Alibaba’s fashion empress Christina Fontana on how to reach Chinese consumers
Few people are better placed to suggest how fashion, luxury and beauty brands can reach Chinese consumers than Christina Fontana, the director of fashion & luxury Europe for the Alibaba group, the biggest e-commerce company in the world.
Los Angeles-born Fontana is a key player at Tmall.com, Alibaba’s Chinese-language website for business-to-consumer online retailers. It’s essentially a fashion destination, and includes Luxury Pavilion, quite probably the most desired digital boutique platform for mega or emerging luxury and fashion brands keen to succeed in China.
Despite this, the American executive is far from predicting the demise of bricks and mortar, if anything, she sees stores attracting a whole new generation of consumers online.
“We are the biggest online company in the world – bigger than eBay and Amazon - but we are convinced that stores will never go away. Indeed, we create technologies to bring people into stores,” Fontana told a luxury conference in Paris on Wednesday.
Her key message, however, was the importance of storytelling, and how essential it is for Western labels to explain to Chinese customers why they should buy their products and not something made in China. It boasts that it offers more than 1,000 million products and ships 60 million packages daily.
Alibaba essentially delivers to greater China, though the digital giant has also developed an app which Chinese tourists can open when they travel to Europe, allowing them to shop without a language barrier.
Alibaba’s ecosystem currently reaches 730 million Chinese consumers. Its payment system
Alipay does more transactions every second than Visa and MasterCard combined. Founded in 1999 in Hangzhou by Jack Ma, Alibaba generates enormous amounts of data, providing surprising insights into consumer behavior.
“Most of fashion consumption is being driven by consumers outside Tier 1 and 2 cities, which Western brands took a while to understand. They don’t all live in those cities,” cautioned Fontana at the Global Luxury Digital Innovation Summit, which was MCed by LuxuryInsight’s Jonathan Siboni.
Alibaba’s Luxury Pavilion, which opened in August 2017 as an exclusive club, and where only select brands are chosen, offers a platform for luxury brand storytelling across the country.
“Luxury Pavilion is where luxury brands own and operate their own flagship stores. It’s 100 percent about finding your target audience; and communicating your brand values. Each fashion house or luxury label decides on both the price point and choice of products,” explains Fontana over a prost-speech coffee. She notes that already over 130 top notch labels participate. From Burberry, Hugo Boss and La Mer to Maserati, Guerlain and Chanel. Tmall, by contrast, works with over 20,000 European brands, especially mass labels like Zara and Adidas.
Alibaba does not break out revenues for its various divisions, however for the year ending March 2019, the Chinese e-commerce giant said total turnover surged 51 percent to $54.78 billion.
Once again, Fontana cautions that a key element in winning new fans and customers is often in-store events, or pop-up animations; and working with important KOLs (Key Opinion Leaders), especially influencers.
“Chinese consumers like to see a KOL. Above all, they want an authentic voice. So it is very important that any a .com communicates that voice,” stressed Fontana.
She cited the examples of Zegna – with its 'XXX' label – aimed at younger generation, which brought a Chinese KOL, singer and songwriter Nicholas Tse, right into its key Milan flagship, promoting that actively on its website and Luxury Pavilion boutique. Tse participated with Oscar winner Mahershala Ali in the house’s innovative What Makes a Man campaign.
“Valentino does mega events each year in Asia, and when it opened a flagship in Tokyo, it showed skilled artisans, and brought KOLs into the store - live streaming the event from Tokyo – directly on Tmall!” she enthused.
Tmall is not a retailer. It operates by earning a percentage of revenue on all sales by all brands – varying from 5% down to below half that for a luxury automobile. Last year, revenues grew by 34%; driven by the enormous quantity of brands it handles.
“All brands need to explain their heritage; intrinsic value and why 'made in your country' is important. It’s vital to develop every engaging video content, taking customers right into your own factory.”
Feedback is also essential, like creating the brand heat map Luxury Pavilion gives to its corporate clients; or getting data on bigger issues – like the proper retail location, or right department stores.
“It always amazes Western brands the sort of brands Chinese customers place them with. They discover themselves next to brands that they regard as very different!” she smiles.
“Today, Chinese shoppers shop with a phone in hand, showing an image of what they want to buy – seen first online in China,” insisted Fontana, dismissing the obsessional focus on millennials.
“We talk about different life stations – like 18-24, when they are still going to university. Everything changes very much when they get a job. So we target consumers instead at their life stages, from Generation Z on,” she says.
Her group have also actively pushed Tmall festivals, which often operate around the local holiday calendar and the Chinese New Year.
“We encourage each brand to use mega festival technologies for their own promotion. It’s quite simple - online is strong in part in China because there is so much less retail space than in America,” insists Fontana. And partly explaining why Alibaba last year grew by 100 million consumers.
The group’s latest move – a joint venture with Net-A-Porter that went live a month ago.
“It’s very important for us for smaller brands entering China. Net-A-Porter and Mr. Porter is a good retail model – it buys brands and puts them in a multi-brand stores. So it is a very good way to introduce them to new consumers, since they do a great job finding exciting new designers.”
Last month, Tmall brought a series of Chinese brands to the New York, Milan and Paris runway seasons, and she expects to do something similar next September too.
Asked why no designer from China, or indeed the BRICS has grown to become a major marque, she responds, “We have discussed that, but the question has to be asked, why haven’t major Chinese brands with revenues of over a billion expanded into the West?” she responds, referring to labels like Li Ning, the sports label founded in 1990 by a former Olympic gymnast, or PeaceBird, which show under her auspices in Paris.
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