Tag: Taobao

  • Lazada loyalty program link to other ecommerces

    Lazada loyalty program link to other ecommerces

    A Lazada loyalty program for Singapore shoppers looks set to be expanded to other Asian markets.

    Alibaba-owned Lazada has teamed up with Netflix and Uber Technologies – the first time the companies have jointly created an online rewards program, according to Lazada CEO Maximilian Bittner.

    The program is aimed at consumers who primarily go online for shopping, entertainment, transportation and food delivery.

    Alibaba acquired a controlling stake in Singapore-based Lazada for US$1 billion last year. The “LiveUp” program links their online services, from Netflix and UberEats to grocer RedMart and Taobao marketplace.

    Consumers pay S$28 (US$20) a year for such benefits as six months of Netflix streaming, discounts on Uber rides and free delivery on Lazada or Taobao purchases. A mobile app will be rolled out in the second half of the year.

    “Singapore is the market on the cutting edge of validating what we think consumers might want, so we will focus on Singapore first,” says Bittner, who expects to add more partners.

    E-commerce in Singapore, which accounted for 0.9 per cent of total retail there in 2003, has grown from 2.4 per cent in 2013 to 4.8 per cent last year, according to Euromonitor data.

    Bittner and RedMart co-founder Vikram Rupani hatched the loyalty program over breakfast on Christmas Eve before approaching Netflix and Uber. “Their decision to do it was very fast because they have the same goal,” says Bittner.

    Uber, which entered Singapore four years ago, will offer members benefits including free rides and promotions. “This is just the beginning,” says Uber Singapore GM Warren Tseng.

  • Lazada brings Alibaba’s biggest bazaar to Singaporean shoppers

    Lazada brings Alibaba’s biggest bazaar to Singaporean shoppers

    China’s Alibaba Group has teamed up with online retailer Lazada to bring popular shopping site Taobao to Singapore, in a move to deepen the reach of the Chinese e-commerce giant into Asia ahead of US rival Amazon.

    Last year, Alibaba made headlines with a US$1 billion (S$1.4 billion) deal for control of Lazada, giving the Chinese retailer greater access to South-east Asia and closer to a goal of shedding its home-market reliance.

    The dedicated online store, Taobao Collection, went live this week, and links shoppers in Singapore directly to Taobao through Lazada’s website (taobao.lazada.sg).

    The collection targets shoppers in Singapore who want to shop directly from Taobao and are more comfortable with a local connection.

    Some 400,000 items, from electronics to home products, will be specially curated for the Singapore market, Mr Alexis Lanternier, CEO of Lazada Singapore told TODAY.

    The customised range is selected based on top selling products and customer reviews, from the existing line-up of about 1.5 billion offerings on the Taobao website, he said.

    The idea, according to Mr Lanternier, is to address some of the challenges that shoppers here face while shopping from Taobao, such as lowering shipping fees. By doing away with external agents, Taobao Collection is able to offer a flat delivery rate of S$2.99 per order.

    “Lazada is aiming at solving difficulties that currently exist when shopping from Taobao, enabling an effortless way for them to shop. The site will be translated into English (from Chinese) and shoppers don’t have to worry about shipping, payment methods and returns. Shoppers can also track their orders end-to-end on Lazada and can shop exactly as they would on Lazada Singapore,” Mr Lanternier said.

    Taobao’s entry into Singapore, according to industry players, is likely to have far-reaching implications even as it expands the playing field for e-commerce and creates a more dynamic landscape for retailers.

    “It will definitely require online retailers to continuously think on their feet to come up with new and fresh offerings, in order to keep their customers engaged. To ultimately drive Singapore’s weakening retail sector, online and offline retailers should synergise with — instead of cannibalise — each other,” said Mr Hyun Wook Cho, Qoo10 Singapore country manager.

    With more than 2.5 million registered users in Singapore, however, Qoo10 remains confident of its future prospects as an online shopping platform for Singaporeans, as it offers affordable products and understands the local market.

    “Singaporeans are highly savvy online shoppers who no longer only go for attractive prices, but also look for value-added services to have enjoyable shopping experiences,” Mr Cho added, highlighting the company’s interactive Live10 app which serves as a community chatroom where users can broadcast live demos or shopping tips to their followers.

    Meanwhile, avid shoppers in Singapore welcomed Alibaba’s move to bring its largest shopping platform much closer.

    “We now hope to have access to Taobao products much faster and expect them to be cheaper with no agents in between. Earlier, it used to take almost a month to get the products,” said 19-year-old Siglap resident Mr Nguyen Duc Thanh who buys electronic products for himself and others from Taobao at least once a month.

    “I would want to shop more now that Taobao is easily accessible through Lazada. I have always wanted to do so but given the language and other issues (related to agents), I was hesitant,” said Dakota resident Mr Andrew Fang, 30, who is keen on buying more home products.
    According to Qoo10’s Mr Cho, e-commerce players who successfully create lasting experiences that resonate with their user bases will be the ones to survive today’s increasingly competitive landscape.

  • Lazada launching website to sell Taobao products to Singapore shoppers

    Lazada launching website to sell Taobao products to Singapore shoppers

    Alibaba’s bringing its teeming Taobao internet marketplace to Singapore.

    Alibaba Group Holding and Lazada Group are teaming up to sell select Taobao products direct to shoppers in the affluent island-state, striking their first partnership since the Chinese company took control of Southeast Asia’s largest e-commerce operator a year ago.

    Lazada is launching a dedicated website that links directly to Alibaba’s largest shopping platform, said Alexis Lanternier, chief executive officer of Lazada Singapore. To start with, the new site will add 400,000 Taobao products that aren’t available now to an existing lineup of about 5 million products, he said.

    In linking Taobao with Lazada, the two are trying to ease a process that’s gained momentum in recent years. Bargain hunters in Singapore already buy directly from Alibaba’s Chinese marketplace, an eBay-like online bazaar where small merchants and individuals hawk items from electronics to bed-sheets. Its items often go for a fraction of retail prices in Singapore, the world’s most expensive city according to the Economist Intelligence Unit.

    Many people however buy through agents who help with English translations, payments and deliveries – for a fee. That’s led to problems with returns, Lanternier said. Scams may be another issue: Taobao re-joined the Notorious Markets list last year, a name-and-shame pool of global markets the US Trade Representative considers rife with counterfeits.

    Taobao can be difficult to police because it’s an open marketplace, but Lazada will take swift action to protect consumers if it’s notified of fakes, Lanternier said.

    “We want to solve those difficulties, enabling an effortless way for them to shop,” Lanternier said, sharing the new initiative for the first time. “Now it’s all translated into English and you don’t have to worry about shipping options, payment method, returning. You are going to be able to track your order end-to-end.”

    The move is another small step abroad for Alibaba, which has ambitions to expand beyond a slowing Chinese home market. The company and Lazada are now preparing to deepen their operations in the fast-growing region, anticipating Amazon.com’s entry this year.

  • Alibaba plans technology boost

    Alibaba plans technology boost

    Alibaba plans to form independent research and development teams to build up core technologies that support its vision of serving 2 billion people in the future.

