Exclusivity, Omnichannel Strategy Key to Alibaba's Luxury Ambitions

Loyalty club members get access to unique offers, celebrity events and more

Author: By Man-Chung Cheung

October 1, 2018

Luxury goods ecommerce is on the rise in China, as product selections broaden and consumers become more comfortable shopping online. eMarketer’s Man-Chung Cheung spoke with Lili Chen, general manager of Alibaba's invitation-only luxury ecommerce platform Luxury Pavilion (LP), about how the platform can help luxury brands create an exclusive and refined omnichannel experience for its shoppers. 

Chen was interviewed as part of eMarketer’s October report, "The Rise of China's Omnichannel Luxury Consumers: How Ecommerce is Changing the High-End Market."

eMarketer: Can you walk us through Tmall's Luxury Pavilion (LP) experience?

Lili Chen: We launched the LP in August 2017 to meet the demands of consumers looking for the same brand exclusivity and tailored shopping experience online that they enjoy in offline luxury stores. We focused on building a premium destination where brands could sell directly to consumers, have full control over their brand experience, and be positioned among their luxury brand peers. 

LP exists as a separate, virtual app within our Taobao and Tmall ecommerce platforms, and offers a look and feel of luxury, and includes customized search, intelligent recommendations, among other features.

eMarketer: How many consumers are using the Luxury Pavilion?

Chen: There are more than 100,000 consumers spending an average of $159,000 per year on our marketplaces. Millennial luxury shoppers, those born after 1990, account for 49% of LP’s shoppers and 45% of sales.

eMarketer: How does the Luxury Pavilion fit in with Alibaba services?

Chen: Brands on LP have access to Alibaba’s consumer base of more than 600 million. That allows them to leverage analytics and insights from across our platforms in order to better understand their existing customers, as well as locate and engage with new potential customers. On the first day of its launch on LP, Versace reached customers from 283 cities across China. A significant number of these consumers came from Tier 3 and Tier 4 cities where Versace did not yet have a physical store. This allowed Versace to reach a wide net of shoppers, as well as gain important insights into potential strategies for store openings beyond Tier 1 cities. Luxury brands also can engage with their customers both online and offline through LP. 

eMarketer: How is Tmall's Luxury Pavilion creating that feeling of exclusivity and catered service that the in-store experience offers?

Chen: In April 2018, we launched the loyalty program called "Pavilion Club," which gives members a personalized and seamless online-to-offline experience. Club members have access to exclusive offers, celebrity events, flexible payment options, priority purchases and door-to-door returns.

For premier members, they receive even more exclusive offerings and offline services from LP, such as spa sessions and personal shopping concierge services. As an example, with Tiffany, we are also offering premier members special rewards, including a high-end delivery experience and an invitation to an exclusive party in Shanghai to celebrate the collection’s official launch, with complimentary stays at the St. Regis Shanghai hotel. 

eMarketer: What types of campaigns has Luxury Pavilion created with brands? 

Chen: There are several ways that we collaborate with brands. With a flagship online store on LP, brands can enjoy other marketing partnerships ranging from special promotions to specialized experience benefits, including offline initiatives and events, special services, and perks through the Pavilion Club. For example, Longines recently held a special offline event in celebration of Chinese Valentine’s Day to allow customers to design special heart-shaped bands, and even consult directly with a watch master to learn how best to maintain and upkeep a Longines watch. 

Luxury brands have also used LP to launch virtual pop-up stores to test consumer appetite for their products and build greater awareness for their brand. For example, we launched a 3D virtual store with Maison Valentino that mirrors their offline pop-up store and gives online consumers a first-hand look at its Candystud collection. 

With Loewe, the brand was looking for a testing ground to enter the ecommerce market in China. So together, we created a flash sale in honor of Chinese Valentine’s Day where the “Hearts” Barcelona bag was available exclusively to our shoppers. 

More recently, with Tiffany & Co., the latest “Paper Flowers” collection was launched exclusively for LP shoppers a full two weeks ahead of being available in Tiffany brick-and-mortar stores in China. And a fully interactive online experience was designed where consumers could even scan the signature “Tiffany Blue” anywhere on the platform to gain access to the pop-up. This store format offers an important way in which brands can build excitement and anticipation through an engaging shopping experience.