Will handsome, white-gloved delivery men help JD gain an edge over rival Alibaba in luxury sales?
Both online giants are going out of their way to grab market share in the luxury sector, but analysts say it will be difficult for them to shrug of their ‘grass roots DNA’
JD.com, China’s second largest e-commerce giant, has unveiled its new luxury e-commerce website “Toplife”, just two months after market leader Alibaba Group revealed details of its own “Luxury Pavilion” section, targeted at ultra-wealthy Chinese customers on its shopping flagship site, Tmall.
The move underscores how luxury has now become the new battleground between China’s two online leaders.
“JD is cash rich, so money won’t be a problem for us,” said Ding Xia, president of JD Fashion, an offshoot of JD.com, which gained popularity among shoppers by selling electronic products including laptops and mobile phones after its opening in 1998.
“It’s going to be a very money-burning stage for Toplife, but it’s the right decision for us to make such a move,” she said on the sidelines of the Retail Congress Asia Pacific conference in Hong Kong.
One of Toplife’s advantages over Alibaba’s Pavilion, according to Ding, is what she called its “white-glove delivery service”, which will feature good-looking young males, delivering goods to customers’ front doors, driving cars instead of electric tricycles – the standard transport for other delivery companies in China – in suits and bow-ties, and wearing white gloves.
“As well as the smart appearance, it will be a requirement for these delivery men to be well educated,” she said.
However, analysts appeared sceptical of either company’s latest charm offensives.
“The major obstacle for both JD and Alibaba to expand in the luxury sector is their original 'DNA’," said Zhou Ting, a director with Fortune Character Institute, explaining the two online heavyweights have largely gained their footholds in China market by engaging with mass audiences.
She also reckons it is likely to prove difficult for luxury brands to partner with the two, as such a move might tarnish their own image.
“Can you imagine luxury brands feeling OK about being sold alongside condoms and cheap lingerie? It’s almost impossible for the two to shrug off their grass roots DNA.” she said.
Alibaba’s Tmall accounted for 56.6 per cent of China’s online shopping market, compared with JD’s 24.7 per cent last year, according to digital intelligence firm L2, which claims the former still offers more big names in the luxury sector.
Just under a quarter (24pc) of L2’s indexed luxury brands have set up stores on Tmall this year, against just 10 per cent on JD, according to the firm.
In an effort to poach more business off long-time rival Alibaba – as well as from smaller Chinese rival websites that sell luxury goods only – JD invested US$397 million in British retailer Farfetch in June to broaden its luxury offering of branded consumer goods. Farfetch sells products from over 700 international brands including Prada and Chloe.
Alibaba launched its invite-only Luxury Pavilion on Tmall in August, and brands on offer there already include Burberry, Hugo Boss, La Mer, Maserati, Guerlain (LVMH) and Zenith, offering products ranging from clothes and skincare products to watches and luxury cars.
The move was part of what Alibaba described as the first in a multi-phase launch, that will eventually offer a complete suite of marketing and omni-channel solutions.
“The timing’s right for these two to set up their own luxury sections,” said Tang Xiaotang, founder of luxury retail consultancy Nofashion.
“But the problem is that luxury brands would prefer to have their own, directly operated online platforms.”
Both Louis Vuitton and Gucci, for instance, launched their own e-commerce presence in China in July, allowing Chinese customers to shop without the restrictions of store location or opening times, underscoring how the brands felt they could no longer afford to give a cold shoulder to the country’s 5 trillion yuan (US$751 billion) e-retail market.
“Within three years, expect to see almost all the major luxury brands setting up their own online platforms in China,” said Tang. “They can no longer afford to miss out.”
Alibaba owns the South China Morning Post.