Nearly a year after rolling out its high-end brand hub, the Luxury Pavilion, Tmall is building a luxury loyalty club to offer more benefits to the 100,000 Luxury Pavilion customers who spend more than $159,000 per year through Alibaba.
The new Luxury Pavilion Club offers those top-spending customers a suite of benefits, including exclusive sales, event invites, flexible payment options and first access to new products. There are two tiers to the program, with a premium membership providing customers with a personal shopping concierge and offline perks like spa sessions and hotel stays.
The loyalty club is part of Alibaba’s Uni Marketing platform, through which it’s been sharing data with brands to help them run better targeted campaigns, find new customers and understand who shops for what on Alibaba’s marketplaces. It’s also part of Tmall’s ongoing pursuit to bring luxury brands, which have been wary of Alibaba’s mass reputation, onto the platform by winning them over with an online gated community. The Luxury Pavilion and Club are both invite-only on the customer and brand side; all Pavilion customers are automatically admitted into the Loyalty Club with higher-spending customers qualifying for the premium tier. As of now, there are around 50 luxury brands on the platform, including Burberry, Guerlain, Givenchy, Rimowa and Hugo Boss.
This high-touch customer experience stems from the handle Alibaba holds on its vast customer data, including its ability to identify luxury shoppers and understand their shopping behavior. In China, millennials are driving a luxury market growth rate, accounting for $22 billion in spend on high-end apparel, accessories and cosmetics in 2017, a six-fold increase over 2016, according to Bain & Co research. On Tmall, millennial customers add up to about half of the Pavilion’s clientele.
All of the luxury customer insight that Tmall gathers is then handed over to brands.
“There are 500 million users on the Tmall platform, and we’ve done the work to make sense of the data we’ve collected so brands can get a better picture of the consumer, by tracking what they like, tracking sales results and communicating with the right customers based on these profiles,” said Jessica Liu, president of Tmall Fashion and Luxury. “That’s vital for marketing, sales and branding on such a complex platform.”
By building the Luxury Pavilion on top of a mine of customer data, Tmall is hoping to build trust with brands that have looked at it as a place for cheap commodity goods and counterfeits. Through the Luxury Pavilion, brands can build out their online storefronts with editorial and video content, promote in-store offers and personalize product recommendations. Tmall is using machine learning to not only identify luxury customers, but also predict the brands and items they will be most likely to purchase. For non-luxury Tmall shoppers, there’s no way to access the Luxury Pavilion.
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“A brand-owned site saves these luxury labels from issues like control over positioning, description, pricing and listings,” said Rob Nowell, marketing manager at the global analytics firm Brandview. “Brands that have such a strong brand image and want to maintain that are wary of selling on platforms where there’s a lack of control. Alibaba wants to prove it’s not one of those platforms.”
With the new Luxury Pavilion Club, Alibaba is also helping brands to promote online-to-offline shopping at luxury brand stores in China. Through Tmall’s brand dashboard, brands can identify customer behavior across online and in-store channels. Premium members also get access to a personal shopper who can make purchases and returns in local stores on their behalf.
“In traditional retail, it takes incredibly long to get customer feedback. You design, you ship to a retailer, they sell to the customer — it takes months,” said Liu. “We open the data feedback loop as soon as a product goes live on the site. You can react immediately. Quick feedback is very important today, because the consumer is changing so quickly.”