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China’s Ecommerce Giants Want Exclusivity, Brands Have to Deal with It
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Brands have to weigh the benefits and synergies of the major ecommerce platforms, said Tom Birtwhistle, PwC Hong Kong digital consulting director. While Tmall currently owns about 57% of market…
Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.
PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.
In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”
The Fondation Cartier pour l’Art Contemparain building in Paris
Brands have to weigh the benefits and synergies of the major ecommerce platforms, said Tom Birtwhistle, PwC Hong Kong digital consulting director.
While Tmall currently owns about 57% of market share in the Chinese ecommerce space, its dominance has given rise to complaints about anti-competitive practices, chiefly from its closest rival, JD.com. Indeed, it's a well-known belief in the industry that brands will be punished for not signing exclusive contracts with Alibaba. And some who have tied up with JD.com have reported lost traffic and advertising banners that have vanished from prominent spots on Tmall.
Tom Birtwhistle, PwC Hong Kong digital consulting director, addressed these concerns during a presentation on China’s retail trends last Thursday. “Working closely with internet companies has become strategic, [and] sometimes comes with exclusivity, which means you can only work with one," he said. "There is no answer to that.” He added that brands can only be cautious, as an understanding of the partnership synergies and benefits is built over a long time. Birtwhistle however suggested that brands can leverage the fragmented ecosystem in China, aside from focusing on the two major platforms. “In most digital markets around the world, there are typically two or three players. That being said, within the 25% that is fragmented, particularly in a market like China, niches can be a billion-dollar industry,” said Birthwhistle. “There is a massive proliferation of vertical-specific platforms.” He pointed to the example of Kaola.com, the NetEase ecommerce arm that has become a major player, and Pinduoduo, a social ecommerce site that counts Tencent as one of its investors.
Another concern that clients often have is the fear of lagging behind the latest technological innovations, said Birtwhistle. However, he explained that it should not be the case as most innovations are still at the pilot stage and customers instead care more about end-to-end experience rather than functions such as paying with facial-recognition technology.
Referring to the Alibaba-owned supermarket Hema, which has large wet market sections and offers an integration of online and offline retail, Birtwhistle said, “Alibaba has all the money and technology in the world, yet they focus on getting the consumer experience right and having the tech to enable it.”
Meanwhile, findings from PwC’s Entertainment and Media Outlook, released a fortnight ago, show that a few ecommerce growth metrics, including the growth of mobile payment users, will hit a plateau starting this year even though there is still plenty room for growth otherwise, as ecommerce penetration is only 15%. The major players have instead focused on O2O, or ‘new retail’, the buzzword made popular by Alibaba. Birtwhistle, however, emphasised that Alibaba does not monopolise the ‘new retail’ concept, as Tencent has ventured into ‘smart retail’ through partnerships with Carrefour and Wanda, for example, while JD.com has its own ‘borderless retail’.
Article originally published on Campaign Asia-Pacific. Republished with permission.
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