Tmall can boast yet another new brand set to launch on its site. The digital platform run by Chinese e-commerce giant, Alibaba Group Holding Ltd, has been attracting several fashion and cosmetics labels over the past few months, with Burberry, very much leading the way. In April month, the British brand announced its plans to launch a Tmall shop in coincidence with the opening of its Shanghai flagship, making it one of only a small handful of luxury brands with a presence on Tmall.
Also in April, ASOS, one of the UK’s largest online-only fashion and beauty stores, made its Tmall debut. Estee Lauder quite successfully followed suit (the cosmetics company’s Tmall store had nearly 8,000 transactions in its first day with sales estimated at almost $500,000) and fast fashion giant Zara announced last week that is slated to open a Tmall shop in the near future in an attempt to reach new customers and to strengthen its position in China. Now French cosmetics company L’Occitane, which began an Asian-centered expansion in 2009 under the direction of CEO, Reinold Geiger, is set to roll out its own Tmall store.
While most luxury brands are hesitant to establish a presence on Tmall due to the fact that a large portion of goods are sold on the site at heavily reduced prices without brand authorization (think: the gray market), the site certainly offers benefits. As the largest online retail platform in China and sister site to TaoBao, the Chinese version of eBay, the site attract hundreds of millions of Chinese shoppers, making it a difficult venue for brands to ignore.
In fact, in 2013, Tmall handled more than 1.5 trillion yuan ($240 billion) in transactions for 231 million active users across its three main Chinese online marketplaces. That is more than Amazon and eBay combined. An additional factor that is important to brands: Tmall offers them a lot of freedom to operate their virtual store fronts; merchants set their own prices and handle their own logistics for nearly everything, except for payment processing. Thus, brands may keep tight reigns on their image and the manner in which their goods are marketed.
Of its impending Tmall store, Zara’s Chief executive Pablo Isla told analysts the Tmall model should allow the brand to keep control of its image; interestingly, the Spanish fast fashion retailer currently sells through its own website in China, which it launched in 2012 to reach the booming e-commerce market and reach consumers in smaller cities in China.
The retailer will continue to offer Chinese e-commerce capabilities on its own site following its Tmall launch. “It is nothing different to online sales through our own webpage,” Isla said. “It is like opening a store in a shopping mall, so it’s very, very consistent with our image.”
Shaun McCabe, international director for ASOS, which also operates its own e-commerce site in China, says Tmall “is so important in Chinese e-commerce that it’s almost essential.”
We are waiting to see if more brands follow suit …