Coach announced this week that it is closing its Tmall store, and will serve China’s online shoppers on its brand site and WeChat account. Tmall shoppers will still be able to buy Coach goods through third parties who sell the brand’s good online. Coach – one of the first US luxury brands to open a Tmall store – offered no reason behind the closure other than wanting to “consolidate its resources.”
Earlier this year, Gucci and Michael Kors quit the anti-counterfeit coalition as a protest against Alibaba’s inaction on counterfeit luxury goods sold by third party sellers on peer-to-peer e-commerce site. And even though Alibaba says it has ramped up its anti-counterfeiting efforts, luxury brands say it is not doing enough. L2 data suggests that Alibaba has made some effort to reduce counterfeit luxury goods on Taobao, at least between February and May of 2016.
However, L2 data also shows that brands are powerless against the remainder of the counterfeit listings, even when they decide to work with the e-tailer and build branded Tmall storefronts. Official Tmall flagship stores receive no priority when an online shopper searches for a brand online. As shown in the graph below, just a few of the luxury brands that have opened Tmall stores – Ports 1961, Burberry, Tommy Hilfiger – own more than 90% of search results for their brand name. And even those brands (with the exception of Ports 1961) have trouble appearing in the first page of results. Furthermore, search results for brand names are sorted by bestsellers, which can place new brand stores at a disadvantage against counterfeit sellers with a long track record. For certain brands like Burberry opening a Tmall store is more of a branding move than a commerce channel, and if the branding is close to invisible they have reason to abandon their efforts.