chinese consulting firm Zhi Yan, Industry Analysis and investment prediction of Chinese footwear market from 2018-2024, pinpoints the start of the great sneaker boom to be as early as 2014, predicting that by 2020, the sports-inspired footwear and apparel market will grow to 246.7 billion yuan ($38.6 billion). The sales of sneakers are predicted to outgrow sports apparel by almost 3% by 2020.

The stylish sneaker trend is starting to have an impact on the sales of footwear from traditional luxury brands. Analysts from investment bank RBC Europe wrote in a recent report that, “The casualization trend is benefiting categories like sneakers and down jackets at the expense of formal wear/formal shoes.” Last year Euromonitor pointed out that the high-end athleisure market is forecast to overtake China’s luxury market by 2020.

On luxury e-commerce platform OFashion, there is very little difference between the price of sneakers by luxury brands, and sneakers by traditional sportswear labels. For example, a pair of Adidas Yeezy Desert Rat 500 is marked at 3149 yuan ($492.8), Gucci’s Ace embroidered sneaker sells for 3880 yuan ($607.28), Air Vapormax Off White is 5090 yuan ($796.66), and Balenciaga’s Speed Signature Mesh Sock Sneaker can be purchased for 4980 yuan ($779.39).

Although this competition may not be good news for luxury brands, the impact it has brought on the sportswear industry is positive, allowing sneakers to be sold at a higher price and with a higher product margin than ever before. According to Erwan Rambourg from HSBC, this is, “the luxurization of sneakers”.

Gildo Zegna, CEO of Italian luxury fashion house Ermenegildo Zegna, attributed the rising price of sportswear sneakers to their rise in emotional value, “If there is one product today that is impulse driven and creates emotions among consumers, it is the sneaker (…) you are talking about people spending $100 to $700 on a single pair.”

Higher pricing has enabled sports brands to share the driving seat with luxury brands. Yet more alarming for luxury brands is a new culture of sneaker exchange – partially driven by emotions and impulse. Young consumers are viewing purchasing of limited edition sneakers in a similar way to that of a Birkin bag – many hold immediate investment value and can be auctioned for much higher prices.

Stock X, a trading platform designed to make sneaker exchange easier, allows buyers to put their sneakers up for auction, and others to buy in real time just like exchanging stocks. Users get their own sneaker portfolio, and track the value of their collection over time, comparing it to others. Two years since the platform was founded, Stock X regularly exceeds as high as $2 million sales a day – approximately 12,000 transactions. On Stock X, the option of shipping to China is now available, and as Fashion Network reported early this year, the company is moving towards further expansion in China.

It’s hard to say how much crossover there is between sneakerheads and luxury buyers, but the healthy growth of both industries are being heavily fueled by young millennials. As the growth of streetwear consumption in China surpasses other fashion industries, the increasing exposure to urban clothing will make consumers open to the option of investing in a pair of higher-priced sneakers.

Meanwhile, the changing structure has led brands to think twice about their production strategies. Paul Andrew, the creative director of Italian brand Salvatore Ferragamo, said in an interview with W magazine: “People wear sneakers so much now that the architecture of the foot has really changed. Italian shoemakers often use casts that are 30 years old, but feet today have become more spread out.” Now he adds a pad made out of memory foam to all of his shoes.

By Ruonan Zheng 

This article was originally published on Jing Daily, a content partner of TheCurrentDaily: Upscaling of Sneaker Brands Threatens Luxury Fashion

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Retail Uncategorized

Are China’s Retail Pop-ups a Bubble That’s Ready to Burst?

Coco Game Center by Chanel
Coco Game Center by Chanel

With racing games and a claw machine, it looks more like an arcade than a boutique. But the Coco Game Center housed in trendy Shanghai mall K11 from April 14 to 23 is actually a pop-up shop created by French luxury house Chanel. The racing game, for instance, has a double C logo steering wheel, and the prizes captured by the claw machine are Chanel cosmetics samples.

Chanel’s first game-themed pop-up took place in Tokyo in March this year, and excitement about it spilled over to Chinese fans on social media. When Chanel announced it was bringing the pop-up to China, reservations were booked out a week before it arrived.

The concept of pop-up stores was popularized by Japanese fashion label Comme des Garçons. Its founder, Rei Kawakubo, opened the label’s first pop-up store in Berlin in 2004. Since then, the fashion label has been making its mark around the world through pop-up stores.

