Deciphering Tencent’s WeChat Ecosystem | Jing Daily

As China’s leading social media platform with over 1.1 billion monthly active users, WeChat is now a daily business necessity for luxury brands. To serve greater marketing and advertising needs, the app quickly evolved over the last couple of years, enabling brands to acquire and monetize traffic with a one-stop business solution.

At the 66th annual Cannes Lions Festival of Creativity on the French Riviera this past week, Jing Daily caught up with Kiki Fan, the General Manager of Sales and Operation of Key Accounts, Tencent Marketing Solution, to get an update on the current WeChat ecosystem, which is known to her team as the “ 2.0” model.

“We offer the 2.0 model to help our customers — especially those that are luxury brands — go one step further and achieve the most direct and shortest path to conversions through Mini Program and mobile payments,” Fan said about mastering the new WeChat. “We not only create content that drives initial interest or traffic, but also help brands achieve a closed loop from traffic to sales.”

Here, some key details on how WeChat’s “ 2.0” model works for brands:

Acquiring traffic

The incredible marketing power of WeChat today all started with the platform’s massive number of daily users, which represents unlimited traffic potential for brands to monetize. Being fully aware of this advantage, Tencent Marketing Solution has gone a step further in helping luxury brands obtain traffic. In the above chart, the team defines four types of traffic that brands can access and acquire within the app. For example, WeChat lets brands tap into users’ Moments (朋友圈) by offering them social coupons and gift cards, allowing those users to gain social traffic. These days, this kind of word-of-mouth traffic is becoming more and more important to all businesses. But the app also accepts advertising requests from brands at prime viewing places such as Moments and posts by key opinion leaders (KOLs). On top of that, Tencent has even created some intellectual property (IP) assets that have gone viral among Chinese Millennials and Gen-Zers, including the video game Honor of Kings and the reality show Produce Camp, that brands can use in advertising. The American cosmetics brand M.A.C., for instance, had a successful campaign that featured Honor of Kings characters in it.

Decoding customer data

With traffic in hand, Tencent Marketing Solution also attempts to help brands interpret and analyze their online history to gain a better understanding of the brand’s customers. “We currently provide brands with the Tencent Data Cloud, data modeling capabilities, and other diverse data-driven tools to help them optimize marketing budget allocation, enhance their ability to reach more potential customers, and transform their entire value chains,” said Fan. Tencent Marketing Solution also collaborates with world-leading consultancies like the Boston Consulting Group to provide brands with consumer insights.

Converting traffic to sales

Launched in early 2017, Mini Program is now central in the WeChat ecosystem in terms of turning traffic into real sales. Today, a great number of luxury brands have opened boutique stores, manage customer relationships, and more via Mini Program. “The Mini Program feature is a part of the WeChat ecosystem that also brings together functions like calls, social chat, search, ticket purchases, and payments,” said Fan. “It is an essential touchpoint for brands to connect with consumers by offering customizable features that open new integrated engagements and sales possibilities like the discovery of online pop-up stores, the digitization of offline stores,  online and offline campaigns, etc.”

In addition, WeChat works with brands to add a personal touch to their communications with users — a strategy that effectively increases conversation rates by 350 percent or higher.

Connecting online to offline

WeChat has also greatly enabled brands’ sales consultants to further develop relationships with store visitors online. In the past, brands’ sales associates typically added customers to their personal WeChat accounts, which caused a problem when they eventually left their jobs, causing the brand to lose the customer’s data. With WeChat’s Enterprise version, brands can stop worrying about that type of customer loss.

Looking into the future of social commerce

Overall, WeChat’s “ 2.0” model is offering a comprehensive solution for luxury brands that hope to excel in the social e-commerce era in China. As this trend is set to keep growing in the future, Fan believes digital platforms like WeChat will become the axis around which content, social sharing, data, and retail product promotions and catalogs will be fully integrated. In that way, luxury brands can proactively and seamlessly engage with consumers in a highly relevant and targeted manner across all touchpoints, regardless of where those customers start their purchase journeys.

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Louis Vuitton Educates Fans Via a New WeChat Mini Program

Luxury brands continue to explore WeChat’s many functions, from e-commerce to loyalty programs to chatbot possibilities, with the expressed goal to engage with over one billion WeChat users. While many brands create one-off Mini Programs for special occasions like Valentine’s Day or local exhibitions and events, the luxury powerhouse Louis Vuitton has built up strategic program to interact with the local consumers on a one-on-one basis.

Launched on June 14, their latest Mini Program is designed to educate consumers on the latest Louis Vuitton news and products. First announced on their WeChat account, once clicked, users are greeted by an avatar holding a Louis Vuitton bag and a poker card, as a short introduction explains on what they can expect from this program. By adding their name, date of birth, and phone number they can download a phone wallpaper of the cute avatar covered in various Louis Vuitton’s logos, and preview the latest Louis Vuitton editorial content.