    The giant e-commerce and technology company unveiled its grand plan at its inaugural tech summit, “New Technology, New Future”, at its Hangzhou headquarters in China. About 5000 engineers attended, plus thousands of other staff members, technical and otherwise, watched via live stream.

    “Alibaba’s success in commerce has outshone its light of technology over the past 18 years,” Alibaba Group chief technology officer Jeff Zhang told the summit, describing it as “a tech-driven company that seamlessly combines business and technology”.

    Over the past several years, Alibaba has rolled out a wide range technologies for an array events and business areas, including Alibaba’s 11.11 Global Shopping Festival, payments, cloud computing and logistics. Zhang said Alibaba had reached “a critical point in technology innovation” and should gear up to develop more core technologies for future success.

    Executive chairman Jack Ma said he expected Alibaba to become the world’s fifth-largest economy in the next 20 years, serving 2 billion customers, creating 100 million job opportunities and enabling 10 million businesses to make profits. To hit that goal, he said the new economy he envisioned should be built on the continuing development of technological infrastructure.

    “An economy that serves 2 billion people must be backed by solid technological capacity. To shoulder the future responsibility, we will build Alibaba’s own ‘NASA”, Ma said, referring to the National Aeronautics and Space Administration, an organisation he admires for what it has contributed to mankind through technological advances.

    “We will establish new teams to develop the core technologies of machine learning, chips, the Internet of Things, operating systems and biometric identification.”

    He said Alibaba once developed figurative “hand grenades”, but the new R&D-focussed team and mechanisms would allow it to develop “missiles”.

    Ma said Alibaba needed to have a discerning, independent eye when judging technology trends. Technology developed by Alibaba should empower people in the virtual economy, making it more inclusive and creating opportunities. Technology needed to ensure the new economy would be sustainable and lead to its participants having happy and healthy lives.

    Speaking about computers and robots, and the possibility they might one day replace or displace humans, Ma said machine learning should help humans do things that otherwise could not be done. Machines should serve as assistants to humans, rather than robbing them of human pleasure or becoming rivals.

    Alibaba has more than 20,000 engineers on staff, including more than 500 with doctoral degrees. Among its 36 partners — the group’s powerful decision-making body — nine come from a technology background.

    Alibaba has been investing in new technologies for many years, and has developed many key technologies of its own. These include…

    Cloud computing

    Apsara: A super computational engine developed by Alibaba Cloud. It offers clients powerful computing capability, robust technology services and software that can affect broader society.

    Database systems

    OceanBase: The first applied large-scale financial database system in China, developed by Alibaba Group and Ant Financial.

    Artificial intelligence

    ET: Artificial intelligence services that can be broadly applied to different areas in society. Cases include the Hangzhou City Brain master plan, which has enhanced the city transportation department’s efforts to ease traffic congestion. It has also helped Guangzhou International Airport with flight management.

    Personal recommendations: Tailored shopping pages on Taobao/Tmall with a most-suitable product recommendation for each buyer. About 6.7 billion personalised shopping pages were created during Alibaba’s 11.11 Global Shopping Festival last year.

    Ali Xiaomi: A smart personal shopping assistant on Alibaba’s e-commerce sites. About 95 per cent of daily inquiries can be handled by Ali Xiaomi.

    Ant Financial’s smart customer service: This can answer about 97 per cent of daily inquiries.

    Quantum computing/communications

    The Chinese Academy of Sciences -­ Alibaba Quantum Computing Laboratory was established in 2015. Quantum cryptographic data-transfer services became available on Alibaba Cloud this year.

    Virtual reality

    Buy+: Offers the world’s first end-to-end VR shopping experience, in which the entire transaction can be completed, from browsing, to order, to payment.

    Biometric recognition

    Facial recognition payment: Alipay enables facial-recognition payment with an accuracy of more than 99 per cent. It is listed among the top 10 technology breakthroughs this year by the MIT Technology Review.

    Alibaba is also using biometrics to recognise eye patterns, irises, palm prints and handwriting.

    Geolocation technology

    QianXun location network technology: Using BeiDou satellite technology, this can achieve a positioning accuracy of 1 millimetre.

    Operating systems

    YunOS: The world’s third-largest mobile operating system works in mobile phones, cars, TVs, tablets and other Internet of Things items.

    Blockchain

    Ant Financial has started deploying this technology for charitable donations. Blockchains are a database — an open ledger that records transactions between two parties in an immediate, secure, verifiable and permanent way.

    Smart logistics

    Alibaba’s smart-logistics technology includes last-mile delivery robot and its intelligent warehousing system.

    -Susan Wang

  • Chinese ‘Taobao villages’ turning poor communities into huge online retail hubs

    Chinese ‘Taobao villages’ turning poor communities into huge online retail hubs

    Thanks to the rapid development of China’s e-commerce industry, over 1,000 “Taobao villages” across the country are turning poor communities into huge online retail hubs, creating more than 840,000 job opportunities.
    These villages are so-named because at least 10 per cent of the population living in these rural communities makes its living by selling products online-mostly on Taobao.com, the Alibaba-owned consumer-to-consumer marketplace. The e-commerce annual turnover of each village is no less than 10 million yuan.

    By selling crafts online from their hometown of Wantou Village, Boxing county in east China’s Shandong Province, villagers made online sales of over 300 million yuan ($43.5 million) last year.

    Similarly, villagers of the Shuanglongqiao Village in Nanchong, southwest China’s Sichuan province, have allured flocks of tourists, including foreigners, to stay and experience the star-level accommodation at their houses, via e-commerce platforms.

    These villages offer a glimpse into how e-commerce industry spurs the rural economic growth and the farmers’ benefits.

    Online retail sales of China’s farm produce are estimated at 220 billion yuan ($32 billion) in 2016, up over 46 per cent over the previous year, the Ministry of Agriculture said.

    The latest figures from Aliresearch showed that there were 1,311 Taobao villages across China, and over 840,000 jobs were created by the clusters.

    Experts said that popularity of Internet and improvement of rural infrastructure have to some extent removed the bottlenecks restraining their information communication and logistics. The market potential and demands of the central and western part of China, especially those remote areas, was leveraged as a result.

    They added that rural areas have been constrained by labour outflow, poor infrastructure, low incomes and lack of competitive advantages, while an e-commerce development will help optimise market environment, upgrade industrial structure and absorb more labours.

    The profitability of e-commerce has attracted a rising number of rural residents to return home, according to statistics. Thanks to the development of e-commerce, about 12 million people left for brighter futures have come back to build up the local economy.

    The development of e-commerce, as experts believe, can be attributed to favourable policies and the rising market demand.

    The recently-released first policy statement from the central authorities for 2017, usually an indicator of policy priorities, emphasised the importance of supply-side structural reform in the agricultural sector, urging the development of e-commerce industry in rural areas.

    At the same time, e-commerce and traditional businesses have cast their eyes to the rural areas. So far, Alilbaba has expanded its services to over 23,000 villages nationwide.

    Days earlier, a strategic cooperation agreement to boost rural e-commerce was inked by Sichuan province, Alibaba Group and Ant Financial Services Group, the mobile payment affiliate of Alibaba.

    Alibaba CEO Jack Ma said that his company hopes to offer a training on e-commerce and Taobao villages to those county officials of the province, explaining that their rising awareness to develop e-commerce will guarantee the business success of the province.

