April, 2018

JD.com woos European luxury brands

Original article: Reuters

JD.com is wooing European luxury brands in a bid to challenge Alibaba's control of China's massive e-commerce market. Last week JD urged European luxury brands to sell their products on its platform, highlighting its company-owned logistics network - which allows it to guarantee same or next-day delivery on 90%+ of orders - and anti-counterfeiting prowess. “Fake goods is a big issue in China. Our focus on authenticity has led to our success,” Winston Cheng, JD's head of global business, said at the recent World Retail Congress in Madrid. 


JD has a reputation as a reliable seller of authentic consumer goods. That stands in stark contrast to Alibaba, whose Taobao platform remains a haven for counterfeiters. Ask Chinese consumers where to buy a mobile phone, computer or air conditioner online, and they will tell you JD.com is a good bet. Taobao is better for specific second-hand goods, like analog photography equipment or books - items which are rarely counterfeited. It's also fine for cheap, unbranded clothing. 

To its credit, JD has chosen to protect brand owners' interests even when its own bottom line has been hurt. In 2015, fed up with incessant counterfeiting on its C2C platform Paipai.com, JD shut the site down. Compare that move to Alibaba's reluctance to ban even specific product categories that are relentlessly pirated from its platforms. Failure to curb the proliferation of fake auto parts on its platforms is one of the main reasons Alibaba remains on the U.S. Trade Representative's Notorious Markets blacklist. 

"JD has been more consistent than Alibaba in its efforts to fight fake goods," says Dean Arnold, managing director of O2O Brand Protection. As a result, "neither brand owners nor consumers have ever associated JD with counterfeiting. It doesn't have the image problem that Alibaba does." 

With that in mind, JD looks like a better bet for European luxury brands than Alibaba's TMall. To be sure, Alibaba positions TMall as a premium platform with official brand stores. It's the electronic equivalent of a high-end department store, while Taobao is a freewheeling flea market. And Alibaba has begun partnering with luxury heavyweights from LVMH to Kering. Still, it's hard to entirely trust a partner whose largest platform features thousands of goods infringing on your trademarks. 

Both e-commerce giants are vying for a bigger share of Chinese consumers' luxury spending, which has slowed in recent years but still accounts for 1/3 of the global luxury market, according to consultancy Bain & Co. 

In October, JD.com launched Toplife, a dedicated luxury-goods e-commerce platform. Its features include same-day delivery and special storage facilities to keep premium apparel and accessories in optimal condition. La Perla, Emporio Armani, Rimowa (LVMH), B&O Play and Trussardi are among the luxury brands which have joined Toplife. "Toplife aims to mirror the offline luxury shopping experience in a premium e-commerce experience," said JD chairman and chief executive officer Richard Liu in a statement. 

Toplife competes with Alibaba's Luxury Pavilion, a VIP section of TMall not open to the public. Luxury brands use Luxury Pavilion to offer exclusive products to rich shoppers selected by Alibaba. 

In an October report, luxury-sector news site Jing Daily said that Luxury Pavilion's emphasis on exclusivity better suited premium brands' spirit than Toplife. Since Alibaba selects Luxury Pavilion users based on previous high spending on luxury goods (it has all their data), the Hangzhou-based firm connects luxury brands with the customers they want, the report said. 

Ding Xia, president of JD Fashion, thinks otherwise. She told Jing Daily that Toplife's positioning as a stand-alone site better captures the luxury retail experience than Luxury Pavilion. "Super luxury brands don’t want a small corner of an all-categories site, so we built Toplife as a stand-alone, truly luxury shopping experience,” she said.