China's Alibaba launches 'outlet' platform to shift luxury overstock

Chinese e-commerce giant Alibaba Group Holding Ltd has launched a new luxury platform targeting younger consumers that also aims to help high-end brands shed excess inventory built up during the global coronavirus lockdown.

Chinese shoppers account for more than a third of global luxury goods spending and China was the first key market to be hit by the coronavirus pandemic, which forced brands to shut stores and led to a virtual halt in international travelling.

As the virus spread to Europe and the United States, Chinese spenders gradually emerged from weeks of lockdown and most labels have been enjoying a recovery in sales there since March.

But the pandemic has disrupted supply chains and warehouse planning across the globe, leaving fashion groups with vast amounts of unsold goods, while Chinese spenders, who used to buy mostly when travelling abroad, are now shopping at home.

In a statement on Wednesday, Alibaba said it was piloting the new Luxury Soho platform to run alongside its Tmall Luxury Pavilion flagship site.
“Brands are now sitting on a worldwide abundance of stock and are also needing to find ways to reach new consumers,” said Christina Fontana, head of Tmall Fashion and Luxury in Europe, in comments posted on Alibaba’s website.

The platform will allow brands to run their own online stores with full control over their pricing, product selection and strategy.

Fontana said that while Luxury Pavilion would continue to offer the brands’ latest collections and more exclusive services, focusing on a more affluent clientele, Soho would be home to “luxury deals, older collections, timeless classics and vintage collectibles”.

She said the platform would help high-end houses reach newer consumers such as those from China’s lower-tier cities or so-called Gen Z shoppers, young clients up to the age of 25 who are just entering the world of luxury and are expected to become increasingly important for the sector.

“With Luxury Soho, brands can now move selected products and collections onto an online outlet store and bring them in front of a specific audience.”