JD.com’s e-commerce company’s luxury marketplace, Toplife, added Saint Laurent to its growing roster of brands that will sell directly to Chinese customers through the platform, the brand announced Monday. By setting up its online shop on the platform, the French luxury brand is joining other labels like La Perla, Emporio Armani and Derek Lam, the American brand that begin selling on Toplife last week.
JD.com launched Toplife in October as an online home for luxury brand partners. Brands who sell on Toplife get access to 24-hour customer service capabilities, same-day delivery options, white-glove concierge service, a separate fulfillment center and premium landing pages, which let them add videos, campaign and runway materials, and other imagery to their online store. JD.com is also training employees as luxury fashion consultants to act as a resource as brands navigate the Chinese market.
Toplife is JD.com’s answer to Alibaba’s Luxury Pavilion, an invitation-only luxury marketplace on consumer e-commerce site Tmall, which launched in August. Western luxury brands previously wanted to distance themselves from counterfeit and grey market sales that marked e-commerce in China. Now that China is fueling luxury growth globally — Bain & Co data reported that Chinese shoppers accounted for 32 percent of the luxury market in 2017 — brands are strategizing how they should sell online in the region.
“As luxury brands look at China as a fast-growing region, JD.com wants to establish a leadership positioning for this trend,” said Xia Ding, the president of JD.com’s luxury fashion business, which was worth $10 billion in 2017. “As the middle-class income shopper grows in China, they’re more loyal to brands and they want to access some brands that aren’t typically available. And they want quality, as well. JD is not just for bargain sales anymore, but a place for brands to have a true presence.”
Saint Laurent, which is the second biggest label in Kering’s portfolio after Gucci, is riding strong brand appeal in the Asia-Pacific region, particularly in Mainland China. According to Kering’s half-year 2017 financial report, China drove the most sales of all of Saint Laurent’s emerging markets, at 66 percent. Overall, Saint Laurent’s 2017 sales are expected to exceed $1.7 billion, and while Western Europe and North America are the brand’s two biggest markets, it’s the emerging markets like China that’s fueling actual growth.
But even for brands that belong to major luxury groups, setting up shop online in China is a tricky strategic move when there’s no existing logistical infrastructure in the region. While some brands, like Gucci and Louis Vuitton, have decided to open up individual online stores, platforms with vast resources at the ready — like JD.com, as well as WeChat and Alibaba — are appealing partners.
For brands like Saint Laurent and Derek Lam, selling through a platform like Toplife opens up access to Chinese customers’ wallets without a laborious or expensive on-boarding process. JD.com owns its own logistics network, giving it top-tier shipping capabilities for a customer that’s accustomed to speedy deliveries. It also has robust digital profiles for its 240 million active users, offering up data around the JD.com customer. Unlike Alibaba’s Luxury Pavilion, Toplife is accessible by all JD.com customers; the Luxury Pavilion only appears to customers recognized by Alibaba as luxury shoppers.
According to Ding, fashion is JD.com’s fastest-growing category, and the company plans to continue to aggressively pursue both luxury brands and customers into the new year. It got a boost when it invested $350 million in Farfetch to become an official logistics partner for the luxury global marketplace to ship to China. Thanks to the partnership, Farfetch customers in China all get the same-day delivery, white glove treatment.
But shaking the perception that JD.com is a mass marketplace at its core could prove difficult.
“Prior to the luxury platform launches, Alibaba and JD.com were struggling to attract high-end brands,” said Liz Flora, Asia-Pacific analyst at L2. “These platforms will be the determining factor in how successful they are.”