China Watch Report


Alibaba: a game-changing alliance with Richemont

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November 2019


Alibaba: a game-changing alliance with Richemont

Tmall is hoping its strategic cooperation with Yoox-Net-APorter will attract distribution and increase sales of watches on its dedicated luxury platform. We interviewed Lili Chen, general manager of Tmall Luxury Pavilion.

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mall is the leading digital marketplace in China, connecting thousands of merchants with millions of consumers. Basically, you can order anything on the platform, at any time. This includes luxury timepieces. In an effort to build more trust with the high-end segment, which is wary of counterfeits and the grey market, Tmall is hoping its strategic cooperation with Yoox-Net-APorter will attract distribution and increase sales of watches on its dedicated luxury platform. We interviewed Lili Chen, general manager of Tmall Luxury Pavilion.

Lili Chen, general manager of Tmall Luxury Pavilion
Lili Chen, general manager of Tmall Luxury Pavilion

Could you share some key facts and figures about the watches sold on Tmall Luxury Pavilion?

We currently host various international watchmaking stores such as Longines, Breitling, TAG Heuer and Zenith. We also host an Omega pop-up store, offering a dedicated limited collection for the Beijing Winter Olympic Games. In total, there are around one thousand watch brands on Tmall. Their presence spans the range from flagship stores operated by the brands directly, to wholesalers, with speciality stores representing the main business models currently operating on Tmall. Although we don’t share specific sales figures, we have seen high growth, particularly in the accessible luxury and super luxury segments.

China delivered more than half the global growth in luxury spending between 2012 and 2018.

Why did you create a distinct entity for luxury brands on Tmall?

We launched Tmall’s Luxury Pavilion in 2017 to address the growing demand of Chinese consumers for premium products from international brands. Chinese consumers are set to contribute almost two-thirds of global growth in luxury spending. According to studies by McKinsey and Bain & Co., China delivered more than half the global growth in luxury spending between 2012 and 2018, and is expected to deliver 65% of the world’s additional spending by 2025. International high-end brands cannot afford to ignore this market.

Who are the watch sellers on the platform?

On Luxury Pavilion, the brands own and operate their stores directly. We provide them with the technology infrastructure, the consumer reach and unparalleled insights into the Chinese market, and ultimately every brand chooses how to establish its presence and shape its positioning in the way that suits it best. The most important thing for the brands is to reach and connect with the younger generations who were born on the internet and are highly connected to digital devices. For them, e-commerce is not just an option, it’s part of their lifestyle.

Last year you announced a global strategic partnership with Yoox Net-A-Porter (Richemont). What is the scope of your cooperation?

It aims to bring their retail offerings to Chinese consumers. Under the collaboration, Yoox Net-A-Porter and Alibaba will establish a joint venture to launch two mobile apps for multi-brand, in-season online Net- A-Porter and Mr Porter stores for consumers in China. In addition, the joint venture will launch Net-A-Porter and Mr Porter online stores on Alibaba’s Tmall Luxury Pavilion. We will provide technology infrastructure, marketing, payments, logistics and other technology support to the joint venture. The partnership will also leverage Yoox Net-A-Porter’s strong relationship with leading luxury brands, some 950 of which are currently distributed through the company in China.

“Digitising and fully integrating the retail value chain from merchandising and marketing to payments and last-mile delivery.”

What is the plan in the longer term?

Together, we will also explore future offerings that enable the joint venture’s customers to enjoy unique and seamless online and offline shopping experiences. This means digitising and fully integrating the retail value chain from merchandising and marketing to payments and last-mile delivery. We will focus on serving consumers in China and will extend to Chinese consumers travelling abroad.

How has your general relationship with Swiss watch brands evolved?

For various reasons, luxury brands, including watchmakers, have been traditionally reluctant to embrace the digital transformation, mostly as a result of a desire to avoid diluting their brand equity. However, in general, luxury brands and watchmakers have realised that if they want to expand their footprint in China and engage with new, younger generations of consumers, they necessarily have to understand the market and work with a trusted partner like Tmall to build their presence, both online and offline.

More than 180,000 brands across many categories do business with the nearly 700 million consumers on Alibaba’s marketplaces every day.

Nevertheless, a number of CEOs are complaining that there are still too many parallel actors and counterfeits on the leading e-commerce platforms in China…

More than 180,000 brands across many categories do business with the nearly 700 million consumers on Alibaba’s marketplaces every day. This is a testament to the trust brands and consumers have in us. Alibaba’s IP protection policy is simple and clear. We respect and protect all IP and require all sellers on our platforms to do the same. Our IP protection systems and technologies are among the best in the industry and we are always looking for ways to improve them. All actors in the chain of commerce – brand owners, ecommerce marketplaces, merchants, manufacturers, and even consumers – have critically important roles to play, as do law enforcement authorities, regulators, legislatures, and other government bodies.

Do you have plans to open physical stores dedicated to selling watches?

We consider the separation between channels to be obsolete. Alibaba is reshaping the future of commerce, and we launched our “New Retail” strategy in 2016, looking at the great potential for online and offline retail to exist in synergy rather than in opposition. That is why our partnership with brands goes beyond the online environment to look at the consumer experience as a continuum. Tmall Luxury Pavilion is an online platform, but we help brands to better understand and connect with consumers, including for instance issuing targeted invitations to customers to visit their physical stores.