While American accessible luxury brand Coach has shuttered its online shop on Alibaba’s Tmall, its sales on WeChat will continue at a time when high-end labels are slowly warming to the idea of e-commerce on the mobile messaging app.
Earlier this month, Coach announced that it would close down its official Tmall store, reducing its China e-commerce sales channels to a standalone online store and WeChat shop. The brand was originally the first global luxury label to join Tmall with the launch of its pilot “online pop-up flagship” in December 2011, which it later closed in January 2012. It later re-joined the platform in 2015 after a few additional luxury brands had opened shops in the interim to sell fashion, including Burberry, Ports 1961, and Calvin Klein.
The American accessible luxury brand declined to provide any reasons for closing its shop, but many international luxury labels have avoided selling on Tmall out of fear of appearing too mass-market. Coach has been pursuing a more upscale image in recent years in an attempt to revive its lackluster global sales numbers. After installing Stuart Vevers as creative director in 2013, it has made efforts such as launching an apparel line, holding New York Fashion Week presentations, introducing more expensive items, renovating stores, relying less on price reductions, and cutting back on its presence at discount outlets. While the brand has been dragged down by North America sales, China has remained a bright spot, with double-digit mainland China growth for the year ending in July 2016.
"Coach’s move to focus on WeChat comes at a time when luxury brands not selling on Tmall are warming to WeChat sales."
While exclusivity is a top concern for the luxury sector, some brands are still drawn to Tmall’s massive China e-commerce market share and benefits such as greater exposure, access to customer reviews, a direct line to Alibaba’s counterfeit removal program, and the opportunity to overshadow third-party sellers on the platform. Coach was unsuccessful in this last endeavor, however—items through its official shop only took up 12 percent of first-page Tmall search results, according to a recent report by L2. In addition, Alibaba faces criticism from brands that say it’s still not doing enough to fight fakes.
While most luxury brands on the site remain in the more accessible cosmetics or sunglasses category, the number of foreign fashion labels that could be purchased on the platform recently increased dramatically when flash sales site Mei.com launched a partnership with Tmall in March, making names including Kate Spade, Dolce & Gabbana, Jimmy Choo, Tod’s, and more available on the platform.
But it remains challenging to get brands to take the plunge with Tmall, or with e-commerce at all for that matter—L2 found that only 35 percent of all luxury brands sell online in China through any channel.
Coach’s move to focus on WeChat comes at a time when luxury brands not selling on Tmall are warming to WeChat sales. In addition to Coach, brands including Cartier, International Watch Company, Montblanc, and Longchamp have full WeChat shops with WeChat payment available. Meanwhile, Dior and Bulgari recently launched limited-edition flash sales. WeChat could be seen as a way for brands to sell online with a more exclusive feel due to the nature of the platform, allowing them to reach consumers on a more personalized level and give the “VIP” level of service that they hope to provide through their offline stores.
This article was originally published in Jing Daily.