Photo: Louis Vuitton Mini Program.

Photo: Louis Vuitton Mini Program.

Followers can read the content on a separate tab of the Mini Program, named the World of Louis Vuitton. So far, the brand has posted four articles featuring various products besides handbags. In the first article, the brand explained the history of their signature print, Monogram, while other articles introduced products such as their waterproofed travel luggage line, Horizon Soft; their jewelry line, Star Blossom, with delicate monogram flowers and diamonds, and the popular menswear collection designed by the much-hyped designer Virgil Abloh.

At the end of the editorial tab, followers can access another stand-alone Mini Program, featuring the addresses, opening hours, and the product categories of all LV retail stores. Followers can also connect with a real-time customer service Mini Program, and by clicking the “about me” tab, they can find key information of the account, and instructions to subscribe to Louis Vuitton’s WeChat account.

To promote the program, Louis Vuitton offered the first 2,000 users an opportunity to win a branded badges with winners to be announced on June 30, 2019. By the time of this publication, the post garnered 35,000 pageviews and 72 likes. Instead of making a one-off e-commerce channel, Louis Vuitton has created a Mini Program with a set of specific functions — editorial content, retail stores, and customer service to complete a full ecosystem, as to personalize to follower’s interests in a wider range of Louis Vuitton products and offerings.

Want to read more about WeChat campaigns? Check out our WeChat edition newsletter – a weekly briefing on all things WeChat, featuring the latest news, reports, case studies & events.

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Benetti Sells Its First Megayacht To Fly The Chinese Flag

Benetti FB270 will be delivered in the first half of 2021

The 65m Benetti will be the Italian shipyard’s first superyacht to fly the Chinese flag, with a certificate issued by the China Classification Society

Benetti continues to build on its success in the Asia Pacific area. Hard on the heels of the recent sales of a Mediterraneo 116, Fast 125 and 50m custom, Benetti’s winning streak in the Asian market has continued with the sale of FB270, a 65m custom build that will be the Italian shipyard’s first superyacht to fly the Chinese flag, with a certificate issued by the China Classification Society. FB270 will be delivered in the first half of 2021.

Peter Mahony, General Manager of Benetti Asia, said: “The sale of FB270 shows that an evolution is taking place and that a market will adapt to its new environment if an open mind, hard work and can-do attitude is shared by all parties involved.

“Following extensive work between China Classification Society, Benetti and Lloyd’s Register who will also provide class on this yacht, we are delighted to have confirmed this new build order.”

Fu Buming, Port Administration Chief at the Department of Commerce of Hainan province, said: “Hainan is striving to become an international tourist centre, in accordance with the state’s general guidelines and requirements, in order to further develop the city as a first-class port tourism destination with a window to display world-class yachts and innovation within the global yachting industry.”

FB270 will be delivered in the first half of 2021

FB270 will be delivered in the first half of 2021

FB270 is a custom yacht with a steel hull and an aluminium superstructure. The design features an innovative layout for the living area and a 160sqm apartment for the principle.

Giorgio M. Cassetta designed the exteriors, layouts are by Benetti Basic and Executive Design Department, while Pierluigi Ausonio handled the hull lines.

The interiors present colourways reminiscent of the sea, beaches and tropical islands, with a design developed entirely in-house by Maria Rosa Remedi of the Benetti Interior Style Department with full consultation and guidance of the buyer’s team to achieve a unique and iconic interior suited to her intended use.

Special features that set FB270 apart from similarly sized yachts include the service bathrooms on every deck and a wealth of technical spaces and storage areas. Special care has been taken to separate crew flows from the guest areas to ensure maximum guest privacy.

Benetti Splashes Third 100m-Plus Gigayacht in 100 Days

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Why Chinese Consumers Love Luxury Products

Although China’s appetite for luxury brands is well documented, misconceptions and stereotypes involving the Chinese consumer are still being widely disseminated. Every so often, young Chinese shoppers are presented as “label-obsessed” buyers who are addicted to luxury shopping, but the reality is far more complex.

While Western-style consumerism interprets luxury consumption as a “way of life” in China, the love of luxury has a Confucian essence. According to Pierre Xiao Lu, the civil servants in ancient China had an appetite for the finer things: enjoying cultural activities and elevated hobbies that exalted their artisanal skills. Craftsmanship and artistry were widely associated with the upper class.

During the following centuries, China experienced various political and socio-economic changes via imperial dynasties, destructive wars, and eventually, Mao’s Communism. These periods left marks not only on the country but also on the consumer. The aspirations and necessities of one generation were not identical to the following one, but what remained within all ideas about luxury consumption was what we find in Confucianism.

