👋🏻🇨🇳YOOX NET-A-PORTER says Goodbye Greater China 🇨🇳! As I’m always repeating to my clients as well as during my classes, the Chinese market might become an Eldorado (was it existing?) Yoox Net-a-Porter operated in China since 2013 under a joint venture with Chinese ecommerce giant Alibaba Group which will be liquidated, according to what Financial Times reports. The partnership with Alibaba was signed in 2018 “to bring 950 luxury brands in the Country”. The question you might have is: how did this happen? Let’s start by saying that Chinese consumer market is fully dominated by Tmall and JD.COM , referring to Alibaba’s chief competitor. Moreover as Thomas Hale pointed out in the FT article, don’t forget that Alibaba invested in the joint venture to enhance its luxury credentials. Since that partnership in fact, many luxury brands as Burberry entered on Tmall with less fear. And now? Jacques Roizen could not have said it better: “The brands that have been fuelling their growth with the rise of the middle class are the ones that are exposed to the current economic environment in China”. #digitalmarketing #ecommerce #omnichannelmarketing #luxurymarket #chineseluxury
Jacques Roizen
4mo
Thank you for the kind words Tiziana Tini. Alibaba's investment in YNAP was indeed a strategic move to enhance its luxury credentials and attract luxury brands to Tmall. However, much like Farfetch, YNAP struggled to gain a strong foothold in China, surviving largely on financial investors’ belief that long-term profitability was achievable.
This is a very good topic Tiziana Tini thks for sharing. To add, based on experiencie the financial model of an e-commerce in general are negative at the beginning and risky to be overcame in a long term if there is no unique (exclusive) and desired brands with full margin (from cost to sales price). The cost of acquisition, financial and logístic surpass the margin of a market place.
I think it's more of a discussion of owned media vs. shared media. The failure of this JV was clear since the day they formed the partnership. Likewise, the fall of multi-label ecommerce platforms is deep rooted in many brands launching their own brand.com ecommerce - with better customer experience and customer service. Alibaba's Tmall has also lost a significant number of brands over the years due to competition - as well as LVMH signing a deal with JD.com; similarly the rise of other more attractive platforms like Little Red Book. We can't simply narrow that down to just the economic situation in China (or the rest of the world). Richemont's YNAP itself has been struggling worldwide - with back and forth talks of selling the trouble ecommerce portfolio.