    Du Yifei

  • Mall bad news but some bright spots

    Mall bad news but some bright spots

    In just over a year, clothing retailer Hang Ten has closed more than a third of its stores.

    The 12 outlets, in suburban malls, had been bleeding money. Consumers were spending less but Hang Ten’s landlords were still charging high rents, said its general manager Andrew Kee.

    “We started to close non-profitable suburban shops since Q4 2015 to reduce losses and just concentrate on a few strategic locations.”

    The days of suburban malls as the retail sector’s bright spot are coming to an end, said property consultancies.

    For the past five years, as the rise of e-commerce and growing economic uncertainty pushed Orchard Road retailers out of business, suburban malls were fairly resilient.

    Such malls could fall back on shoppers living in the area, unlike the tourist-reliant Orchard Road, which is susceptible to competition from overseas destinations and lacklustre tourist arrivals.

    The turning point was last year, when the pace of decline of suburban rents quickened – from 1 per cent quarter-on-quarter in the first quarter to 2 per cent in the fourth quarter, said R’ST Research’s director Ong Kah Seng. This is a sign that rents in suburban malls are going downhill, he added.

    But as the challenges drag on, suburban malls are being dealt a belated reality check.

    Some mall managers are fighting back by offering short-term leases, filling their spaces with food and beverage outlets, and adding more lifestyle elements to their malls.

    According to property research consultancy R’ST Research, rents of retail properties in Orchard Road fell by about 11.1 per cent on average from 2012 to 2015.

    Over the same period, rents of suburban retail spaces dipped only marginally at about 1.4 per cent.

    The turning point was last year, when the pace of decline of suburban rents quickened – from 1 per cent quarter-on-quarter in the first quarter to 2 per cent in the fourth quarter, said R’ST Research’s director Ong Kah Seng.

    This is a sign that rents in suburban malls are going downhill, he added.

    Tenants are also feeling the heat.

    Czech shoe company Bata’s country manager Pierluigi Pontecorvo said it is increasingly difficult to operate in suburban malls now, compared with two years ago.

    Footfall has reduced “drastically”, while little has been done by malls to attract customers, he said, adding that landlords were also not flexible in reducing rental costs to help retailers cope with the challenges.

    To retain customers, Hang Ten – which has 21 stores – revamped its loyalty programme in 2015.

    With online stores such as Taobao, Zalora and Lazada gaining traction, retailers that sell mass market items and clothing are finding it harder to survive.

    Malls are hence devoting more space to food and beverage, a trend that became more prominent since mid-2015, according to real estate consultancy Knight Frank Singapore.

    Its executive director and head of retail Wendy Low said F&B, on average, makes up up to half of a suburban mall’s tenants, compared to about a quarter previously.

    Mr Desmond Sim, head of CBRE Research for Singapore and South-east Asia, said suburban malls are banking on experiential elements to draw shoppers.

    Next month, Waterway Point in Punggol will launch a new party room next to the mall’s playground on the second storey, where shoppers can hold family gatherings.

    Frasers Centrepoint Malls is working with existing tenants to pilot new ideas, including temporary short-term leases or pop-up stores, said its general manager of retail properties Stephanie Ho.

  • Foreign Taobao shop owners in China share experiences and secrets to their success

    Foreign Taobao shop owners in China share experiences and secrets to their success

    Taobao.com, founded by Alibaba in 2003, has become the single most popular e-retailer in China with 423 million active registered shoppers by the end of March 2016. The figure has also far surpassed American e-commerce giants Amazon and eBay. Taobao has not only transformed China’s retail marketplace by providing products and online convenience to rural customers, but it has also created millions of jobs and alternate sources of income for private entrepreneurs, many of whom have become millionaires thanks to the country’s booming e-commerce phenomenon. Foreigners living and working in China are now hoping to get in on the action by opening their own Taobao shops, but are the cultural challenges and business hurdles facing them worth the payout?

    To glean some insight into expatriate e-retailing, the Global Times recently reached out to two foreign Taobao shop owners about their experiences and successes (or lack thereof).

    Kaikai, the Chinese name of a 29-year-old American, became a Taobao shop owner in 2012. He said that his first visit to China was in 2007, when he studied Putonghua at Peking University and National Taiwan University.

    “I can say everything in Chinese, I can also read and type the words on computers and mobile phones,” he said. “However, I didn’t dedicate my Chinese studies to handwriting as there is not much practicality for it in this day and age.”

    His excellent command of Putonghua laid a solid foundation for his future Taobao career. In 2012, Kaikai began selling household kitchen appliances, electronic devices and travel accessories on Taobao.

    He said he was inspired by Chinese friends who kept asking him to buy iPhone 4S from the US for them.

    “At that time, I had a need to convert my salary (paid in dollars) into yuan, so it was a win-win for both sides,” he said.

    Realizing the viability of this new trade, Kaikai decided to quit his job and begin selling products on Taobao full time.

    In terms of procedure, he said foreigners without Chinese partners need only a passport and the completion of a simple Chinese-language test. Like many budding entrepreneurs, Kaikai didn’t have any help at the beginning of his business.

    “I first started the business by myself, living and operating out of a youth hostel in Shanghai. From product procurement overseas, to logistics, importing, sales and final fulfillment, I controlled every step of the process,” he said. “I didn’t have anyone to hold my hand, so I had to learn everything on the fly.”

    Authentic American

    Even though he is not a native Chinese speaker, Kaikai conducted all his customer service interactions himself. “I would often send messages using Taobao’s voice function, which made the sales experience with customers a lot more intimate and congenial, because Chinese are happy to know that it’s really a foreigner communicating with them,” he added.

    Kaikai admits that his identity as an American guy selling American products in China is his biggest competitive advantage on Taobao.

    “In most of my listings, I take all the product photos and videos myself to differentiate my store from other sellers,” he said. “It’s an effective strategy to give my customers peace-of-mind knowing that they are buying authentic American products from an authentic American.”

    Fortunately, Kaikai’s efforts eventually became profitable. According to him, his store’s sales volume has increased exponentially through a combination of positive feedback, solid reputation and product expansion.

    He also attributes persistence to his success. “I see many small stores come and go because they quickly give up. But if you’re willing to dedicate yourself by putting immense focus and effort into your business, then the possibilities are limitless,” he said.

    Profiting from pollution

    Thomas Talhelm is an assistant professor of behavioral science at the University of Chicago. During his stay in China in 2013, he noticed smog becoming a crucial environmental issue and thus founded the social enterprise Smart Air Filters to promote DIY air filters as cheaper alternatives to expensive air purifiers.

    These DIY purifiers primarily consist of a fan and a high-efficiency particulate air (HEPA) filter, which are the major components of any standard air filter. To ship them to and sell them in China, Talhelm and his team set up their own Taobao store in 2013.

    “We started simple, but since then we’ve expanded to other products that we’ve personally tested and published results for, such as carbon filters for formaldehyde, pollution masks and particle counters,” he said, adding that their customer base is comprised of both expats and locals concerned about China’s worsening air pollution.

    “Opening a Taobao store allowed us to get affordable clean air options to more people in China,” he said. “Taobao is clearly the major online commerce platform in China. The choice is a no-brainer. Now there are more options with Weidian and JD, but Taobao is still huge.”

