As brands in L2’s recent Digital IQ Index: Luxury China report increase their e-commerce presence in China, most are still holding back from opening official stores on Alibaba’s B2C behemoth Tmall. Instead, they are favoring direct-to-consumer (DTC) e-commerce and pure-play luxury e-tailers to reach China’s online luxury shoppers, with a small but growing number making a foray into WeChat sales.

The percentage of Index brands in the Watches & Jewelry and Fashion categories offering DTC e-commerce on their China site has more than doubled since 2014 among those in all studies from 2014-2017. Salvatore Ferragamo, Officine Panerai, Tissot, and Chloé are among those that recently jumped onboard the China e-commerce bandwagon with new online shops on their Chinese sites. On the full list of brands from the 2017 study alone, 40% of Fashion brands and 38% of Watches & Jewelry brands now offer DTC sales on their China sites.

While high-end brands have been heavily courted by Tmall, they remain wary of joining the mass-market platform despite its dominance of the B2C e-commerce market in China. The percentage of brands on Tmall in the Index’s Fashion category actually decreased from 2016 to 2017 as Coach departed from the platform, while the Watches & Jewelry category saw slight growth. As brands have been deterred by controversies over fakes on Alibaba platforms, the e-commerce giant has been making public efforts to convince them that it is cracking down on counterfeit sellers.

Although more than half of Index brands lack both DTC and Tmall sales, international fashion e-tailers such as Net-a-Porter, Yoox, and Farfetch are expanding the online availability of Index brands in China, especially in the Fashion category. A total of 83% of Fashion brands in the 2017 Index are available on Farfetch in China, while 77% can be found on Yoox and 55% on Net-a-Porter. Brands that don’t officially distribute to these sites can still easily be found online in China. This is thanks especially to the gray market and Chinese luxury e-tailers such as Secoo and Xiu.com, which source products from a range of distributors and each sell 98% of Fashion brands.

Tmall had a few luxury wins over the past year as watchmaker Tag Heuer became LVMH’s first hard luxury brand on the platform in February 2017. With several cosmetics brands already on Tmall, LVMH appears to be warming to the platform, although it is yet to be seen what the upcoming launch of its new luxury multi-brand e-commerce site 24 Sèvres has in store for China.

One e-commerce platform that remains uncharted territory for Luxury brands is WeChat. While adoption rates have grown since 2016 and brands such as Cartier, Coach, Dior, IWC Schaffhausen, and Givenchy have WeChat shops or have held limited-time WeChat sales, only 6% of Fashion brands (5% counting brands in both last year’s and this year’s study) and 14% of Watches & Jewelry brands sell through WeChat.

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