Richemont, the Swiss luxury group that owns powerhouse e-commerce platform Net-a-Porter, has just announced a joint venture with Alibaba to bring its luxury fashion business to China.
Together, Alibaba and Richemont will launch two mobile apps, Net-a-Porter and Mr Porter, inside China that are separate from those platforms’ non-Chinese versions. Alibaba’s Tmall Luxury Pavilion, a program that makes Western luxury brands that are difficult to purchase in China more accessible for Chinese consumers, will also be home to online store versions of Net-a-Porter and Mr Porter. Net-a-Porter will be the first multi-brand distributor to have a spot on Alibaba’s platform, Alibaba told Glossy.
Many of the brands sold through Net-a-Porter, like Burberry, already have a significant presence in China either through the Luxury Pavilion or with their own physical stores. But with the joint venture between Alibaba and Richemont, Chinese consumers will likely gain access to a vast assortment of new brands that were previously unavailable. Alibaba emphasized that not every single Net-a-Porter affiliated brand is guaranteed to be included. While neither company has made specific announcements about which brands from Net-a-Porter will be sold through Alibaba’s platform, Net-a-Porter carries more than 300 luxury brands compared to Luxury Pavilion’s 75, and most are expected to be available.
China is currently the largest luxury market in the world, according to Alibaba’s figures, making up almost a third of the total global luxury market. Chinese consumers are buying luxury goods at an astonishing rate, with a massive appetite for luxury brands from outside of China in particular. In 2016, 77 percent of all Chinese luxury consumption was from abroad, and only 23 percent was purchased domestically. Brands like Tiffany & Co. and Moschino have made huge investments into targeting consumers in China, thanks to the growing local demand for Western luxury brands.
“Chinese customers at home and abroad are an increasingly important customer base for Richemont and for the broader luxury industry,” said Johann Rupert, chairman of Richemont, in a statement. “Our digital offering in China is in its infancy, and we believe that partnering with Alibaba will enable us to become a significant and sustainable online player in this market.”
By 2025, China is predicted to make up more than half of the global luxury market, according to McKinsey. Many of those luxury-consuming Chinese customers are young and digital-savvy. Alibaba reports that 80 percent of affluent consumers are between 18 and 44 years old, with the average age of 35 — 10 years younger than in other developed countries. Additionally, Luxury Pavilion’s online luxury sales have grown by nearly 50 percent in the last year alone.
Alibaba views itself as the “gateway” between China and brands from the rest of the world. China has long been a difficult market to break into. From the restrictions placed on certain websites by the Chinese government to the tendency for Chinese consumers to forego credit cards in favor of mobile payments like Alipay, non-Chinese brands have a lot to navigate to target the Chinese consumer.
“We work with these brands on a daily basis to help them figure out what works and what doesn’t,” said Sebastien Badault, Alibaba’s managing director, in a recent interview with Glossy. “It’s a different customer, so you can’t just take what you’re doing in the U.S. or elsewhere and apply it here. But what does work is exclusives. So brands that partake are leveraging all the right ways to engage with the consumer.”