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Translated by
Cassidy STEPHENS
Published
Nov 10, 2022
Reading time
4 minutes
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Alibaba: the Luxury Pavilion between metaverse and "live shopping" to seduce Chinese millennials

Translated by
Cassidy STEPHENS
Published
Nov 10, 2022

On the occasion of the 11.11 discount period for "single day", a major commercial event in China, Alibaba is celebrating the fifth anniversary of its space dedicated to luxury and premium products. The Luxury Pavilion has attracted some 200 major Western brands, including LVMH, Richemont, Kering, Chanel and Hermès. Brands that come to target Chinese millennials. This has led to "live shopping" and the metaverse taking an increasing importance in the Chinese giant's strategy.


Luxury Pavilion


The pavilion is a separate space on Tmall, a generalist platform that attracts 800 million customers around 290,000 brands. While the Tmall Luxury Pavilion is only intended to capture a fraction of this audience, the space has nonetheless seen a 153% acceleration in its number of active consumers between 2019 and 2021, while business volume is said to have exploded by 309%, including the activity of Yoox Net-a-Porter and Farfetch, which have joined the Pavilion. It must be said that, since the beginning of 2020, Pavilion has benefited from a strong return of Chinese luxury consumption.

Deprived of the trips during which they massively indulge in the purchase of luxury products, Chinese consumers have since made 90% of their luxury purchases from the Middle Kingdom. "To this phenomenon is added another: the accelerated digitalization of luxury houses, which has made China a laboratory whose lessons are applied to the rest of the world," explains Nicolas Cano, Pavilion's development director.

For the manager, the Pavilion is of particular interest to brands because 67% of its customers are Chinese millennials. And above all, it is among the youngest millennials that Alibaba sees the strongest increases, as Cano points out. In addition, 17% of its customers are Gen Zs, up two points between 2020 and 2021. "This raises many questions about the right ways to engage different audiences respectively" points out the development director.

Metavers and liveshopping



Among these ways of engaging the new luxury consumer, Alibaba can rely on its long-term experience in virtual and augmented realities, which today has naturally led it to the metaverse. On the occasion of its traditional 11.11 discount period, the Luxury Pavilion will rely for example on a "virtual influencer" named Timo. This avatar will be in charge of promoting the products of the different partner brands. Especially "3D digital collectibles", a home-made variation of the NFT concept, without commercial value, and compatible with Taobaolife, Alibaba's own metaverse.


Timo, the Luxury Pavilion's new virtual influencer - Alibaba


"In the light of the metaverse, there is a fundamental trend which is the considerable growth in the use of virtual idols", says Cano. "It is in this logic that we have just launched with the Damo Academy (Alibaba's research institute) a virtual marketplace in the form of a digitalized shopping avenue, which consumers can visit through their avatars. And there is our Meta Pass, which gives selected customers priority on certain product releases and events."

Easier for brands to develop at the moment, live shopping is also becoming an increasingly important marketing tool for Luxury Pavilion. These direct commercial events now take three forms: live streaming open to all, "One to few" events, which consumers selected via the platform's data are invited to (a concept notably adopted by Vacheron-Constantin), and "One to One" events. The latter approach, tested this year by Cartier and Burberry, allows for personalized sessions for a single customer, who is put in touch with a brand or a designer.

"This is done from a studio, or a space set up in a boutique, which is done a lot in China today," explains Cano. "It becomes almost a one to one VIP space, just like when a customer enters a store. This specific approach combines the best of the digital and physical worlds."

Towards niche brands



Beyond its ambitions for luxury and ultra-luxury, Alibaba says it has now attracted the majority of premium brands to its Pavilion. The online giant now intends to complete its offer with more confidential labels, that will appeal to Chinese consumers.


Luxury consumtion has increased among millenials, especially among the youngest of them - Alibaba


"What interests us most are brands that have an interesting voice and extremely strong values, because that's what our consumers are most interested in," explains Cano, citing brands like Christophe Lemaire, Courbet or La Bouche Rouge. "Whether it's on the environmental part, diversity or traceability... All of these are high on peoples expectations list. So any brand that brings these elements in addition to design quality is going to be a natural fit in our luxury offer."

The Alibaba group generated 853 billion yuan in sales (123 billion euros) in the fiscal year ending March, while operating revenue was 69 billion yuan (9.9 billion euros). In search of an international growth driver, the group separated its Chinese and foreign activities last December. For the latter, the company is counting on Lazada, in which it has just injected 912 million euros to accelerate its activity in Southeast Asia. And, it also seems, to be preparing its conquest of the European market.
 

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