On 18 December 2020, the Italian house Gucci disembarked on Tmall Luxury Pavillon, owned by the Alibaba Group.
Gucci will open two digital stores on China’s largest e-commerce platform. One features all its product categories in fashion, it is available from December 21, and the other that will sell beauty will be available in February 2021.
In 2017, Gucci launched its Chinese website, Gucci.cn, and since then has been building its market strategy which includes a dynamic presence across all social platforms in China.
In China, the brand is also effectively collaborating with Kols like Lu Han, Ni Ni, and Yuchun Li.
What is Tmall Luxury Pavillon?
Gucci joins over 200 other luxury brands on the platform, up from 150 before the Covid-19 outbreak, and expects to exceed 220 by year’s end. Balmain, Salvatore Ferragamo, Alexander McQueen, Golden Goose, De Beers, Jaeger-LeCoultre, and IWC Schaffhausen are among the names that have recently joined the platform.
This jump in the Pavilion’s adoption is due to its unique, distinctive environment that allows brands to bring the same custom-tailored experience and exclusivity from their stores to China’s online consumers.
It was launched in 2017 and it has more than 750 million active users. Until recently, the fear of counterfeiting had kept many luxury giants away from Chinese e-commerce platforms, often accused of failing to sufficiently control online sales to protect brands. But due to its business policy, Tmall ensures only authentic and premium quality products to its consumers.
Tmall Luxury Pavilion is a unique platform worldwide because it is the only place and the only platform where brands have 100% control over everything. Indeed, brands can pick the price, the merchandising strategy, and the communication strategy.
Luxury Soho: a new section of Tmall Luxury
The focus for 2021 is the so-called “new luxury” which is gathered in the Luxury SoHo section. Like New York’s SoHo neighborhood, it is populated with younger brands, many of which are made in Italy and have a strong focus on sustainability. Brand values have increasing importance in the purchasing choice of Chinese consumers. The Luxury SoHo project, which also hosts the outlets of some brands was designed to dialogue with younger consumers.
How to join Tmall Luxury Pavillon?
This platform is an invite-only service for luxury brands. This means only selected or invited luxury brands can join the platform. All payments are done through Alipay. It offers brands a safe place where they will not be overcrowded.
Regarding the costs of the platform, there is an annual fee plus sales commissions based on the products’ category.
Consumers come here for a premium shopping experience where in-store merchandise is highlighted.
Tmall Global: an alternative to Tmall Luxury Pavillon
Tmall Global, a B2C platform part of Alibaba Group, is a popular online marketplace in China where many international brands are selling their products. Nowadays, Tmall is the largest Chinese e-commerce platform.
Tmall Global currently hosts more than 25.000 brands coming from 92 countries and regions. It has become the easiest way to penetrate into the Chinese market because Tmall International provides a cross border business model for many foreign brands and retailers to expand their business into China.
There are some requirements for brands to enter Tmall Global:
- Companies must be registered overseas,
- Merchants should own a trading license,
- Must be the brand owner or have the brand re-selling authorization,
- Merchants need authentic products.
The Chinese luxury market in 2020
Mainland China’s luxury goods market is likely to reach 48% growth in 2020, reaching nearly 346 billion yuan.
This was revealed by the research conducted by Bain & Company and Tmall Luxury called ‘China’s Unstoppable 2020 Luxury Market’.
After a difficult start, the Chinese luxury market closed the year with double-digit growth, for some brands even triple. The interruption of travel, on one hand, has resulted in the collapse of Chinese purchases around the world and, on the other hand, has seen an increase in domestic purchases. Consequently, the market for high-end goods in China started to rise in April.
Mainland China’s growth does not compensate for Chinese consumption lost overseas. So while the global luxury market decreased by about 23% in 2020, the Chinese mainland market has almost doubled its market share, from 11% in 2019 to 20% this year.
The forecast is that this growth will continue, putting the country on the right path to conquer the ‘majority share’ of the luxury market by 2025, even after the world market has returned to pre-Covid-19 levels.
China Luxury Market: Bestselling segments
In 2020 leather goods and jewelry led the luxury sector with a growth rate of 70-80%, clothing, and shoes + 40-50%, and beauty products + 25%, while high-end watches scored +20 %.
There are about 320 million Chinese Millennials, born between 1980 and 1995, and they represent the main consumers of luxury products on Tmall Luxury Pavilion. Nevertheless, Gen Z consumers, born after 1995, around 80 million people, are becoming increasingly important. Of the 757 million active annual consumers who shop online, the majority are Millennials and Gen Z.
According to iResearch, Gen Z consumers spent, on average, five hours a day on mobile devices in 2020, 10 % more than the average. Their sources of information for luxury goods are therefore social media.
The annual penetration of online luxury in China has increased by about 13% in 2019 to 23% in 2020.
Are you a luxury brand and you want to conquer the Chinese consumers?
To grow your luxury brand in China: Set up a digital marketing strategy
The Covid-19 pandemic taught everyone an important lesson: the importance of the digital world. Any foreign luxury brand that wants to enter the Chinese market must understand the power of having a digital marketing strategy in China. This means:
- Being present on Baidu, China’s most used search engine (70% of queries) with an efficient website;
- Invest in Baidu Seo and Sem to rank in the highest positions;
- Have an official account on WeChat and Weibo, the two most used social media in China. WeChat will allow your luxury brand to attract new clients, communicate with your followers, send push notifications, and redirect users to your website or to the e-commerce platform; Weibo is a good tool to increase brand awareness;
- Use Douyin, the Chinese Tik Tok, and collaborate with Kols to increase visibility and brand loyalty;
- Work with Chinese Kols to advertise your brand, increase sales, and engage with consumers through social media and live-streaming platforms.
- Read more about the above point here
If you need help setting up your digital strategy, contact Gma and we can discuss your project.
Gentlemen Marketing Agency is a digital marketing agency that is an expert in helping foreign companies to establish or strengthen their position in China. We can help your brand increase sales in China, thanks to our services like:
- Advertising
- Baidu SEO&SEM
- Social Media
- PR
- KOL & Influencers
- E-commerce and cross-border e-commerce
- Distribution