Burberry opened its first official Tmall store in April, becoming the first foreign luxury brand with an official presence on the third-party retailer. Until then, prestige brands had avoided the site (known for a persistent gray market) for fear of diluting their caché. Burberry’s opening of a Tmall storefront was considered a bold attempt to have more control over that market.
The reception was strong. In the first few hours, 1,500 fans reposted the news of Burberry’s opening on Sina Weibo. In 18 days, Tmall sold more than 132 products. But 32 of the pieces have already been returned, resulting in a 26.4% return rate far higher than the 7.2% average for similar items sold on Tmall. So far, fragrances make up the majority of the Tmall store sales, the rest being polo shirts, jeans, and pants. The store recorded no sales of higher-priced items such as purses and trench coats.
Quality of service or items was not an issue, as the store had a 60% higher rating than the average Tmall store. Price was, as the gravitation towards lower-priced items suggests. Luxury goods are more expensive in China than other countries, a disparity that has lead to the proliferation of resellers that advertise products as “buy from overseas.” The official Burberry Tmall store has higher prices than those gray market retailers, and consumers have so far not been willing to pay the difference as insurance against receiving fakes.
A Tmall store could be beneficial in bringing more traffic to brand sites or offering a convenience for Chinese consumers, but the Burberry case proves it a largely ineffective strategy against resellers. Perhaps, a more proactive stance from Tmall is needed (similar to Amazon’s) to persuade global luxury brands to work with the e-commerce platform.