Alibaba Looks to Move Luxury Overstock With ‘Outlet’ Targeting Young Shoppers

Alibaba’s latest platform is aimed at younger shoppers — and at helping luxury labels get rid of excess product.

The Chinese e-commerce giant today announced the launch of Luxury Soho, an outlet-style platform that “targets younger, newer luxury consumers, such as those from China’s lower-tier cities or Gen Z shoppers who are just entering the world of luxury,” according to Christina Fontana, head of Tmall Fashion and Luxury in Europe.

Through Luxury Soho, brands will be able to operate their own online stores — developing strategy, choosing product and setting prices. The platform is now being piloted alongside Alibaba’s existing Tmall Luxury Pavilion flagship site.

In addition to being aimed at younger shoppers, Luxury Soho is also meant as a way for brands to get rid of overstock. Many fashion labels are sitting on excess inventory as a result of the COVID-19 outbreak, which caused temporary brick-and-mortar store closures — experts indicate some of these shutterings will turn permanent for certain firms — and led to a decrease in traveling.

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“[B]rands are now sitting on a worldwide abundance of stock and are also needing to find ways to reach new consumers. With Luxury Soho, brands can now move select products and collections onto an online outlet store and bring them in front of a specific audience that is waiting to discover new products and brands,” said Fontana.

More than 80% of luxury shopping is done in physical stores. Further Chinese shoppers represented over one-third of global luxury spending last year, according to a Bain & Co. study. When the coronavirus outbreak began in China earlier this year, luxury retailers such as Coach, Hermès and Gucci temporarily shuttered their stores in the country — causing sales to take a hit. Chinese shoppers also have traditionally have done much of their luxury buying while traveling: In 2018, they purchased about $70 billion worth of luxury goods while traveling outside of mainland China, according to Bain & Co.

 

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