The Confucian doctrine emphasis six virtues — xi (the virtue of learning and assimilating ethics), zhi (the virtue of character and knowledge), li (the virtue of community, fairness and politeness), yi (the virtue of morality and righteousness), wen (the virtue of self- development), and ren (the highest virtue and the equivalent of benevolence and charity). As mentioned, these values dictate not only personal interactions but also consumer behavior.

Tom Doctoroff, Chief Cultural Insight Officer at the brand and marketing consultancy Prophet, told eMarketer that “Confucian culture is a combination of rules and regimentation, and [the idea] that the individual does not exist independent of his obligations and responsibilities to others. Therefore, there is a need to obey certain standards; in this case, a demonstration of success.” Doctoroff goes on to say that under this doctrine “not by rebelling but by mastering the rules, you are able to climb up the hierarchy.”

Evidently, culture plays a significant role when analyzing China’s appetite for luxury. While Western societies are largely individualistic, usually emphasizing the need for distinctiveness, China is ruled by collectivism. As a result, it has become a society where individuals respect social norms and aspire to achieve conformity while being assimilated into strong, cohesive social groups. Therefore, in China, luxury goods are more than the peripheral status symbols they are in the West; they’ve become badges of success. For affluent buyers, the fastest and easiest way to convey their role as a winner in society is through luxury consumption.

However, the younger generations don’t play by the same rules. As explained above, consumption patterns change with generations, and while Baby Boomers adhere to the idea of collectivism (the political theory associated with communism), millennials and Gen-Zers (the shoppers known by marketers as “young emperors”) grew up in a world similar to the West. For this reason, the shopping habits of younger consumers are relatable to those of Westerners. Millennials see luxury purchases as the source of immediate gratification and a way of expressing their personalities.

China’s period of rapid economic growth is relatively new, and with it came consumerism and the huge growth in luxury spending. As the middle — or “aspirational” — class progresses, luxury brands are finding new opportunities to expand. According to Bain and Co., China’s luxury goods market is growing at a rate of 20 percent, and that growth accelerates as the middle class expands.

McKinsey predicts that the “upper middle class will account for 54 percent of urban households and 56 percent of urban private consumption” in China. Furthermore, McKinsey estimates an eventual doubling of the average urban household income for the middle class. Given these details, it’s safe to say that the luxury sector is not in danger of losing the Chinese market because a new cohort of consumers is already on its way. But this doesn’t mean that limitations and political restrictions won’t curb growth.

If established luxury retailers don’t want to lose momentum, they should focus on the human dimension by building engaged communities around their consumer base. Good examples of culturally competent heritage brands are Dior and Burberry, who won big in China because of their customer-centric business strategies, bold business models, and astute marketing campaigns.

Above all, it’s worth mentioning that China is going through the same stages of luxury consumption that the rest of the world has, but there are various cultural components in China that require a personalized approach to marketing. Luxury brands that put a premium on nurturing innovation and dialogue with their consumers will thrive in this competitive and demanding market.

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SilverYachts Building Espen Øino-designed SpaceCats in China

SilverYachts, the Australia-based builder of high-performance, fuel-efficient aluminium monohull superyachts, is building 35.5m SpaceCats at its new Pearl River yard.

SpaceCats are built in SilverYachts' facility in China under supervision of the builder's Australian management team

SpaceCats are built in SilverYachts’ facility in China under supervision of the builder’s Australian management team

Hong Kong-based Executive Director Jona Kan said SpaceCat was a strategic partnership between SilverYachts and Espen Øino International. The founder of SilverYachts is German Guido Krass, who runs the eco-friendly Pari Group. China Zhongwang, a Hong Kong-listed aluminium group, recently purchased controlling equity in construction of these fast yet economic aluminium vessels.

Øino said the environmentally-friendly SilverYachts hulls reduce wave resistance at higher speeds and that this concept is “now taken to the next level with the creation of SpaceCats”.

“These power cats have even higher length-to-beam-ratio hulls than the well-known Silver series monohulls, further reducing resistance, and thus power needs, while providing a generous platform with unparalleled possibilities for highly-versatile layouts normally found only on much larger yachts,” he said.

“With its 35.5m length and 13.3m beam, the SpaceCat offers two generous volumes. The external living area boats over 575sqm of space, while the interior areas are over 300sqm. The volume of the SpaceCat can be compared with a 50m monohull, and its roomy spaces definitely imbue a large yacht feeling.”

The introduction of the SpaceCat, said Kan, “comes hand in hand with the strategy of expanding the Perth-based superyacht builder SilverYachts with the establishment of an additional shipyard in China.”

“Located in Jiangmen in the Pearl River near Guangzhou, this yard has been fabricating marine aluminium structures and components since last year, and will be the main facility to build the SuperCat series of vessels.

