Tmall has officially launched their luxury channel in collaboration with flash sales site Mei.com. This has been part of a long term strategy for the e-commerce platform to bring more luxury and premium international brands to their site. However, luxury brands need to think carefully about the long-term consequences of being present or discounted on Tmall.
In a media savvy opening last week in Shanghai, Tmall and Mei.com officially announced the new luxury channel with a celebrity event and fashion show featuring Olivia Palermo and local singer Li Yuchun (Chris Lee). The event was simulcast on both Tmall and video-site Youku to create excitement about the new luxury channel.
The luxury channel is part of a strategy by Tmall and owner Alibaba to bring more luxury and premium fashion brands to the e-commerce platform. Last July, Alibaba invested in excess of $US100 million in Mei.com, ostensibly with the goal of introducing the flash sales site directly to Tmall users. While some luxury and fashion brands, including Burberry, Calvin Klein, and Lacoste, have set up Tmall stores, other luxury brands have been more reserved in their enthusiasm for the platform.
Mei.com provides a ‘Trojan Horse’ for Tmall – they can introduce luxury brand to Tmall without requiring brands to set up official stores on the platform.
This is advantageous for Tmall as it will arguably create more premium perceptions of the site. Also Tmall and Mei.com will be introducing brands such as Dolce Gabbana, Armani, and Versace, not only to Tmall users in 1st- and 2nd-tier cities, but to consumers in 3rd- and 4th-tier cities who do not not have direct access to the brands’ physical stores.
Good for Tmall, but is it good for your luxury brand?
The launch of Tmall’s luxury channel is arguably a opportunity for international brands to gain access to a wider number of consumers through e-commerce(400 million users to be exact).
However, being linked to a flash sales site such as Mei.com, whose reach is now hugely amplified by Tmall invites the possibility of brand dilution.
Speaking to luxury consumers as part of our work with SMART, several factors are clear in terms of brands’ ability to maintain their luxury credentials with Chinese consumers.
Firstly, they need to maintain consistent pricing. Secondly, they can never be seen to flood the market with unwanted goods. Both of these factors have badly affected several early-arriver brands in China, who are now stuck with the challenge of ‘re-premiumizing’ their brands – arguably the best strategy is to never allow your brand to be devalued, as it is an uphill battle to regain this status in such a consolidated market.
Tmall can work for a luxury brand – as long as all aspects of brand communication are aligned to project a persistent premium image with Chinese consumers. This means paying special attention to Tmall (Mei.com) activity as part of an overall digital ecosystem – if you are ‘over-communicated’ on Tmall or through flash sales, then this will be detrimental to your brand in terms of dissolution.
Remember, any brand can be on Tmall – created a level playing field. However the whole idea of being a luxury brand is that you are not ‘level’ but ‘aspirational’, a ‘dream’, not a ‘consumerable’ – remember to be a luxury brand you must act like one – rarity and exclusivity drive desire, not your attendance at the ‘bargain of the century’ – beware of being Tmall-ed, once Tmall-ed it will be a hard road back to premiumization.
One of the key foci of SMART is to help brands in China structure their digital presence correctly for China, this includes Tmall, but in a very strategic way. Contact us, for a demonstration on how we are helping aspirational brands, maintain their essence in China, despite intense competition.