    When asked about the logistics of opening a Taobao store, Talhelm said that he registered Smart Air Filters as a Chinese company under the name of his Chinese partner, so the registration process was quite simple.

    According to Talhelm, his shop currently has five full-time employees, three part-time employees and several volunteers, most of them foreigners from different cultural backgrounds. All have good command of Putonghua, so language and culture are not barriers for their business.

    “Knowing Chinese is essential, but it’s not enough,” Kaikai countered. “Knowing what to sell, how to buy, how to arrange logistics and how to cope with customer and product issues are equally vital.”

    Talhelm himself designed his Taobao home page and wrote all the Chinese descriptions of their products. He concedes that the business didn’t take off at first, selling less than 10 purifiers in the first week.

    But with China’s “airpocalypse” making domestic and international headlines in recent years, their most popular purifier has now sold over 2,000 units.

    “Over time our open data and tests have reached more and more people, so our sales volume has also gradually increased,” Talhelm said. “Smart Air’s core idea has always been that if people just see the data, most people wouldn’t spend so much money on the expensive purifiers.”

    Trial and error

    Despite such achievements, both foreign shop owners said that they have also encountered numerous challenges and obstacles along the way.

    Kaikai explained that at the beginning he was unsure how to export products from the US into China, which required plenty of logistical research and trial-and-error attempts. “We are now shipping about 12 metric tons of goods each month via air and sea,” he said.

    Kaikai pointed out that learning how to delegate tasks to increase scalability is essential. “Initially, I was a bit of a control freak, as I wanted to control all aspects of the business to ensure the best quality service,” he said.

    “However, I realized that I had to delegate tasks, such as customer service, which is why I now have about five employees just in customer service.”

    Talhelm believes that evaluating customer feedback is extremely helpful, especially negative comments.

    “First we try to figure out what the customer is talking about. Is it true? Where was the problem? If it’s a scientific or technical question, I send data (or even run a new test if it’s something we haven’t tested),” he said.

    He added that the most common negative comment about his product is noise, which is a fundamental problem with almost all air purifiers.

    “Any machine that is pushing out air will create noise, but people want less noise. There are quiet purifiers out there, but they don’t push out enough clean air. We’re working on radical new designs for quiet yet clean filters,” Talhelm said.

    “The reality of day-to-day operations are the less glorious part of my work,” Kaikai said. “Those who can’t handle this will give up and close shop, but if you persevere and are willing to go to battle every day, then you can be a winner.”

    In terms of what administrative or promotional support he expects from Taobao, Kaikai said that he doesn’t expect Jack Ma to just hand over to foreign shop owners a magical key to the castle.

    Thus, his only expectations are for Alibaba to continue maintaining a fair, reliable – and, most importantly, trustworthy – marketplace for both buyers and sellers.

    “There are hundreds of thousands of Taobao shops; my store is just a number in the system. That’s one of the reasons why I love e-commerce in China, though, because I don’t have to deal with guanxi (connections with influential people)” Kaikai said.

    “For the most part, e-commerce in China is very transparent and a level playing field for sellers,” he said. “My success is achieved strictly through hard work and merit, not through relationships with insiders (like bricks-and-mortar stores).”

  • Four strategies of China’s top 10 e-commerce apps

    Four strategies of China’s top 10 e-commerce apps

    Pushing advertisement online and offline has been the typical strategy of China’s e-commerce giants to bring in customers, explaining why e-commerce sector is one of the toughest battlegrounds for freshly born startups since they have little money to spend on advertising. However, the trend is changing.

    As startups like Bolome, combining live streaming into cross-border e-commerce, and Yitiao, a WeChat public account-based e-commerce platform with high-quality content and storytelling around their handmade products, even the e-commerce behemoths are following the trend of live streaming and content marketing. Of course, Chinese e-commerce giants were not lazy on their investment and M&A to consolidate the market.

    Seeing the ranking, Alibaba stayed competitive in its forte, e-commerce sector. Alibaba’s C2C e-commerce platform Taobao ranked first, its B2C e-commerce platform Tmall ranked second, its second-hand retailer ranked seventh, and its electronics retailer Suning ranked the eighth. The report was jointly published by Cheetah Global Lab, Cheetah’s big data platform libra and 36kr.

    China’s e-commerce market will get even bigger, with a boost from the Chinese government. Online retail sales could reach 10 trillion yuan in 2020 as the country’s online population will pass 1 billion, growing by 7.8 percent a year from 2015, according to the 2016-2020 e-commerce development plan released by the Ministry of Commerce and other government departments. The e-commerce market will employ over 50 million people by the end of 2020, according to the plan.

    Screen Shot 2017-01-26 at 10.01.45 AM

     1. Live Streaming

    Taobao, JD and Mogujie added live streaming to their platform. Online celebrities live stream and recommend products on the video, and shoppers can click on the link while watching the video to buy the featured product.

    Online celebrities, mainly female broadcasters in their 20s and 30s, try on brand cosmetics and clothing at home. Online celebrities in overseas countries visit the local supermarket and explain each product while putting them in the cart and visit the local cosmetic shop to get further explanation of the cosmetic product from the clerk.

    2. Content is king

    Some e-commerce platforms added content-reading features to their apps, such as Taobao Headlines (淘宝头条) and JD Findings. Since Alibaba’s content cannot go on WeChat public accounts, Alibaba had no option but to come up with a content service on its e-commerce platform to encourage their customers to get to know more about their products.

    Vipshop is a Guangzhou-based online discount retailer for brands in China. After listing on New York Stock Exchange, the company reported its revenue up 38.4% YoY to 12 billion RMB (1.8 billion USD) in the third quarter of 2016.

    3. Consolidating the market using M&A and investment

    Some e-commerce companies showed consolidation. Hangzhou-based Mogujie now takes control of its previous rival Meilishuo (ranking 20th in the list) through a stock swap in January last year. Ranking 5th in the list, Mogujie was founded in 2011 by a former Alibaba engineer.

    Suning is an electronic product focused retailer in China. The company invested in Eight Days, an e-commerce startup targeting university students to get a grip of post-95 consumers in April 2016.

    4. Focusing on the second-hand market

    Xian Yu (meaning Idle Fish), a second-hand e-commerce has risen from no.10 to no.7. Alibaba spent 15 million USD to acquire Xianyu in March 2016. The customers can use their smartphones to run their stores, and add promotional voice recordings to sell their products, which makes the app more like a social app.

    Other e-commerce companies include Zhe800 and Juanpi. Pinduoduo is an e-commerce company invested by James Mi, the co-founder and managing director of Lightspeed China Partners.

  • Alibaba joins forces with counterfeited brands

    Alibaba joins forces with counterfeited brands

    Chinese eCommerce giant Alibaba has teamed up with some of the world’s most-counterfeited brands to fight against copycats.

    Collaborating with such global brands as Louis Vuitton, Samsung and Swarovski, Alibaba will provide its members with big data and other support to help them block, identify and even take down listings from its marketplaces such as Taobao and Tmall. Those two sites boast 1 billion product listings at any given time.

    In return, the brands have committed to share their anti-counterfeiting data with Alibaba.