Designed by Espen Øino, the SpaceCat has over 575sqm of external living space and more than 300sqm of interior area

Designed by Espen Øino, the SpaceCat has over 575sqm of external living space and more than 300sqm of interior area

“Construction of the first SpaceCat will feature a highly-specialist team of aluminium fabricators hand-picked from China and working under the close supervision of SilverYachts’ Australian management team.

“Driven by the vision of majority shareholder China Zhongwang Holdings, the Hong Kong-listed aluminium group, and founder Guido Krass, the German eco-industrialist, who has multiple greentech businesses predominantly in Europe, the SpaceCat will ultimately be manufactured as a production line, starting with two vessels and gradually moving to 10 simultaneously.

“SpaceCat marks the gradual diversification of SilverYachts product portfolio, adapting to the different demands of the superyacht market in new geographies.

“By introducing SpaceCat to its fleet, SilverYachts is showcasing its capacity to not only build large superyachts for experienced owners, but also to cater to clients who are trying a superyacht experience for the first time.

“SpaceCat’s target clients would on one hand be superyacht owners who, instead of having one large vessel, opt for three SpaceCats. The yachts could be positioned in the three main cruising waters – Asia-Pacific, the Med and Caribbean – avoiding any hassles of repositioning and non-availability.

“On the other hand, SpaceCat will also appeal to clients who have a production yacht, and wish to upgrade to a larger superyacht. They have this option to take a step into yachting without the high operational costs of employing a large crew, while enjoying a vessel with large volumes.

“SilverYachts envisages the SpaceCat being a popular choice in the cruising waters of Asia-Pacific, such as Thailand, Indonesia, Malaysia, Hong Kong and Australia. The SpaceCat could also be a very interesting vessel for charter, no doubt appealing to charter companies”.

Kan also said that SilverYachts Western Australian-based shipyard maintains its position as a technological frontrunner, with a new series of larger vessels targeting the upper segment of the international market.

SilverYachts’ 85m Silver Loft is nearing completion, while the design team works on the next project, the 85 m Silver Square, which will be unveiled next year.

Yacht Style #47: The Multihulls Issue – Today’s Choices, Sail to Power


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Singapore, Not Hong Kong, is New destination for Ultra Wealthy

The rise of Chinese wealth has given rise to reality shows like “Ultra Rich Asian Girls”

As early as 2018, consulting group Capgemini SE confirmed a wide-known, oft-cited rumour, China’s high net worth individuals controlled an estimated $5.8 trillion of wealth but most of it was offshore despite strict regulations concerning capital flight from the Chinese mainland.

This report adds fact to sentiment, often proven with staggering headline news like the recent Straits Times report that a Chinese buyer had just purchased a fairly premium slice of Singapore luxury real estate to the tune of SG$31.5 million.

At SG$4,805 per square foot for the mega 6,555 square foot penthouse triplex, YTL Land & Development’s Orchard by the Park development registers among the highest psf price in Singapore’s prestigious Orchard Road area code.

YTL’s Orchard By the Park

Speaking with Straits Times, Savills Singapore research head Alan Cheong  opined that high net worth Chinese buyers were “coming in tops among foreign buyers (including PRs) of non-landed private homes in the Core Central Region” in the first five months of 2019, picking up 87 units, double that of traditional big spenders – Indonesians.

According to consultancy Cushman & Wakefield. Singapore luxury real estate is far cheaper than in Hong Kong, combined with an international outlook, world class amenities and the world’s most powerful passport, Mainland Chinese were the largest group of foreign buyers for luxury properties in Singapore in 2018.

From trickle to stream, increasingly, Singapore rather than Hong Kong,  has become the new destination for the region’s ultra wealthy, especially China. Geographically distant from draconian authorities in Beijing, a growing number of China’s wealth managers often hold wealth conferences at the small city-state’s numerous luxury hotels, discussing the slow but inevitable eclipse of Hong Kong as the destination for China’s ultra wealthy elite. Armed with a western outlook yet predominantly populated by ethnic Chinese, Singapore’s advantages are starting to outweigh the traditional lead held by the former British colony.

Historically, Hong Kong and Singapore competed for position as Asia’s premier financial centre and it is a race which persists today given the increasingly global nature of capital and finance. But when the weight of Beijing’s might can be felt, the dynamics change with the balance tilting to the Lion City’s favour.

Hong Kong’s Carrie Lam

Catalyst: Carrie Lam’s Extradition Bill and 2018 Tax Transparency agreements

Carrie Lam, the Beijing-backed Hong Kong leader pushed for the territory’s Extradition Bill covering Hong Kong residents both Chinese and foreign, sparking extraordinary concerns from the citizens of the former British colony. Hong Kong’s modern residents haven’t known anything other than a democratic system of government inherited from the British. In 1997, the territory returned to China from British administration under the promise of a “One Nation, Two Systems” policy. Carrie Lam’s proposed Extradition Bill threatens to upend that policy with growing perception of Beijing’s iron fist threatening both Hong Kong’s fierce passion for democratic rights and even-handed rule of law which makes Hong Kong a favoured hub for international finance.