The compound annual growth rate of pop-up retailing has been over 100 percent since 2015. By 2020, over 3,000 pop-up stores will have launched in China.

Coco Game Center by Chanel / Source: timegonemay/instagram
Coco Game Center by Chanel / Source: timegonemay/instagram
Beyond Traditional Retail

Pop-up stores’ spike in popularity can be attributed in part to the shifting tides of real estate. Traditional retail space is becoming more and more expensive but can feel outdated, making pop-up stores a more exciting alternative.

They allow luxury brands to unleash their creativity, building a branded world that consumers can fully inhabit. Impressive details stimulate fans to record their experiences and post them on social media. Done well, pop-up stores provide authentic social media exposure that money can’t buy.

Last year, Chanel launched its Chanel Café, inviting fans to taste branded dessert and coffee after first trying out some of their products. Around the same time, YSL invited fans to a yacht party, providing them with free makeovers. At both events, brands offered exclusive products for consumers to purchase.

Combining exclusive products and limited durations, pop-up stores are a textbook example of hunger marketing, which is particularly effective in China. Queues often generate excitement, rather than a sense of inconvenience.

Digital Pop-ups Are Now a Thing

Pop-ups are no longer limited to brands entering shopping malls. E-commerce sites are also hosting pop-ups both online and offline.

Luxury E-commerce platform Secoo opened a pop-up store with lingerie brand La Perla last year in Beijing’s popular Sanlitun shopping district. Similarly, MyMM, a content-driven e-commerce platform,  launched a ‘Trend hunter’ themed pop-up store in Shanghai, allowing visitors to touch the merchandise listed on the site. MyMM said the pop-up store benefits lesser-known brands on the platform, giving them a chance to test consumer response before investing in a physical store.

“About one and a half years ago, more and more e-commerce sites started to think about opening an offline pop-up shop. It has reached a near-explosive state this year,” Vincent Tan, the founder of a pop-up agency POPEX told Chinese media Netease Tech.

He argued that it’s become harder for e-commerce platforms to acquire new users online, and shopping malls have been struggling to attract foot traffic. Pop-ups are seen as a solution to both problems, leading online and offline retailers to increasingly working together.

Another recent development is e-commerce sites hosting virtual pop-ups on their platforms. Luxury brands concerned about cheapening their brand by selling online can experiment with e-commerce platforms by first trying a limited collaboration. On April 10 this year, for instance, luxury watchmaker Audemars Piguet announced its first online pop-up boutique in partnership with JD.com, which marks the 143-year-old Swiss manufacturer’s first foray into e-commerce. That gives them the opportunity to evaluate sales performance and consumer feedback before committing to a deeper, more ongoing relationship.

What’s the Future of Pop-ups?

While pop-up shops can be a useful testing ground for some brands, for others they may already be too cost-prohibitive.

Pop-up stores are meant to make young consumers excited, but as they become more commonplace, it’s getting harder to generate that engagement. Simultaneously, the cost of launching a successful pop-up has gone up as more PR and marketing staff are needed, and hiring a space is becoming more expensive.

For smaller brands, hosting a pop-up doesn’t necessarily help them survive and thrive. Guo Wanyi, a manager of a Chinese brand called Debrand said, “It’s not like a physical store where you can count on sales. Often times the purpose of opening a pop-up is not to generate sales, so you can’t necessarily get back the cost.”

For luxury brands, while pop-ups can help reach younger consumers, hosting too many can eat away at their uniqueness. Like online marketing, not ever retail pop-up retail store can go viral.

By Ruonan Zheng 

This article was originally published on Jing Daily, a content partner of TheCurrentDaily: Are China’s Retail Pop-ups a Bubble That’s Ready to Burst?

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social media

5 Chinese New Year resolutions for luxury brands on WeChat

Photo: Shutterstock.com/Sirirat - china wechat
Photo: Shutterstock.com/Sirirat

In January this year, thousands of developers gathered at WeChat’s Annual Conference in Guangzhou, anxiously waiting for Allen Zhang (??? ), the creator of WeChat, to disclose the new features coming to the most used app in China. We spoke with four strategiests who help brands with WeChat about what the new announcements will mean for luxury brands in the Year of Dog.

1. Create Better, More Original Content

One of the biggest announcements from the conference is that WeChat is going to launch a separate app for Official Accounts, typically used by brands, which will allow readers to access content more easily and for operators to better manage their content.