    The move follows a lawsuit filed by the internet powerhouse against two vendors selling knock-off Swarovski watches from their online shopping bazaars on Taobao, claiming 1.4 million yuan (US$202,950) in losses. Taobao is the retail platform for smaller merchants.

    “The most powerful weapon against counterfeiting today is data and analytics, and the only way we can win this war is to unite,” says Alibaba’s chief platform governance officer Jessie Zheng.

    “Alibaba welcomes brands and other organisations to join us in what we believe is the world’s first ‘big-data anti-counterfeiting alliance’.”

    Taobao was returned to the US government blacklist of “notorious markets” last month for hosting fake items, four years after Alibaba lobbied American trade officials to drop the platform from the list.

    Listings removed

    Alibaba says it is disappointed by the decision, noting it has “proactively removed more than double the number of infringing product listings than in 2015”. The company employs 2000 permanent staff and 5000 volunteers devoted to spotting fake goods.

    According to the International Anti-Counterfeiting Coalition, a nonprofit watchdog overseeing piracy concerns, China is the biggest market for knockoffs globally with handbags, footwear, watches and iPhones topping the list of most-faked items.

    Louis Vuitton, Nike, Ray Ban and Rolex are among the labels that seem to be more intensely targeted by counterfeiters, says a report by the Organisation for Economic Co-operation and Development (OECD).

    Domestic brands also have fallen victim. Chinese liquor maker Kweichou Moutai has confiscated 300 tonnes of fake Moutai in a three-year drive against bootleggers, whose products can feature packaging identical to genuine products.

    Chinese authorities have also stepped up efforts to root out people involved in marketing fake goods, staging raids and arresting thousands of suspected offenders.

  • Meet China’s online super-consumers

    Meet China’s online super-consumers

    Like many college students in China, Song Yang buys most of the things she needs for daily life by shopping on the internet. But while her peers have to satisfy the urge to splurge with the occasional new smartphone or pair of branded sneakers, Song doesn’t worry much about living on a student’s budget.

    A finance major at Beijing’s prestigious Peking University who says she made a “pot of gold” in the stock market after being staked by her parents, Song, 21, spends upwards of $15,000 a year shopping on Alibaba Group’s Taobao e-commerce website. Her purchases range from high-end imported cosmetics, fashion apparel and consumer electronics, to Japanese snacks and organic produce, to furnishings for her family’s new apartment, to parts and gadgets for her father’s car.

    “As long as I have free time, I am on Taobao,” says Song, adding that her binge-shopping habit has resulted in up to 30 packages delivered to her home in a single day. “Whenever I have a new idea, I will search on Taobao,” she said.

    Song is the kind of China super-consumer that retailers dream of connecting with—and Alibaba Group is happy to oblige. In 2014, Alibaba recognized that out of the millions of consumers that shop in the company’s China retail marketplaces, a small percentage had adopted online shopping as a significant part of their daily lives. The company created a membership program called APASS (Alibaba Passport) to cater to their needs by assigning them personal account managers and organizing special events like wine tastings and automobile test drives.

    Alibaba top shoppers

    APASS shoppers are mostly young, internet-savvy and increasingly affluent members of China’s rising middle class. To qualify for the program, consumers must spend a minimum of nearly $15,000 a year online. That’s just the minimum. In fact, the average annual spend among current APASS members is about $45,000. In contrast, American’s millennials—defined as aged 18 to 34 with higher consumption than other demographic groups—spend about $2,000 a year online, according to a recent study conducted by BI Intelligence. During Alibaba’s recent 11.11 Global Shopping Festival, a 24-hour online sale, APASS members spent nearly eight times as much as the average consumer shopping on Alibaba’s platforms.

    Alibaba identifies candidates based on an algorithm that takes into account not only how much e-shoppers spend, but how often they shop online, the range of products purchased, credit record, and engagement in online communities.  If you think this screening limits membership to a very exclusive few, think again: There are about 100,000 APASS members.

    Fostering relationships with top customers is a time-honored marketing tactic. To Alibaba, APASS members are vanguards of an emerging consumer lifestyle in China. “They are opinion leaders who drive the consumption trend among China’s middle class,” said Zheng Dongyang, senior manager of the APASS program. To stay on their radar and cultivate loyalty, Alibaba recently upgraded APASS to foster online communities and to offer members exclusive daily deals from more than 100 top brands including Maserati, Burberry, Fissler and Estee Lauder.

    An APASS member who has recently enjoyed the perks of belonging is Hong Degang, a self-described “consumer electronics geek” who runs a wedding photography studio in the city of Wuhan. Hong, 27, was selected as one of 10 APASS members for a nine-day, all-expenses-paid trip to Italy. The mini-holiday included visits to the venues of eight top Italian brands including wine producer Mezzacorona and luxury carmaker Maserati.

    Alibaba livestreamed parts of these visits on the company’s Tmall app and video site Youku over a nine-day period. A trip to a Mezzacorona vineyard generated 400,000 views, 200,000 likes and 120,000 comments, but it wasn’t just social sharing that was inspired. According to Tmall, total sales of the online shops of the eight featured brands jumped more than fivefold over the livestreaming period compared with sales during the nine days preceding the event.

    Despite his recent exposure to Italian brands, Hong says he’ll likely remain enamored mainly with electronics gear. He says that he owns up to 20 computers and tablets at any given time, and stays immersed in his passion by reading electronics blogs on Mobile Taobao’s news channel every day while spending more than $3,000 a pop to acquire the latest cameras from Sony and Canon. He trades his used cameras and computers in Alibaba’s flea market app, Xianyu.

    “I celebrate 11.11 every day,” Hong jokes, referring to Alibaba’s giant annual online sale.

    Not every APASS member shops purely for the joy of it. Wu Xiaofang, a 41-year-old interior designer who lives in Lishui, a small city located in southern Zhejiang Province, says she is a big online spender and APASS member because she sources products for clients on Taobao.

    Wu designs exclusively for themed country inns and guesthouses that are popular in her mountainous province, so before she shops she determines whether customers want rooms done up in Chinese ancient style, American country style, French classic style or other themes. Everything is purchased online: toilets, shower kits, bathroom faucets, customized beds and wardrobes, curtains, lamps and other furnishings.

    “Taobao can always fill my specific demands,” Wu says. “I can buy second-hand antique French or German furniture on Taobao, and classic, floral-pattern tiles from ancient Chinese buildings. You won’t be able to find this unique stuff elsewhere.”

    She says she has so far finished five “Taobao inns” at a total cost of about $270,000 on all the furnishing—but admits that APASS perks encourage her to shop not just for business but for herself and her family.

    “I think everyone goes through the same journey,” she said. “When you first start online shopping, you are just curious. Later on, you kind of get addicted to it.”

  • Boom quarter for Alibaba Group

    Boom quarter for Alibaba Group

    While China’s economy goes through a sluggish patch, internet shopping mall giant Alibaba Group has announced a sparkling quarter in which profit beat expectations, its fledgling cloud computing business more than doubled sales, and its entertainment income quadrupled.

    “Our results reflect our increasing ability to monetise our 450 million mobile users through new and innovative social commerce experiences,” says CEO Daniel Zhang.