According to a Credit Suisse 2018 wealth report, there are double the number of ultra high net worth individuals in Hong Kong than there are in Singapore – defined as worth of US$100 million or more, 853 individuals reside in Hong Kong but as concerns deepen over the potential prospect of facing trial in China should the Extradition Bill pass, more and more Hong Kong tycoons are moving personal wealth and holdings to Singapore.


Reuters broke the story early this month, speaking to Hong Kong tycoons who consider themselves potentially politically exposed, with one stating that he has “shifted more than US$100 million (S$137 million) from a local Citibank account to a Citibank account in Singapore”, according to an adviser involved in the transactions. Furthermore, legal specialists like Professor Simon Young of University of Hong Kong’s School of Law and legal advisors to Hong Kong’s wealthy elite have been warning about the lesser known aspects of Carrie Lam’s Extradition Bill – that should the bill become law, Chinese courts can freeze and confiscate assets in Hong Kong.

Compounding the fact is that Hong Kong signed tax transparency agreements in 2018 which includes China among the 75 jurisdictions, compared to Singapore’s 61 jurisdiction tax agreements which do not include Beijing or Hong Kong, therefore rendering financial assets and accounts obscure to Chinese authorities.

Singapore’s Chinatown. The Lion City enjoys a 75.4% majority ethnic Chinese population.

Nevertheless Lam’s Extradition Bill and 2018’s tax transparency agreements are only catalysts for the recent uptick in capital flight. Data from Hong Kong’s Securities & Futures Commission show that Hong Kong private banking has been slowing since 2015, with private banking assets lowering from 18% to 10.7% in 2016.


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Can Virtual Influencers Make Luxury Brands’ Dreams Come True?

Key Opinion Leaders (KOLs) and online influencers have established themselves as premier players in the luxury sector and now command significant fees and build celebrity-level profiles from collaborating with big-name brands. But now they’re facing increasing competition from a whole new cast of characters: virtual influencers.

Born out of the enduring consumer enthusiasm for ACG (anime, comics, and games), these animated models, performers, and brand ambassadors have become a fast-growing trend that hasn’t escaped the attention of luxury retailers wanting to attract young consumers. With virtual influencers in China taking part in everything from holographic concerts (tickets for a concert featuring China’s first virtual pop star Luo Tianyi sold out in minutes) to online talent shows (virtual idol HeZ sparked a debate about animated characters competing against real people), brands have quickly seen the advantages of hiring them to help promote their products.

It’s catching on in the West, too, but they are designed differently for the two audiences.

Magical realism vs. hyperrealism

Earlier this year, the creative studio and online magazine Voicer presented its new intern — China’s first virtual influencer — to its followers. Like traditional influencers, Poka Poka has her own Instagram account and a growing army of fans. And while she may have worked with Gucci, Mr. Porter, and Shushu Tong, she is clearly anything but traditional. Created to appeal to China’s enormous ACG fan base, she embodies elements of magic realism that make her look and feel as if she’s stepped out of one of the better-designed life simulation games. Stopping short of precisely replicating human features is key to engaging a Chinese audience — it preserves a sense of fantasy while delivering a very real opportunity to connect with luxury brands.

Tmall was one of the first to capitalize on the popularity of this kind of virtual influencer by appointing the virtual KOL Noonoouri, who has a strong track record in the luxury business, as an ambassador for its luxury platform, LuxuryPavilion. She has had features in Vogue; dresses in Jacquemus, Versace, and Fendi; and famously took over Dior’s official Instagram account for two days to promote its 2019 Cruise collection. Capitalizing on anime and manga sensibilities through exaggerated features and a highly-stylized appearance has evidently paid dividends —Noonoouri currently has over 291,000 followers.

And, in a direct path from gaming to brand promotion, the virtual boy band WXWZ (无限王者团) was brought to life via Tencent’s top-performing mobile game Honor of Kings. The band collaborated with luxury fashion brand Thom Browne who “dressed” the band members for their first appearance. Meanwhile, creators in the West — who apparently have dismissed any concerns about the uncanny valley effect — have adopted a different approach by choosing to drop the ‘magical’ and go straight for realism (or as close as they can get to it). These virtual influencers could — and have — been mistaken for real people, thanks to their hyper-realistic features.

With 1.6m followers on Instagram, Lil Miquela typifies this kind of virtual being. She’s a “19-year-old Brazilian-American Instagram influencer and model,” wears designer gear “given” to her by brands that include Chanel and Prada, and “self-awareness” is her stand-out characteristic. Often sharing her opinions on social trends, world events, and causes, she has also commented on her own origin story — in a very human way. ‘“In trying to realize my truth, I’m trying to learn my fiction,” she states after discovering that her creation was a choice made in order to “sell me to brands.”