However, Zhang pointed out, there will be no Facebook-style newsfeed for subscription accounts. This is because the WeChat team truly believes in creating a decentralized system so that users can decide which content they want to view.

“This puts pressure back on brands to create consistent, great content,” said Preeti Kumar, head of digital strategy at 31Ten. Though WeChat said they will continue to refine the search feature, it’s not clear how the search algorithm in WeChat works. Brands can’t game the system, so they need to create quality content that readers will seek out and share.

While brands should be getting their content right before it is published, WeChat now allows for corrections of up to five Chinese characters on Official Accounts, enough to fix typos, if not factual errors. Kumar sees this as a small but important step in enabling brands to enhance the quality of their content.

Jenny Chen, the marketing manager of WalktheChat, believes the introduction of WeChat-native stores that run as Mini Programs within the app will be less important to sales than quality content. “Content and marketing campaigns will remain the key driver for e-commerce sales for luxury brands,” she said.

2. Ensure My Mini Program Strategy is Omnichannel

There has been an explosion in WeChat mini-programs since the capability was established last year. Look at the data: there are now 580,000 mini programs, with a combined 170 million daily active users.

Offline is the key playground, and it is where luxury brands can build an emotional connection with their consumers.

In the Year of the Dog “WeChat Mini Programs will be part of an overall omnichannel approach that has evolved for luxury brands”, said Jeff Fish, CEO of TMG Worldwide, a New York-based agency that helps global brands connect with customers on WeChat. He gave the example of QR codes included in retail spaces to seamlessly incorporate digital content.

Meanwhile, Kumar emphasized Mini Programs should be used for more than just sales. “It could also be used for enhancing the overall user experience by providing exclusive access, convenience, and customization possibilities.” She gave the example of Longchamp’s Mini Program that allows consumers to customize their tote bags, and Tesla’s Mini Program that provides drivers with information about charging stations.

Stepping back, Chen saw not just luxury retailers including more digital content in stores, but also tech companies leading bricks and mortar retail. “Both Alibaba and Tencent are focused on acquiring big retail stores and retail brands in 2018. We can expect both companies to restructure retail organizations and aggregate the data from both retail shops and e-commerce stores.”

3. Take Advantage of Better Ad Data

Advertisers have complained how little data WeChat Ads provides, making it harder for them to target specific audiences. Fish from TMG said: “This is getting better every day. The team at Tencent has devoted significant resources to producing better targeting and more visibility into actionable intelligence.”

However, their progress may be slow compared to their Western counterparts.

“I would not expect WeChat ads to become as sophisticated as Facebook or Google this year,” said Chen. “Brands could consider other advertising platforms such as Toutiao, which have a lot of active users in second, third and fourth tier cities, making them an effective way for big luxury brands to expand their reach. And Toutiao is less strict on the requirements on overseas entities running ads.”

4. Ensure My Website’s Store Accepts WeChat Payments

Seventy percent of customers mentioned brands’ own websites as their preferred online shopping destination because of the guaranteed authenticity and exclusivity, according to a China luxury consumer survey conducted by Bain in 2017.

All four experts agreed the integration of official websites and mobile payment should be a major focus this year.

“WeChat payments will be more systematically set-up on brands’ .com websites, giving a convenient and fast experience to Chinese consumers,” said Alexis Bonhomme, the co-founder and general manager of Curiosity China.

“We have been assisting luxury brands in hospitality and hard goods sectors to integrate WeChat pay into their websites since last year,” added Kumar, “and the demand is only growing.”

“Chinese customers are not used to inputting credit card information on websites, unless it’s JD.com or Taobao,” Chen said. “And it’s not just WeChat pay. Brands should also integrate Alipay to give the customer more China-Friendly options.”

5. Explore WeChat as a Customer Relationship Management Tool

Bonhomme thinks WeChat could become a fully integrated Customer Relationship Management (CRM) tool in the Year of the Dog, connecting with brands’ global CRM systems.

Chen questioned if that is realistic this year. “Integration with global CRM will remain a a question since users behave so differently on WeChat,” she said. “Companies might as well establish a local team to carry out their China social media strategy.”

“Our focus has been on integrating [CRM service] Salesforce for brands, and treating WeChat as the main channel for China, but just one of many channels globally,” added Fish.