    “Beyond the strong performance of our core commerce business, we are pleased with the continued rapid growth of our cloud computing business. We also see huge potential in our newly integrated digital media and entertainment unit. By combining engaging online experiences with highly relevant content, we delivered impressive financial and operational results for the quarter. ”

    CFO Maggie Wu says the group had robust revenue growth of 55 per for the quarter ended September 30.

    “Our highly profitable and cashflow-generative core commerce business enables us to invest in our future growth areas of cloud computing, digital media, and entertainment and innovation initiatives. We expect each of these businesses to drive long-term value for both our customers and shareholders.”

    At RMB34.292 billion (US$5.142 billion), revenue increased 55 per cent year-over-year, the star sector being digital media and entertainment, which ballooned 302 per cent to RMB3.608 billion. There was also an impressive 130 per cent growth in revenue from cloud computing to RMB1.493 billion, while revenue from innovation and other sources grew 78 per cent to  RMB698 million, and revenue from core commerce rose 41 per cent to RMB28.493 billion.

    Up 23 million

    Mobile monthly active users (MAUs) on its China retail marketplaces reached 450 million in September, an increase of 23 million over June, while annual active buyers reached 439 million, an increase of 5 million from the 12-month period ended in June.

    Customers for its cloud computing business grew to 651,000 from 577,000 in the previous quarter. The operating loss from cloud computing was RMB398 million for the quarter, and adjusted EBITA loss narrowed from RMB158 million in the previous quarter to RMB57 million.

    Alibaba says its Taobao app continues to be the leading social-commerce platform, serving creative content, social-engagement opportunities and personalised shopping recommendations. Livestreamed demonstrations for fashion apparel, cosmetics, maternity/baby products, sports and activewear generated millions of daily views.

    The company says it also achieved high social engagement on the mobile Taobao platform, citing more than 6 million app users sharing their shopping experience with friends each day.

    “We continue to see strength in the consumer electronics category, with robust growth in smartphones and large appliances,” says Alibaba. “In September, Apple recognised our branding reach and distribution capability by appointing Tmall the third-party online platform for the simultaneous launch of the iPhone 7 with Apple in China.”

    In the large appliance category, Alibaba is continuing to work with Haier’s logistics subsidiary RRS, with orders from its marketplaces handled by RRS growing by more than 82 per cent for the quarter.

    Triple digits

    Alibaba has also continued to make strong progress in the FMCG category, with personal care, food, and mother and baby being among the top growth categories. Its Tmall Supermarket has seen its volumes grow by triple digits year-on-year.

    “Multinational FMCG brands are working with us as the partner of choice, not only to drive their transaction volume, but also in the areas of brand building, channel expansion and product launches to grow their presence in China.”

    During the year Alibaba launched innovations around livestreaming, AR and VR to drive consumer engagement. Examples include a livestreamed “See now, buy now” fashion show watched by 7 million viewers on Taobao, Tmall and the Tudou and Youku apps. Alibaba also integrated the omni-channel shopping experience at more than 60,000 offline storefronts, including Gap, Uniqlo and Intime department store.

    A pilot program has been introduced to help global merchants sell beyond China. Hong Kong and Taiwan are the first markets outside the mainland.

    Alibaba Cloud hosts and provides security products and services for more than 35 per cent of China’s websites, says the company.

  • Alibaba tipped to record solid quarterly revenue growth

    Alibaba tipped to record solid quarterly revenue growth

    Alibaba Group Holding, the world’s largest e-commerce company, is expected to report another strong quarter of sales in the three months to September 30, as its preparations intensify for the Singles’ Day online shopping festival next week.

    Analysts estimated New York-listed Alibaba’s total second-quarter revenue for its fiscal year that ends March would increase about 50 per cent year on year.

    “We model total revenue to grow 51.7 per cent to 33.64 billion yuan (HK$38.55 billion) versus [market analysts’] consensus estimate of 33.94 billion yuan,” Alicia Yap, the head of regional internet research at Citi Research, said in a report published ahead of Alibaba’s earnings announcement on Wednesday.

    Yap estimated Alibaba’s gross merchandise volume, the total amount of goods sold through the company’s vast online retail platforms, to have grown 22 per cent year on year to 872 billion yuan in the past quarter.

    Citi maintains a “buy” rating on Alibaba shares, and has raised its target price to US$133, up from the previous US$112.

    In an open letter to shareholders early this month, Alibaba chief executive Daniel Zhang Yong said: “During fiscal year 2016, our China retail marketplaces reached a historical milestone when annual gross merchandise volume transaction surpassed 3 trillion yuan, making Alibaba Group the largest retail ecosystem in the world.”

    In the three months to June, Alibaba reported a 59 per cent year on year jump in revenue to 32.15 billion yuan. The gross merchandise volume transacted on its China retail platforms rose 24 per cent to 837 billion yuan.

    Alibaba, which owns the South China Morning Post, runs four business segments – core commerce, cloud computing, digital media and entertainment, and innovation initiatives.

    Citi estimated Alibaba’s revenue from its core commerce business would reach 28.18 billion yuan in the quarter to September, up from 27.24 billion yuan in the quarter to June.

    That segment comprises the China and international online marketplaces operating in retail and wholesale commerce, including Taobao Marketplace, Tmall.com, Juhuasuan, 1688.com, AliExpress and Lazada.

    Citi predicted Alibaba’s cloud computing revenue would reach 1.56 billion yuan in the three months to September. Led by subsidiary Alibaba Cloud, it had revenue of 1.24 billion yuan in the quarter to June.

    Digital media and entertainment revenue was estimated by Citi to have reached 3.35 billion yuan in the past quarter. This segment, which includes UCWeb and Youku Tudou, had revenue of 3.13 billion yuan in the June quarter

    Alibaba’s innovation initiatives segment was forecast by Citi to have posted revenue of 550 million yuan in the three months to September, compared with 535 million yuan in the June quarter. This segment includes the YunOS mobile operating system and web mapping and navigation software AutoNavi.

    We want to offer a large variety of daily necessities to the city’s consumers

    Daniel Zhang Yong, Alibaba chief executive

    Last week, Alibaba said its introduction of the Singles’ Day shopping extravaganza and the Tmall.hk platform to Hong Kong would ramp up e-commerce services outside the mainland.

    “We want to offer a large variety of daily necessities to the city’s consumers,” Zhang said at the launch of Alibaba’s 11.11 Global Shopping Festival in Hong Kong.

    That kicked off a flurry of activities ahead of Singles’ Day, an annual event held on November 11 that will see billions of dollars of goods transacted on Alibaba’s online retail platforms within 24 hours, making it the world’s biggest online shopping event.

    At last year’s 11.11 festival, Alibaba posted a 60 per cent year on year increase in gross merchandise volume to 91.2 billion yuan.

    Daiwa Capital Markets analyst John Choi said in a report that sentiment on Alibaba was positive as “most investors now seem to have a better understanding of Alibaba’s ecosystem”. Daiwa has a “buy” rating on Alibaba.

  • Can This British Retailer Conquer China?

    Can This British Retailer Conquer China?

    New Look, a fast-fashion retailer bearing a striking similarity to Forever 21, is aiming to boldly go where many chains have gone before but few have succeeded.