Luxury boutique Balmain has fully embraced the concept by adding three virtual models to its #BalmainArmy. Shudu, the “world’s first digital supermodel,” was snapped up by the luxury brand to capture the attention of a global audience, along with virtual companions Margot and Zhi. Following a successful campaign where Balmain worked with software company CLO Virtual Fashion to dress Shudu in their new range, she appeared across Balmain’s stores and malls in Hong Kong to capitalize on her popularity and the buzz surrounding virtual models.

However, a feature about the trio in Harper’s Bazaar highlighted the issue with creating CGI models that are this close to being human — they can make the audience uncomfortable. In a poll at the end of the article, readers were asked to vote on how they feel about virtual models. While 33 percent agreed “This is the future of fashion,” 67 percent declared them to be “So creepy.”

A virtually perfect solution?

As with all new technology, there can be conflict over whether it’s an advancement, a gimmick, or a development which actually sets us back from a human perspective (the debate around virtual stars appearing in reality shows bears this out). While some may see the total control virtual influencers afford brands to deliver a very precise, culturally-tailored ‘look’ and message, others may see it as a step too far into digitized experiences that completely eradicate human flaws. Whatever their perspective, it’s a conversation that will come up more and more often among luxury brands and their marketing teams as they seek to perfect their promotional strategies.

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How Millennials and Gen Zers are Forcing Luxury Brands into E-commerce

If a company chooses a wait-and-see approach instead of leading the charge into new technology, then they have already lost. Many brands still don’t understand this.

For instance, it’s nearly impossible to buy any luxury car online. And the typical reason CEOs and sales directors of luxury car companies give me is that consumers don’t want to buy a luxury car on the internet. However, Tesla already shows that many consumers have no problem paying 150,000 USD or more for a Model X online.

Why shouldn’t they? Luxury is an emotional purchase, so why not allow a consumer to choose when or where they want to buy it? The fact that most car brands do not offer the option of buying online doesn’t mean consumers would never do it. The consumer needs to be the focus of all brand thinking. If they want to buy in a store, the brand needs a brick-and-mortar presence, but if they want to buy online, maybe on a different occasion, the brand should be available online, too.

However, e-commerce execution isn’t something that’s separate from core brand positioning. Independent of the channel, the experience that a luxury brand creates must reflect the core positioning of the brand. This is why selling luxury via third-party platforms like Net-a-Porter can be problematic if the third-party store is not expressing the positioning of the brand precisely enough, and if it doesn’t create the experience that a proprietary store or site offers.

In a recent press event that was summarized in Vogue Business on June 10, the chief client and digital officer of Kering, Grégory Boutté, highlighted that Kering is going to fundamentally rethink their online approach. Instead of relying on those third-party sites where there is little control over the content, Kering’s brands — which includes Gucci, Bottega Veneta, and Yves Saint Laurent — will refocus on their own e-commerce sites to create a more seamless brand of storytelling. That is to say that the luxury group will correspondingly treat their e-commerce sites as their stores: carefully managed with content that is controlled by brand teams.

Additionally, he stated that Kering is using A.I. and machine learning to make sense of their generated data — something that will offer more streamlined customer experiences, including in their brick-and-mortar stores, which are still responsible for more than 90% of their sales. What can other luxury brands learn from this?

The brand is everything

Most companies still underestimate the necessity of getting their brand story straight. What do I mean? Many brands really just trademark. There is a name, a blurry positioning which often just reflects the entire category, a design and product philosophy, and a general price positioning.

Typical positioning statements I hear when I do brand audits are “We sell the best fashion products,” “Our quality is second to none,” “We sell a dream, an experience,” “We are the most trusted brand,” “We have a longstanding history,” or “No one matches our creativity”. This is not enough!

It’s not just insufficient —it’s dangerous. That’s because a blurry brand will not resonate with Millennial or Gen-Z consumers, each of whom has a shorter attention span and less patience. They expect to understand their reason to buy the product right away. The message needs to be specific and relevant to them. Precision is necessary — brands need to have a clear purpose which cannot be defined from the brand’s perspective but needs to be determined from a consumer perspective. In other words: “What’s in for the consumer? What do I get from this specific brand?” Rationally and emotionally, the positioning needs to be rigorously sharp and straightforward, understandable in five seconds, and always consumer-centric.

Why is it dangerous to be blurry? Because your brand won’t resonate, you will waste your marketing investment, and you will quickly become obsolete as the competition heats up and other brands resonate better with the Millennial target. Prada, for example, had to pay a high price recently in China, when Chinese Millennials were not buying their bags anymore because they struggled to understand what their brand stands for. On top of that, correcting a blurry brand will take additional investment and time on top of the time and money the brand has already spent.