He gave the example of a luxury brand whose sales associates invite customers to join a rewards program, have them scan a QR code to follow the brand’s official WeChat account, then track then add the customer to Salesforce for managing personalized communication. Using WeChat as a CRM tool can help “clients feel like members of an extended family,” Kumar added.

By Ruonan Zheng 

This article was originally published on Jing Daily, a content partner of TheCurrentDaily: 5 Chinese New Year resolutions for luxury brands on WeChat

Categories
business

Gucci CEO Marco Bizzarri on why consumers are “Feeling Gucci”

Gucci's CEO Marco Bizzarri at the WWD CEO Summit. Photo Credit: Patrick MacLeod/WWD
Gucci’s CEO Marco Bizzarri at the WWD CEO Summit. Photo Credit: Patrick MacLeod/WWD

Gucci’s strong momentum has continued entering the second half of this year. The Italian heritage brand delivered another spectacular earnings result earlier this week, reporting a 49% jump in sales in the third quarter. The Asia-Pacific region sales, led by China, increased 36%.

This higher-than-expected growth proves the continuous influence of the brand’s creative director Alessandro Michele in dictating the fashion taste of global consumers. Michele, who has helmed the house since 2015, is the hero behind Gucci’s latest turnaround.

In China, Gucci is leading the way in profiting from the recovery of the country’s luxury market in recent years. The bold and imaginative design has impressed and won over the hearts of Chinese millennial consumers. Aside from the impressive sales figure, younger generations’ high interest in the brand’s new product lines such as home decor, furniture and perfume, along with the constantly organic promotion by a slew of top-tier online influencers including celebrities Liu Wen and Yang Mi, and fashion bloggers gogoboi and Becky Li, are all signs of Gucci’s success with this demographic.

There are still some who question the sustainability of Gucci’s growth, however. Some fashion critics and industry observers hold the view that Gucci may soon lose steam if it cannot catch up with the fast-evolving appetite of Chinese young customers, who are known to be one of the most demanding and least loyal buyers of luxury brands.

To Gucci’s CEO Marco Bizzarri, who, under his leadership, has put creativity at the core of the brand culture, this pessimism may not hold true. During the WWD’s CEO Summit on October 25, Bizzarri was confident enough to say that almost every consumer on the planet (no matter the age and nationality) is “Feeling Gucci”.

“Feel Gucci” is a term coined and defined by Bizzarri’s 16-year-old daughter, meaning, “feel good”. The term reflects the authenticity and the sincerity of the work of Alessandro Michele. Bizzarri further explained that the brand culture that he instilled, which now values creativity, instinct, and intuition, has made him firmly believe consumers’ enthusiasm that Gucci could continue strong.

“Creativity was put again at the center of Gucci,” he said. “[And] respect, happiness, passion, empowerment, inclusivity are values that foster creativity.”

Upon his arrival at Gucci in 2015, Bizzarri revolutionised the office atmosphere through removing all the black-and-white images of the brand’s deceased supporters like Grace Kelly and Jacqueline Kennedy Onassis. The change was meant to make Gucci set apart from its glorious history and bring in fresh ideas, creativity, joy and emotion.

The “Shadow Executive Committee” is another example of how he empowers a bottom-up idea transfer. The unofficial organ is where Bizzarri can listen to the opinions of lower-level employees. He disclosed that “Gucci Places”, the new travel app released in August this year, was the outcome of the committee.

“You need to listen to consumers, but not too much,” said Bizzarri, who acknowledged the significance of customer’s ideas but also the need to set some distance from them in order to avoid their opinions completely dominating the company’s vision.

He believes “intuition and instinct are ultimately more important than intellect and rationality”. He firmly stated that one of the best professional choices he made — appointing Michele, a person who was not even on the list of candidates for Creative Director — was based entirely on his intuition and instinct.

“[Alessandro] opened the door and was wearing the Princetown fur loafers,” said Bizzarri. “We were thinking the same way — for me, it was from a business standpoint, and for him, design. It was very much about empathy. You feel like you found the right person immediately.”

From Bizzarri’s talk at the Summit, it is clear that his approach to managing this 95-year-old iconic fashion label is to preserve the most human side of luxury culture, which prioritises creativity, instinct, and intuition over rational, strategy, and technology.

In today’s fashion world, the advance of technology and data science has brought assistance as well as distraction to the business. Some high-end brands tend to focus on the modern, superficial metrics such as social media and KOL (influencer) traffic while neglecting the real factor — namely, human creativity, that can differentiate them from rivals among consumers.