    The British retailer’s chief executive officer, Anders Kristiansen, has made no secret of his intentions in China, announcing plans in June to open 50 more stores there by March, which would bring its total number of locations in the Asian nation to 150. That’s 10 times the number of stores it had in China in 2015. But a Reuters report last Thursday revealed that New Look’s owner, South African billionaire Christo Wiese, has a more ambitious expansion in mind—500 stores within three years.

    New Look currently has more than 850 stores around the world, two-thirds of which are in the U.K. Despite a challenging first quarter that saw revenues fall 4.2% to 354.2 million pounds ($431.9 million), Kristiansen insisted the retailer would stay the course in China, where there had been a “strong local reaction to our affordable, fast-fashion offer.”

    According to Reuters, Wiese plans to conquer the Chinese market using a local-for-local manufacturing model, meaning most of the clothing it will sell in China will be made there to ensure locally relevant products are delivered to stores quickly. It’s a sourcing strategy that Zara owner Inditex has down to a tee and many other companies, including Under Armour, are trying to replicate around the world.

    “South Korea and Japan drive a lot of the trends that the Chinese customer seeks, so our ability to be able to identify those trends, source them locally and get them into our stores quickly is key,” Sven Gaede, managing director of New Look’s international business, told Reuters, adding that 85 percent of what the retailer already sells in China is made there.

    Local sourcing aside, some experts are skeptical about the retailer’s bullish growth plans. Franklin Yao, managing partner at strategy consultants Smith Street, described them as “virtually impossible,” noting that New Look is unlikely to find 500 empty retail stores, given the fact that H&M and Uniqlo also want to open hundreds more locations in China in the coming years.

    That being said, Chinese consumers are notoriously fickle and several big-name brands have failed to gain a foothold there, including Gap, Marks & Spencer and Walmart. In an effort to test the waters before committing to a brick-and-mortar presence, most international retailers first launch on the likes of JD.com or Alibaba’s Tmall and Taobao.

    But New Look appears to be covering all its bases in China: After opening its first locations in Shanghai and Beijing in February 2014, it launched an online store on Tmall seven months later and debuted on JD.com earlier this year.

  • This Retail Tycoon Wants to Open 500 Stores in China in Three Years

    This Retail Tycoon Wants to Open 500 Stores in China in Three Years

    As Europe’s fashion giants brace for what could be the toughest leg of their expansion in China, a South African retail tycoon has launched a bold assault on the world’s most populous nation.

    Christo Wiese is promising to open 500 of his New Look stores in just three years, catapulting the British brand into the same league in China as the world’s top fashion chains – Spain’s Inditex and Sweden’s H&M.

    His plan is to make most of the clothes in China to ensure they cater to local tastes and can get to stores quickly – a strategy similar to the one successfully pursued in Europe by Zara-owner Inditex.

    The arrival of New Look – and its local sourcing strategy – poses a new risk for the likes of H&M and Inditex, already suffering from slower growth in China, fierce competition for real estate and the cost of investing in ecommerce.

    H&M is opening more stores in China this year than anywhere else in the world and the country is already the second biggest market for Inditex outside Spain.

    China is a big draw for retailers who hope to tap the aspirations of a fast-growing middle class, with mid-range names benefiting as consumers trade down from luxury brands since Beijing’s clampdown on corruption and conspicuous spending.

    But recent history offers plenty of examples of failure. Western brands that have struggled in China include Gap Inc , Abercrombie & Fitch and Marks and Spencer , which decided last year to close five stores in smaller cities to focus on flagship stores in large cities and online.

    “Most of the Western fashion labels that are mid-range fail in China. A large part of it is that the styles and the fit are so completely different,” said Shaun Rein, founder of market intelligence firm China Market Research.

    LOCAL TASTES, LOCAL SOURCING

    New Look, a chain founded in 1969 and bought last year by Wiese’s investment vehicle Brait SE, does not want to make the same mistake. It now runs 94 stores in China, out of a global total of 852, and hopes to have up to 150 by next March.

    “I will definitely give it a try if it is a foreign brand and as long as I like it,” said Chen Jie, a 32-year-old businessman from Shenzhen who was carrying an H&M bag in a shopping district in Hong Kong. “Price is not an issue but the design and quality must be good.”

    While New Look is cashing in on the popularity in China of British style – it is adding the “London” tag to its logo for its Chinese stores and website – it is also catering for local tastes.

    Sven Gaede, managing director of New Look’s international business, says the firm has an advantage over many European rivals as 85% of what it sells in China is sourced locally and more than a third is designed exclusively for China.

    That has allowed New Look to tap into the current popularity in Asia of culottes – flared, three-quarter length trousers. Gaede said they account for 12% of the firm’s sales in China, though they are not popular in its European markets.

    “South Korea and Japan drive a lot of the trends that the Chinese customer seeks, so our ability to be able to identify those trends, source them locally and get them into our stores quickly is key,” said Gaede.

    That helps explain the success of the Uniqlo chain of Japan’s Fast Retailing in China, which already has almost 500 stores in the country and is aiming for 1,000 stores in about five years – more than in Japan.

    “It’s pretty hard for the foreign fast brands to do the localisation that Uniqlo does in China as it was born with the Asian gene,” said Violet Shen, a marketing executive in Shanghai.

    The “fast fashion” model was pioneered by Inditex, which can bring new styles from the catwalk to stores in Europe within days from factories mostly in Spain and North Africa. However, Inditex does not have the same advantage in China.

    Inditex plans to add 60 stores in the next few years to the 582 it already runs in China, but it serves them from its logistics centres in Spain.

    “As their proportion of sales increases in the East, it challenges this model. You can’t hub out of Spain,” said Dominic Jephcott, chief executive of supply chain experts Vendigital.

    New Look is not the first Western retailer to try to bring the Inditex model to China.

    Denmark’s Bestseller, which runs brands like Vero Moda and Jack & Jones, says over 90% of its products sold in China are also produced in China and most of the designs for the Chinese market are adjusted to local tastes.

    That has helped the family-owned firm to become the clear leader in China, with more than 6,800 stores in over 300 cities, to give it a 2% share of the fragmented market, according to market research firm Euromonitor.

    Anders Kristiansen ran the China business of Bestseller before taking over as New Look chief executive in 2013. Gaede said Kristiansen’s experience in Asia is one of the reasons behind the group’s aggressive expansion strategy.

    H&M also buys many of its garments in China – the country accounts for about a quarter of its global sourcing.

    But the Swedish firm does not make a big point of adjusting its ranges for China, where it has opened 47 stores in the last nine months, taking its total to 400.

    “We see that fashion becomes more and more global and that China doesn’t differ much from the rest of the world regarding trends and fashion,” said investor relations head Nils Vinge.

    “There are of course local differences but that is true for every market. H&M has a business model that can adapt to this,” Vinge said, declining to elaborate.

    Rein of China Market Research says Western brands must strike a delicate balance.

    “You have to keep your global brand image and you can’t be that creatively different in China than other markets. The Chinese travel around the world,” he said. “It is good to localise. But it hard to localise an aspiration.”

    STORES VS ECOMMERCE

    A bigger challenge for New Look may be to secure the right locations, especially as rivals also seek to add hundreds of stores in the coming years.

