What Travel Brands Can Learn From Alibaba’s New Luxury Marketplace

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Despite the popularity and discussion surrounding the Chinese consumer in recent years, it is still a developing market worth watching and studying for nuanced changes and opportunities.
— Samantha Shankman

China’s $751 billion e-commerce market took a leap forward this summer with the introduction of two new luxury platforms.

Earlier this month Chinese e-commerce giant Alibaba Group launched Luxury Pavilion — a invitation-only platform dedicated to premier brands housed within its business-to-consumer site T-mall. The minimum spending requirement is $15,000 a year, but Alibaba’s top spenders buy an average of $45,000 worth of goods annually.

Mirroring Alibaba’s efforts to cater to a ultra wealthy online shoppers, its main competitor JD.com introduced a white-glove delivery service with which purchases can be hand-delivered by black-tie staff.

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“Luxury Pavilion is of course much more content-driven while Tmall is a platform with tons of products like Amazon,” explains Louis Houdart, Chinese branding and creative agency Creative Capital China.

The new platforms come at a time in which the global luxury market is forecast to grow just 2 to 4 percent — much slower than in previous years prompting luxury brands to overcome their perceptions of Chinese e-commerce.

Luxury brands have previously been vastly underrepresented on China’s main e-tailers such as Alibaba’s T mall and JD.com. According to L2’s recent report Luxury China, 100 percent of consumer goods brands have an official presence on T mall and 98 percent on JD.com. In comparison, only 24 percent of luxury labels are on T mall and 10 percent are on JD.com.

This is due to a public perception that China’s online retailers are meant only for the mass market as well as fears of counterfeit sellers and sales.

Luxury sales however are increasingly moving to the mainland. Tighter customs controls are putting a limit on foreign shopping and unauthorized sales, and simultaneously stimulating domestic sales.

Luxury travel brands do no have the same concerns as luxury goods providers. They do not have to worry about the logistics that retailers selling directly to consumers in China loose sleep over. Travel providers can sell their services, but the experience often happens in another country. Travel providers have to consider marketing and payments, but not shipping or delivery.

There are other options for travel providers outside of these channels.

“I am personally amazed by WeChat, which combines the best of all worlds: Content, community feeling and commercialization,” explains Houdart, who highlights Peninsula Beijing’s first WeChat shop featuring goods and services from Mooncakes to spa treatments and dinner coupons.

That said, there are still lessons for luxury travel brands in the industry shift that comes with these new platforms.

Exclusivity

Exclusivity is a major motivator for luxury Chinese consumers. That is why Luxury Pavilion is an invite-only platform for only ultra-rich consumers or members of Tmall’s members club for top online shoppers. Only this select group of consumers can even see the entry-point to the online Pavilion, according to Jing Daily.

Personalization

The shopping experience is more customized. Consumers’ personal information is used to create personalized home pages, customized brand pages, product recommendations, VIP awards, and post-purchase customer service.

“While big was once beautiful, niche is now beautiful. The scale of the China market makes it a fantastic opportunity for a so-called niche brand as you can be niche and still quite large. It is also a way to be perceived as less commercial and more personalized,” says Houdart

Omnichannel

The new platform will be more interactive using augmented and virtual reality to imitate a real-life shopping process. The luxury pavilion is part of a larger “New Retail” push from Alibaba that seeks to create an omnichannel shopping experience that combines aspects of online and offline commerce to meet younger shoppers’ diverse and multi-layered expectations.

“It is what Jack Ma from Alibaba calls the new retail, which is not about e-commerce, not about retail, but a blend of both worlds,” sums up Houdart.

It’s not impossible to travel brands to replicate this. Technology providers such as SaleMove seek to replicate the in-store shopping experience by helping companies identify high-value website visitors, communicate via chat or video and provide personalized guidance through co-browsing.

It’s worth noting that Alibaba has a platform exclusively for travel. Fliggy, formerly known as Alitrip, has partnerships with Western travel companies such as Marriott International and Norwegian Cruise Line.

By Samantha Shankman Courtesy Skift

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