By Yiling Pan @SiennaPan

This article was originally published on Jing Daily, a Fashion & Mash content partner.

Categories
business e-commerce Editor's pick

Will Alibaba’s anti-counterfeiting deal with Kering stall luxury counterfeits?

Gucci - Kering anti-counterfeiting
Gucci

French luxury conglomerate Kering Group and China’s e-commerce giant Alibaba Group reached an agreement August 3 to jointly fight against the counterfeits on Alibaba’s online marketplaces to protect brands’ intellectual property rights.

As part of the agreement, the details of which were made public in a press release co-issued by the two parties, Kering has also decided to withdraw a lawsuit that it filed against Alibaba in 2015 in New York district court accusing the e-commerce site of being involved in the sales of fake handbags, watches and other items under the names of brands owned by Kering. The cooperation marks an official end to the legal dispute between the two companies.

Alibaba and Kering have established a “joint task force” to collaborate on the anti-counterfeiting actions, the public statement said. The two companies will exchange useful information and work closely with law enforcement bodies. Kering will also benefit from Alibaba’s advanced technology capabilities in identifying counterfeiters on its platforms.


Will this move by Alibaba really assure luxury brands?

Owning elite luxury labels including Saint Laurent, Gucci and Balenciaga, Kering’s endorsement represents a milestone for Alibaba’s ongoing efforts to combat the counterfeit issues on its platforms in order to attract more luxury brands to work with.

However, it is interesting that Saint Laurent has just decided to work with Alibaba’s major rival JD.com earlier this week. Moreover, one major reason for that cooperation, according to the brand’s CEO Francesca Bellettini, is that the presence of Farfetch (of which JD.com acquired a nearly $400 million stake in June) has helped mitigate their worries over the counterfeiting issue.

There is little doubt that Alibaba has been working hard on this area in recent years. The group set up the “Alibaba Big Data Anti-counterfeiting Alliance” in mid-2016, which aims to use modern technology to identify counterfeiters. A number of luxury brands such as Louis Vuitton, Shiseido, and Swarovski are all members of the Alliance.

On many public occasions, Alibaba’s founder, Jack Ma, has been quite outspoken about the counterfeiting problems in China and has publicly called for the government to devote more legal efforts to it.

A recent article published by Luxury Daily, nonetheless, views the company’s current coalition as a failure to achieve what it has promised, namely, to curb the sale of counterfeit luxury goods on the Chinese e-commerce site. According to the publication, Alibaba is still “lax about counterfeiting,” while counterfeiters have become much more sophisticated than ever and consumers have better access to fake goods due to the flourishing of social media and modern technologies.

Chinese markets have become a pillar of Kering’s various businesses as per recent earnings reports. The conglomerate’s core brand, Gucci, has just tapped into the country’s online market through establishing its own e-commerce site. It is thus not so surprising to see Kering ceasing fire on the dominant market player over the counterfeiting issue. But the partnership, for either side, is possibly far from being worthy of celebration.

By Yiling Pan @SiennaPan

This article was originally published on Jing Daily, a Fashion & Mash content partner.

Categories
e-commerce

Alibaba unveils exclusive luxury pavilion courting super-wealthy Chinese shoppers

Burberry's official Tmall flagship store
Burberry’s official Tmall flagship store

Chinese e-commerce giant Alibaba Group today launched the Luxury Pavilion, a brand new section within its business-to-consumer site Tmall for premium and luxury brands. The initiative is part of a broader bid, according to Alibaba’s news site Alizia, to push forward its New Retail initiative in the luxury arena to reach out to the country’s super wealthy online shoppers.

The new platform currently features a wide range of products from apparel, watches, beauty and cosmetics, and luxury auto from brands such as Burberry, Hugo Boss, Maserati, and the LVMH-owned brands Guerlain and Zenith. Notably, these labels have already had flagship stores on Tmall.

The timing of the launch of Luxury Pavilion is interesting considering that the country’s second-largest e-commerce company, JD.com, recently announced it was speeding up its foray in the luxury industry with a partnership with Farfetch. In June, JD.com invested $397 million in the leading British luxury e-commerce platform, and the new partnership welcomed its first comer, Saint Laurent, the high-profile French luxury label owned by the Kering Group.