    “To find 500 stores of real estate and roll that out in the right way … I think it is virtually impossible,” said Franklin Yao, managing partner at strategy consultants Smith Street.

    But the more established New Look’s brand becomes in China, Gaede said, the better the locations and terms it will be offered, adding that the firm was now pushing into smaller cities.

    “We are less wedded to the number each year and we are more wedded to getting quality locations,” he said.

    Meeting soaring Chinese demand for buying clothes online is also tough.

    Most international brands initially launch on Chinese ecommerce sites like JD.com and Alibaba’s Tmall and Taobao, but are keen to build up their own online operations to protect margins and integrate ecommerce and store services.

    New Look is currently available on Tmall and JD.com, but plans its own transactional site in the next 12 to 18 months.

    Partnering with Chinese sites and local payment and delivery service providers is essential to reach consumers across such a vast country, said Vendigital’s Jephcott.

    “It is a hard physical push and a very hard digital push, all premised on a strong relationship with the logistics partner like Taobao,” Jephcott said, noting that Taobao has established a delivery network of micro-stores even in small towns.

  • After Death of Thai King, Luxury Market Wavers

    After Death of Thai King, Luxury Market Wavers

    Following a decade of declining health, 88-year-old King Bhumibol Adulyadej of Thailand, the world’s then-longest-reigning monarch, passed away in Bangkok on October 13. The king’s untimely death concluded a reign that lasted more than seven decades and initiated a year-long period of mourning, bearing substantial consequences for the nation’s luxury and fashion sectors.

    As declared by Prime Minister Prayuth Chan-ocha, leader of the junta that has ruled the country since 2014 after seizing power through a bloodless coup d’état, civil servants will be expected to wear “sombre-coloured” attire for the duration of the mourning period, while the rest of the population has been ordered to “tone down” or cancel entertainment and “joyful events” for at least the next month.

    Though the first full week of mourning has yet to pass, the consequences are already being felt. “I think [the fashion and luxury sectors] are definitely going to suffer — there will be a drastic decline in consumers of fashion brands,” predicts Kullawit ‘Ford’ Laosuksri, editor-in-chief of Vogue Thailand. “For example, I have spoken to a distributor of Kate Spade and Valentino, and they said that they had to re-estimate their Spring/Summer orders … The tourist and retail sectors are going to see a decline in sales — that is something the whole nation is afraid of.”

    Indeed, many of these fears are justified. “Retailers and hotels cancelled all promotions and activities related to sales and events during October to November,” says Anisa Ngandee, an analyst from Euromonitor. “Generally, the last quarter is usually the peak tourism period and the months where retailers [see] festive spending [during the] holiday seasons; thus, it will have a short-term impact on the retailers and hotels sales.”

    Regarding his publication, Laosuksri says, “There’s nothing we can do for the November issue, [but] for December issue, we are definitely going to decrease the print run, [while] a lot of traditional advertisements will be — if not in black and white — condolence messages.”

    From a Western perspective, the extent of mourning may seem extreme, but King Bhumibol’s reign was unique. For most Thais, life under Bhumibol is all they have ever known. “I and all the Thai people view this passing of the king as something that is quite personal as if somebody from our family has passed,” says Laosuksri. King Bhumibol’s heir, Crown Prince Maha Vajiralongkorn, has delayed his ascension to join the Thai people in grieving for his father; however, the country’s general election will go ahead as planned in late 2017.

    In recent years, the Thai luxury market has shown tremendous promise, growing 8 percent year-on-year from 2015 to 2016, reaching a total value of nearly $1.6 billion, according to Euromonitor. This can partly be attributed in part to the country’s young, wealthy upper-middle class. According to Digital Luxury Group,a business intelligence firm headquarted in Geneva, 20.5 percent of consumers who earned $150,000 or more in 2014 fell into the 30-34 age bracket, while another 18.6 percent fell into the 35-39 bracket, giving luxury brands and retailers ample space to penetrate the Thai market.

    The tourist and retail sectors are going to see a decline in sales — that is something the whole nation is afraid of.

    Nevertheless, despite this wealthy domestic consumer base, tourism still plays a significant role in sales of luxury goods. According to Bain & Company’s 2015 Global Luxury Goods Report, “Thailand [is a] top performer [in the Southeast Asia market] thanks to Chinese flows with strong potential going forward.” Just two days before the death of the king, Thailand’s biggest retailer, Central Group, announced expectations of a 21 percent rise in revenue to 320 billion baht ($9.17 billion) for fiscal 2016; sales at Central stores to foreigners rose 15 percent while transactions with domestic consumers merely increased by 5 percent.

    Given the immediate decline in the domestic demand for luxury goods, the Thai government must now tighten their dependence on the tourism sector to offset regressions, as retailers scramble to compensate losses in sales. “[The fashion industry] is very much going to depend on tourism; therefore, I think the government will be trying their best to promote it … after the one-month period,” predicts Laosuksri.

    If Laosuksri’s forecasts are correct, the Thai government will need to amplify its current efforts to engage Chinese tourists. “Thai authorities are leveraging Mandarin websites and KOL (key opinion leader) representation in China to promote the destination,” says Thibaud Andre of Daxue Consulting, a market research firm based in China. “[They] are strongly pushing their domestic practitioners to be more educated on Chinese culture and basic Mandarin, as well as [to increase activity] on Chinese platforms such as Wechat, Weibo or Taobao.”

    Despite the negative image of Chinese tourists in Thailand and controversy surrounding the recent crackdowns on “zero-dollar” budget tours targeted at lower-income tourists from China earlier this month, according to the Siam Commercial Bank, the average daily expenditure per person amongst Chinese tourists has grown to 5,748 baht ($164.1) in 2015, from 4,425 baht ($126.4) five years prior. In terms of purchasing power, foreign shoppers, especially Chinese tourists, have become a cornerstone of the Thai luxury market.

    In data provided by Thailand’s Department of Tourism, from January to August of this year, approximately 6.6 million tourists from China visited Thailand — more than from Europe, the United States, Australia, Africa and the Middle East combined – with nearly two million arriving between January and February 2016 alone, an especially high-traffic period for the Lunar New Year.

    In the near future, Thailand’s luxury retail market may face several hurdles in sustaining recent growths in sales — particularly given the country’s strict lèse-majesté laws and the increasing risk of ultra-monarchist violence in the capital deterring inbound tourists from mainland China. “In the short term … we already lowered our expectations to 10.5 million visits for 2016 due to the mourning period,” says Andre. “Chinese agencies are already refunding their clients and tour operators are cancelling trips.”

    While the short-term forecast may seem turbulent, market analysts remain positive about the future. According to Ngandee, “In the long term, with the development of infrastructure, expected number of tourists are projected to be positive; [compounded with] the expansion of Thai middle-income population, industries are generally looking forward to more optimistic performances.” Nevertheless, Euromonitor suggests that stability still remains contingent upon next year’s government election.

    However, the country has shown resilience during previous political and social upheavals, and many Thai industry insiders like Laosuksri maintain a sense of hope in this period of uncertainty.

    “Euromonitor projects that more than 12 million incoming Chinese tourists at the end of 2020, [and] Thailand is expected to remain among the top destinations and might overtake the second hit destination [for outbound Chinese travellers] at the end forecast period,” assures Ngandee.