While Alibaba has spent years working to attract top international luxury brands to its B2C e-commerce platform Tmall, its success so far has been modest. But Swiss watchmaker Tag Heuer’s recent Tmall launch signals that French luxury behemoth LVMH is now open to working with Alibaba in the luxury sphere, which could encourage more high-end sellers to set up shop in the future.
Starting with premium beauty brands, LVMH has been upping its Tmall presence over the past year. Tag Heuer’s Tmall e-flagship opening in mid-February made it the fifth LVMH-owned brand to officially join the platform, marking a turning point as the conglomerate’s first hard luxury brand to do so following the launches of Guerlain, Make Up For Ever, Sephora, and Rimowa.
Tag Heuer’s Tmall presence is ahead of the curve compared to other brands in the Watches & Jewelry category benchmarked by L2. According to L2’s data, only 27% of brands in this group maintain Tmall shops. This number is boosted by the presence of Chinese brands in particular, including Chow Sang Sang and Chow Tai Fook, while the majority of European brands remain reluctant.
LVMH has previously shown resistance to the idea of selling fashion, watches, or jewelry on mass e-tailers anywhere in the world—in October, its CFO stated that there would be “no way” it would place its luxury brands on Amazon. But it has been more willing to sign up its beauty brands on these types of platforms, initially launching Sephora on JD.com in May 2015 before the eventual expansion to Tmall. This marked a turnaround after it had shuttered its Benefit Tmall store in 2012. Its growing willingness to sell cosmetics on Tmall is part of an industry trend—L2’s Digital IQ Index®: Beauty China found that 73% of premium beauty brands are now on the e-tailer.
Luxury brands’ reluctance to join Tmall has come not only from a perception of a mass-market image, but also from concerns over counterfeit goods on the platform. Alibaba has faced several challenges in this regard in the past year, including the revocation of its membership offer to the International AntiCounterfeiting Coalition as well as the return of its C2C platform Taobao to the United States Trade Representative’s blacklist of “notorious marketplaces” for fake goods.
As Alibaba has responded with a host of new initiatives to boost its counterfeit reporting and takedown program, LVMH has been supportive of the process. The company joined Alibaba’s new “Big Data Anti-Counterfeiting Alliance” in January this year, and reportedly invited Alibaba’s VIP members from its APASS program (those spending more than $45,000 a year) to visit its headquarters in France.
LVMH’s approach toward Alibaba’s counterfeit issues has leaned more toward cooperation than that of some of its competitors. Rival French luxury conglomerate Kering has opted to take legal action, as several of its brands including Gucci and Yves Saint Laurent sued Alibaba in U.S. court last year, alleging that Alibaba had partnered with counterfeit sellers on its platforms. Part of the suit was dismissed in August. LVMH has taken legal action regarding counterfeits on Alibaba platforms as well, but filed against Taobao counterfeit sellers directly rather than Alibaba itself.
In spite of these setbacks, Alibaba continues to court international luxury brands, and set up a “luxury flash sales channel” in April 2016 with Mei.com. So far, luxury brands and items on Tmall have generally fallen into the accessible category across sectors, including not just cosmetics but also cars and fashion. As the Tag Heuer launch is a further sign of this trend, LVMH may have opened the floodgates for international accessible luxury brands on Tmall in the future.
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