Patrice Nordey, the Founder and CEO of the Shanghai-based luxury consulting firm Velvet Group, said the project follows the investment of Alibaba into Mei.com in July 2015.

“The deal between Alibaba and the fashion private sales company included the development of a luxury platform,” Nordey told Jing Daily over email.

Part of the team of Mei.com joined Alibaba to prepare the launch of Luxury Pavilion. Alibaba invested more than $100 million in the flash sales luxury site Mei.com in July 2015.


Banking on exclusivity

As evidence that “exclusivity” is a highly important element for Chinese luxury spenders, Alibaba has made Luxury Pavilion an invite-only platform. According to Jiemian, a domestic media site, out of Tmall’s 500 million total users, it selected a limited number of consumers who are either ultra rich or are members of APASS (a Tmall members club for top online shoppers based on their annual purchasing records).

“Exclusivity is key to this project,” Nordey said, “hence the invitation-only business scheme to onboard luxury brands on the platform.”

The entry-point to the online Pavilion, which is located on the Tmall website, is only viewable to this select group of customers. However, while the front-end of the new luxury area is separate for consumers, the back-end will be connected to the Tmall platform, allowing the company to fully leverage synergies, such as traffic building.


A customised shopping journey

The Luxury Pavilion also aims to offer a customized shopping journey to users. Alibaba told Alizia that the new platform is nothing like the current Tmall and Taobao Marketplace that are still mass-facing. Based on the personal information of consumers, it will create personalized homepages, customized brand pages, product recommendations, exclusive VIP awards and individual post-purchase customer service to align buyers’ expectations with luxury brand offerings. The new platform will also be more interactive, imitating the real in-store shopping process, thanks to advanced technology such as augmented reality (AR) and virtual reality (VR).


Testing a ‘new retail’ model

The Luxury Pavilion ultimately attempts to test out the “new retail” business model, an innovative concept that has been engineered by Alibaba in recent years and utilises new technology to deliver a more tailor-made and interactive shopping experience to consumers from online to offline (O2O).

“Luxury brands increasingly want to use new retail technology and consumer insights to connect with younger consumers, as well as drive business-model innovation,” Liu Xiuyun, the head of Tmall’s fashion unit, said in a statement.

Alibaba will provide brands on the platform with a number of marketing and branding tools that allow them to effectively engage with Chinese consumers and connect online sales to offline commerce. After its summer warm-up period, the Luxury Pavilion plans to organise a grand opening by the end of the year.

By Yiling Pan @SiennaPan

This article was originally published on Jing Daily, a Fashion & Mash content partner.

Categories
e-commerce

How China’s e-commerce giants are battling to attract luxury retailers

How China’s E-Commerce Giants Are Battling to Attract Luxury Retailers


When JD.com announced last week it was making a nearly $400 million investment in British luxury platform Farfetch, it put itself in the fast lane for its growth as a luxury e-tail player. But it also gained another valuable resource in its competition against China’s e-commerce leader, Alibaba, and its online shopping platform, Tmall.

There’s a reason JD.com has its sights set high: according to a new insight report by digital intelligence firm L2, the luxury segment remains one part of e-commerce that still offers huge market potential, as many international brands have yet to fully take advantage of China’s online shopping boom.

L2’s report shows that out of the 87 luxury brands they benchmark, only 24% have an official presence on Tmall so far in 2017 – a rise of just 1% compared to last year. On JD.com, only 10% of high-end brands have an official presence.

Luxury brands everywhere have been slow to adopt e-commerce, but this trepidation has been especially strong in China. Online retail giants like Alibaba and JD.com are mass-market shopping platforms and thus don’t offer the environment that e-tailers specialising in luxury would. Both companies do offer luxury brand channels, but are still having to work hard to build up their reputation with international brands.

According to L2’s “Insight Report China: Alibaba”, much of this work for Alibaba has centred around cracking down on counterfeit sellers and communicating this progress to international brands, but like JD.com, it has also meant a series of investments in both companies and models that have luxury retail at their forefront.

In 2015, Alibaba invested in Mei.com, a local flash sales site that had established relationships with more than 280 luxury designers, and together they created a luxury channel that broadcasts fashion shows highlighting looks from Mei.com brands and inspiring consumers to buy what they see on Tmall. More recently, Alibaba enhanced its luxury portfolio with an investment in Intime, a mainland China department store chain. Through Intime’s store on the Tmall platform, Tmall hosts a variety of luxury brands, including Burberry, Gucci, and Michael Kors.