All channels are equally important

Brands need to be wherever the consumer is, and whatever channels consumers choose, brands need to be able to tell their brand stories consistently and precisely across all channels. It’s the same logic as controlling the sales environment in brick-and-mortar. Setting the highest standards needs to apply online, too. Third-party sites are possible but should only be considered if the brand story can be told correctly and with the same precision as on a proprietary website.

Data is the connective tissue

Kering’s approach of using A.I. to identify insights from their consumer data is a step in the right direction. I am shocked at how few companies today use the potential of A.I. and machine learning.

Data is an enabler. It’s like a connective tissue between all the company’s activities. Any brand should be able to 1. measure the ROI of a marketing campaign to track a specific sale when the consumer was exposed to a brand message to evaluate their effectiveness, and 2. to measure consumer consent on an ongoing basis. An automated A.I. tool should scan every online conversation for trending topics and anomalies to identify critical issues in real time. Anything less than that is not acceptable in today’s world of digital natives. Any brand that operates without these powerful data analytic tools in China, which has the most digital luxury market in the world, risks committing brand suicide if something unexpected happens. Dolce Gabbana’s infamous canceled Shanghai fashion show is an excellent example. By the time the brand understood the PR disaster they’d created, it was too late.

Advanced data analytics also helps brands create a seamless journey between online and offline experiences and between offline experiences at different locations. Why should a consumer be treated differently in the Shanghai store of say, Louis Vuitton, just because she’s visiting from Beijing where she usually shops? Or on vacation in the New York store, for that matter?

Live or die

In my point of view, these strategies and tools are not optional today. They are the key to survival and the only way to lead the change that millennials and Gen Zers are ushering in. All efforts need to start with a precise brand positioning followed by executing that positioning excellently across all channels and leveraging data to create consumer-centric luxury experiences. There is no plan B in reaching these younger consumers.

Daniel Langer is CEO of the luxury, lifestyle, and consumer brand strategy firm Équité. He consults some of the leading luxury brands in the world, is the author of several luxury management books, serves as a regular keynote speaker, and holds management seminars in Europe, the USA, and Asia. Follow @drlanger

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Alibaba’s Fight Against Counterfeits: Where Are We Now?

Last week, Glossy reported a bit of good news for luxury brands and resellers around the world: 2018 saw a drop in counterfeit goods among resellers, according to new data from luxury goods authentication platform Entrupy. Things are looking similarly positive for a platform that has faced significant challenges with counterfeit sellers as luxury retailers looked to international online growth — China’s Alibaba.

Just three years ago, Alibaba made headlines for its suspension from the International Anti-Counterfeiting Coalition (IACC), marking one of the major turning points in the company’s rocky journey to win the trust of the luxury industry and its consumers. Alibaba would go on the following year to form its own anti-counterfeiting alliance, which has ballooned from 30 members at launch to 121 brands, including big-name luxury labels like Louis Vuitton, Tapestry (Coach), Michael Kors, and Prada, as well as valuable consumer brands like Disney, Apple, and Starbucks.

It seems this alliance is paying off. Now, Alibaba is boasting a 70 percent year-on-year drop in listings removed from its e-commerce platform in response to consumer complaints of the product being counterfeit.

Alibaba’s recently released Intellectual Property Rights Report, which covers their efforts for 2018, trumpets “record results”, including closing more than 1,500 offline facilities manufacturing counterfeit goods, contributing to an estimated total value of $1.2 billion. Online, approximately 96 percent of listings featuring counterfeit products were removed before any items were sold, while IP rights holder takedown requests dropped by 32 percent from the previous year, according to the company.

Notably, these announcements came not long after President Trump signed a memorandum in late April pledging to curb the sale of counterfeit goods online from Alibaba, U.S. e-commerce giant Amazon, and a number of other sites. To that Alibaba responded in a statement, “We welcome this new initiative and the attention it brings to the global fight against counterfeiting.” The company has “developed best-in-class systems to protect [intellectual property] and battle the scourge of counterfeiting,” and looks forward to “further advancing the working relationship and cooperation with the US federal agencies mentioned in today’s order, as well as with our global commerce peers.”

That same month, Taobao landed on the U.S. Trade Representative (USTR) notorious markets list for the third year in a row, joining the likes of FMCG e-commerce newcomer Pinduoduo. USTR released a report with its reasoning, citing that, “Although Alibaba has taken some steps to curb the offer and sale of infringing products, right holders, particularly SMEs, continue to report high volumes of infringing products and problems with using takedown procedures. Serious concerns remain about Alibaba’s responsiveness to SMEs, who continue to express concerns over ineffective takedown procedures, burdensome enrollment requirements for a Good Faith program that reduces the evidentiary burden for takedown requests, and Alibaba’s delays in responding to SMEs.”

