SHANGHAI — Alibaba is becoming ever more omnipresent.
Hoping to gain even more traction among Chinese consumers, the e-commerce giant is launching an event for members on Tuesday, just a week after revealing a new luxury platform within its B2C Tmall site featuring brands such as Burberry, Hugo Boss, La Mer, Maserati and Guerlain.
The eighth day of the eighth month is both fortuitous in China, where eight is a traditionally lucky number, and is pronounced in Chinese as “Ba Ba,” quite close to the name of the e-commerce conglomerate. The “88 Members” program will take the place of an existing loyalty program and will encompass users of all of Alibaba’s platforms — including Taobao, Tmall and travel site Fliggy, formerly known as Alitrip.
And on the travel front, Alibaba Group chief executive officer Daniel Zhang and Marriott International president and ceo Arne Sorenson were both on hand at a press launch Monday evening for a new joint venture, which will give loyalty members of both Alibaba and Marriott access to the benefits of each other’s programs.
According to Zhang, all of these moves are part of Alibaba’s “New Retail” strategy, which includes unstaffed supermarkets and see-now-buy-now fashion shows, and is being led by a change in consumer behavior.
“Consumers today, things have completely changed. More and more young consumers not only want to find goods and services, they are searching for a more spiritual side to stuff; they want to go everywhere in the world and have experiences,” Zhang said.
“There has been a lot of discussion about this ‘New Retail’ strategy but it all starts with the customers. Ultimately, it’s our job to bring new exposure to consumers, whether it’s a brand, experiences, services. It’s about giving consumers what they want.”
The first phase of Alibaba’s invite-only luxury platform was launched last week, offering products ranging from clothes and skin-care products to watches and luxury cars.
Luxury is key a key category for Alibaba, which drove revenues of $547 billion for merchants using its platform last year, but has been vexed by counterfeits on its marketplace. Chairman Jack Ma in June said fakes were a “cancer” on the business and that, “If people trust you, that’s the most valuable thing.”
Certainly it’s important for the marketplace to cultivate a level of trust with its luxe shoppers, who are spending big to get the real deal.
Alibaba’s “88 Members,” once they pass into the “Super 88 Member” class — Alibaba’s own data suggests there will be around 15 million consumers in this bracket from this week’s launch — will have access to a special shopfront, featuring invited brands to provide limited and customized editions, as well as special promotions for Alibaba’s biggest spenders.
Alibaba’s sustained focus on moving up the value chain and further strengthening its ties to luxury brands comes as no surprise when one considers that Chinese consumers are increasingly buying luxury goods at home rather than abroad, and they’re increasingly doing it online. This trend is expected to continue; global consultancy KPMG recently predicted 50 percent of luxury brand sales in China would be made online by 2020.
And competition for that customer is heating up. Alibaba’s biggest rival, JD.com, recently invested $397 million in specialist luxury e-tailer Farfetch, giving it access to the myriad luxury brands already partnered with the London-based platform.
Gucci and Louis Vuitton have also joined the fray with stand-alone e-commerce platforms in China, but Zhang is adamant that brands of all stripes, including from the luxury end of the spectrum, will increasingly turn to Alibaba to reach Chinese consumers, not least of all because of the company’s famed big-data operation, which allows it to draw in-depth portraits of its half-a-billion strong army of consumers.
“We have an inherent advantage because brands of all kinds serve customers on our platform, brands from all over the world, so we already have this default global alliance. We want to bring customers to these brands and the membership [program] will have a real role [in that]. We have all [the customers’] data, we know their real information, their real names and their real preferences,” he said.
Another barrier to Alibaba’s move into the luxury space — its ongoing legal spat with conglomerate Kering — came to a close late last week when the French luxury group agreed to dismiss the lawsuit filed in 2014 against Alibaba and Alipay, the company’s digital payments arm, in the U.S. district court in New York.