“We see the way Alibaba is trying to work around this obstacle where brands won’t open official stores on Tmall, so they’re going through other retailers to get these products on the site,” says Liz Flora, editor of Asia-Pacific research at L2. “With the Intime investment, they’re also able to leverage the omnichannel retail model where they’ll be integrating the online platform with the offline store.”

L2 cites a recent instance where Alibaba technology helped create a conceptual fashion boutique in Intime called Jihood, that gave brick and mortar shoppers a virtual experience. At Jihood, shoppers could scan radio-frequency identification (RFID) tags on an item of clothing in a “magic mirror” that digitally displayed the product information. The adoption of the omnichannel model in China goes both ways—at its three-story Shanghai flagship, Burberry is carrying out a similar digital and audiovisual experience, according to a recent report by management consulting firm Oliver Wyman.

Alibaba’s Intime investment is part of its “new retail” model, a strategy that, aside from its benefits for mass-market retail, holds great promise for the luxury sector, where brands can benefit from augmenting online retail with a comprehensive range of digital, offline and in-store experiences. Flora says, “It’s a way of attracting luxury brands and retailers to the site and show that even though it’s a cross-sector mass market retailer, it can bring new value to the luxury market.”

By Jessica Rapp @jrapppp

This article was originally published on Jing Daily, a Fashion & Mash content partner.

Categories
e-commerce social media

Burberry leverages popularity of WeChat’s top fashion blogger with exclusive DK88 launch

Burberry announced its exclusive launch of its new DK88 handbag with Mr. Bags through a game on WeChat
Burberry announced its exclusive launch of its new DK88 handbag with Mr. Bags through a game on WeChat

First Strathberry, then Givenchy, and now Burberry – luxury brands are learning that it pays to work with China’s authority on high-end handbags when introducing their collections to Chinese consumers. On Monday (May 3), Burberry partnered with Mr. Bags for an exclusive online WeChat shop launch of its leather DK88 handbag, which was also released in the United States just one day after the Met Gala.

The featured colour for the launch, chosen by Mr. Bags, is called Bright Toffee and is currently only available for purchase in China on Burberry’s official WeChat shop, running for 18,500 RMB (about US$2,683).

The DK88 bags are also available on the WeChat store in four additional colours: Blossom Pink, Slate Blue, Dark Chocolate, and Black, some of which are not currently listed on the US website (though Burberry CEO Christopher Bailey has said customisations would be available). While official sales figures so far have not yet been released, at press time the special-edition colours were sold out. If previous performances are anything to go by, Burberry likely has made a significant dent in the wallets of Mr. Bags’ loyal followers.

As part of the campaign, Burberry also created a WeChat game that invites users to use the shake feature on their phones to ‘paint’ the DK88 bags. With each shake, a new bag colour is revealed, along with a description on what the colour says about the person who likes it. For example, those who pick pink are “passionate” and “optimists,” while slate blue lovers are “gentle, delicate, elegant, and quiet”.

From there, the game gives users the option to send a personalised message to a friend featuring the bag colour of their choosing, or they can go into the WeChat store and read up on more details about the bags and ultimately make a purchase. Customers are given the option to make payments using WeChat, Alipay, or Union Pay. Mr. Bags also tells customers on his WeChat post that first-time buyers can email a screenshot of their order to him, and he will pick out two lucky winners to receive a special gift.

Mr. Bags said in his post announcing the collaboration that he chose the Bright Toffee colour because it’s the most representative of the brand for Chinese consumers, as it’s a similar shade to the tan tones in Burberry’s iconic scarves and trench coats. So far, the response from his followers has been positive, aside from the disappointment expressed by many commenters about certain colours being sold out.

Collaborations between fashion bloggers and luxury brands are not uncommon in China, but e-commerce partnerships through WeChat has been an emerging trend as an increasing number of fashion houses get comfortable with hosting sales on the popular social media platform.

In one of the most recent examples, top Weibo fashion blogger and influencer, Gogoboi, opened a WeChat boutique where he curates and sells clothes and accessories from luxury online retailers like Yoox and Farfetch. Burberry’s endeavour comes as the brand reported a rise in sales at a “high single digit” rate in mainland China.

By Jessica Rapp @jrapppp

This article was originally published on Jing Daily, a Fashion & Mash content partner.