Alibaba does address its Good Faith program in its latest report, claiming that in 2018, the “’Good Faith’ takedown program, which makes it easier for rights holders with a strong track record of successful takedown requests to submit those requests, moved to automatic membership for qualified brands and further relaxed the requirements necessary to join. The two improvements helped to grow the program’s membership 44% year-on-year as of October 2018.”

April has been a significant month for addressing IP protection issues. Despite its inclusion on USTR’s list, the e-commerce group received recognition at the Luxury Law Summit, whose participants include executives from Gucci, Chanel, and Louis Vuitton, all of whom sell online through the high-end channel on Alibaba’s Tmall platform. Matthew Bassiur, Alibaba’s vice president of global IP enforcement, was awarded the Luxury Law Innovator in Intellectual Property Rights and Technology, presented by the Luxury Law Alliance’s president, Fred Mostert, who said Alibaba “has significantly improved its standing within the international community,” and that “Alibaba over the past three years has gone from being criticized for its efforts in IP protection to being viewed as a leader and innovator in the field.”

At the summit, American Apparel & Footwear president and CEO Rick Helfenbein also hailed Alibaba’s efforts, saying the company “has grabbed the flag on IPR protection and is running with it.”

How did we get here? Alibaba’s big data and artificial intelligence capabilities, for which the company is well known for, have proved to be a boon for its crackdown efforts, buoyed by a growth in confidence and participation from international brands and Chinese law enforcement. The group’s IP protection alliance now has members spread across 16 countries and regions. According to Bassiur, the group employs learning algorithms to detect counterfeit goods, so that “the more the brand holders are contributing to the enforcement of their own trademarks, the better the algorithms will understand what might be infringing their rights.”

In a 2017 report from Fortune, Alibaba revealed it had the capability to “scan more than 10 million product listings a day” and put an end to around 675 counterfeit operations in an approximate four-month period from August 2016 to January 2017. Meanwhile, in all of 2018, the group’s efforts led to the arrest of more than 1,900 counterfeiting suspects, according to state-run media outlet China Daily.

“Normally in other countries when we work with the platforms, we experience a reactive form of dealing with counterfeit issues, whereas what we experience here, through our cooperation with Alibaba, is a very proactive way dealing with counterfeits, “Jesper Herold Halle, commercial consul at the Danish Consulate General in Shanghai, said at the Luxury Law Summit as reported by China Daily.

For both the luxury and the FMCG industries, the counterfeit battle is far from over. In January 2018, Alibaba suggested that many of the counterfeiters on its platform moved to platforms that are less strict like Pinduoduo, which has recently come under fire for hosting vendors with fake and counterfeit goods. Others have moved to less official sales channels like WeChat to peddle counterfeits, and to complicate matters further, many vendors are increasingly boasting products that look practically identical to the real thing, thanks to access to factories that also manufacture the authentic products.

For more on Alibaba’s IP protection battle, see it’s full report here:

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YSL Beauty Ramps up Brick-and-Mortar Efforts in China

In “Chinese Whispers,” we share the biggest news stories about the luxury industry in China that have yet to make it into the English language. In this week’s edition, we discuss:

  • YSL Beauty’s biggest global flagship store
  • Fenty Beauty’s entry into China
  • Alibaba Luxury Pavilion “618” results

1. YSL Beauty opens new flagship store in Guangzhou to reach more Chinese shoppers – brand

This week, the French luxury beauty brand YSL opens its biggest global flagship store in Guangzhou, China. The new retail space is a prime example of how high-end beauty technology can empower brands to better interact with today’s digital-savvy shoppers. The store introduces a number of interactive activities that not only aim to sell products but also to educate consumers about the brand’s rich history. Inside the store, YSL installed an Instagrammable “LOVE” wall so visitors can take pictures with it and make personalized “LOVE” letters for their friends and family as well as the first-ever YSL “unmanned” lipstick machine in China.

Fenty Beauty by Rihanna

Fenty Beauty by Rihanna. Photo: Fenty Beauty website

2. Rihanna’s Fenty Beauty to enter the Chinese market – LadyMax

Fenty Beauty, which was founded by top global icon Rihanna, launched an official account on Weibo this week. The move indicates that the brand is finally ready to enter the Chinese market.

Luxury Pavilion

Alibaba’s Luxury Pavilion reported “618” shopping festival sales. Photo: Alizila

3. Alibaba Luxury Pavilion reports “618” retail results – 36Kr

During the 618 shopping festival — China’s mid-year shopping event that’s similar to the Singles’ Day — Alibaba’s luxury portal, Luxury Pavilion, saw an increase of sales and transactions that was 1.3 times it’s average. Among these 618 buyers, roughly 40 percent were 25 years old and under. Also, among shoppers, the number of residents from cities tier-3 and up grew by 40 percent.

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