The brand’s CEO Marco Bizzari stated this week that Gucci is avoiding “most of the platforms” in China’s e-commerce market, like JD.com and Alibaba’s Tmall, because he believes “there’s a lot of counterfeiting, and I don’t want to certify counterfeiting because I belong to these platforms.”
Gucci’s massive popularity makes it a prime target for China’s counterfeiters as well as daigou sellers, or those offering real items smuggled in from abroad to avoid tariffs. Gucci product listings on Alibaba’s C2C platform Taobao have increased in the past year, according to Gartner L2’s recent report on China’s luxury gray market. These third-party listings include a range of sketchy sellers: those claiming the items are daigou (without verification of authenticity), those claiming to be offering yuandan, or “factory extra” goods, and those who admit the items are fake.
Seven of the 10 Iuxury brands with the most third-party Taobao listings saw an increase in third-party seller activity on the platform this year. Last year, they all saw the number of listings with their name fall after Alibaba rolled out new fake-fighting initiatives, but four of them saw a more than 20% increase in 2018.
While Taobao remains on the US Trade Representative’s list of “notorious marketplaces” for fakes, Alibaba has been introducing a range of initiatives like its good-faith takedown service and Intellectual Property Joint-Force System. Companies have to be proactive to be vigilant in policing their own brands on these platforms through these mechanisms, using Alibaba’s platform to report counterfeit sellers and have them removed.
A Taobao search for “Gucci” shows the game of whack-a-mole that comes with fighting fakes, surfacing accounts at the top of the best-seller results advertising counterfeit goods. Clicking on the accounts leads to error messages that they have already been deleted, but the counterfeit sellers include their WeChat usernames in their profile photos so shoppers can access them on another platform.
Not all luxury brands are taking Gucci’s approach to e-tailers in China, as Swatch’s CEO has stated he believes that Alibaba is working harder than Amazon to stop counterfeit sellers. The number of official luxury brand shops for both Alibaba’s B2C Tmall and competitor JD.com has slowly been on the rise. Despite Gucci’s reluctance to launch on these platforms, JD.com has attracted brands from parent company Kering to its luxury platform Toplife, including Saint Laurent and most recently Balenciaga. Other new additions to Toplife have included Ermenegildo Zegna and Christian Louboutin, while Tmall’s Luxury Pavilion has recently announced sales by Tiffany, Moncler, and Moschino.
While Bizzari stated that wants to avoid giving legitimacy to counterfeit sellers on the platforms, brands also risk endorsing the current state of counterfeit sales by not having an official presence. Concerns about brand equity and fakes are reasons for brands to avoid these platforms, but labels that launch official shops can ensure that their their brand presence on e-tailers won’t be completely determined by sellers they don’t control. An official presence on Tmall can affect what shows up on Taobao, where first-page search results can include products in a brand’s official Tmall shop.
Instead of e-tailers, Gucci has opted for a China e-commerce strategy that includes direct-to-consumer sales on its site and WeChat, where it has done innovative promotions like a handbag flash sale and gift cards on WeChat mini programs.
Gucci is certainly not opposed to e-tailers globally, as it has partnered with Farfetch for 90-minute delivery in 10 cities across the globe. While Bizzari stated “at this point I want to stay away” from China’s e-tailers, he is in contact with both Alibaba and JD.com and “instead of taking a risk,” is “in a situation of wait and see.”