Entering the Mini Program, the user becomes a “Mom” by virtually adopting a Burberry elf for free. And, Tencent and Burberry expect this to be an attractive feature to the female audience in China. Customers can also unlock exclusive content and personalized experiences and share them with their friends.

As customers interact more in the store and online, the elf will constantly transform themselves, upgrading new roles and new styles for customers to explore. Rewards include Burberry’s exclusive Cafe meals and digital content.

Burberry also launched “social currency”, which rewards customer interaction by issuing social currency to unlock exclusive content and personalized experience. In addition, there are many places in the mini program with the voice guide service of spokesperson Zhou Dongyu, and the celebrity will provide room tour.

Through the WeChat mini program, customers can get all kinds of contents such as in-store guide and product information. User can choose to book “Burberry Space” fitting room. Each fitting room has a unique theme, and there are 10 different spaces.

At the same time, users can choose the clothes they want to try on in advance, and Burberry can play different types of music according to their preferences.

Offline shopping experience service is more than just fitting on. “Burberry Space” offline is a place of shopping and fitting, afternoon tea, and style design.

“Fitting in” selfie is a necessary procedure for many girls to go shopping. Burberry has set up a self-portrait spot in each offline fitting room to encourage customers to take photos and share them with friends.

In addition, high luxury theme cafes are no longer new, such as Dior café and Chanel café in Shanghai, but Burberry has played something that China doesn’t have.

Burberry launched Thomas’ café, which is not just an ordinary coffee shop, but a special area for the Burberry community to connect and interact. It offers lectures, workshops, and live performances in addition to various kinds of snacks echoing the “British and Chinese tea culture”.

Users can book or register upcoming events on the WeChat Mini Program. This is the second in the world; the first is in its flagship store in London, UK.

WeChat advertising trends for luxury products in 2020

Three major trends are shaping China’s luxury market today: expansion of luxury brands into everyday categories, increased attention towards niche brands and personalization, and “normalization” of online sales of luxury goods.

On August 21^st, CBNData and Tmall published a report entitled “Luxury Consumption Trends in the Era of New Retail, 2017”. Using Alibaba’s consumer data to analyze consumption patterns, the report highlights several trends in changing luxury consumer demographics as well as showing the changing ways that luxury brands pursue consumers in China.

Between 2014 and 2016, the number of luxury brands using online sales channels has continuously increased; by 2021, online sales are expected to account for 13% of the luxury goods market.

Changing consumer demographics…

It considers young consumers, consumers from small cities, and cost-conscious consumers to be the up and coming forces driving growth in luxury consumption.

The generations known in China as the “post-90’s” and “post-95’s” are now a major market for luxury goods, and increasingly the primary targets of marketing campaigns by major players. There has been steady growth in the numbers and purchasing power of the post-90 generation since 2013, and the past few years have seen a rapid expansion of the post-95’s online presence.

Residents in the increasingly prosperous smaller cities, with lower costs of living and fewer pressures to save, are entering the market en masse, making up an ever-larger portion of consumers. Online sales of luxury goods have driven their penetration into second- and third-tier cities and rural markets where few have an offline presence.

In 2015, the size of the average luxury purchase by consumers in third- through sixth-tier cities surpassed the average for first- and second-tier cities. At the same time, the ten cities with the highest growth in luxury consumption are almost uniformly third-tier and lower. High-end cosmetics and watches are particularly explosive markets in smaller cities.

Consumers generally fall into three categories: “quality of life” consumers, mass consumption consumers, and price-conscious consumers; price-conscious consumers are coming to the forefront as the generations born after 1970 and 1980 settle into family life and more closely consider how to spend their larger disposable incomes.

In recent years luxury goods brands have effectively pursued the latter two markets, increasing their market share in those demographics. However, marked differences remain between each group’s purchasing habits; cost-conscious luxury consumers embrace brands with an image of utility (ex. Tissot) and up-and-coming brands, while “quality of life” consumers remain focused on household names such as Burberry.

… and new market trends…

At the same time, it shows that three major trends are shaping the market today: expansion of luxury brands into everyday categories, increased attention towards niche brands and personalization, and “normalization” of online sales of luxury goods.

Luxury brands have “infiltrated” certain sectors to the point where they account for significant portions of daily spending; from 2013, the share of skincare product sales held by luxury brands has continuously increased, while luxury brands now account for more than 40% of all watches and alcoholic beverages sold. Luxury goods, in these sectors, are no longer conspicuous consumption; they’re just consumption.

“Luxury” is no longer synonymous with “LV, Gucci, and Hermes”; rather, Chinese consumers are increasingly aware of niche brands which more closely match their needs and preferences. When entering the market many brands choose to list on Tmall and other e-commerce platforms to increase visibility and attract younger consumers.

In years prior, Singles’ Day events provided a huge boost to luxury goods sales; in the past two years that effect has become less pronounced, as luxury goods have become a more “normalized” part of people’s everyday consumption patterns

… are changing the luxury goods market

These three trends are improving customer experiences and quality assurance to further drive movement of consumers to e-commerce, making new retail formats the preferred choice for luxury consumption. Luxury brands are working to more finely target smaller markets, with goods that will fill gaps in their everyday lives, through online channels.

Other trends affecting the market include gradual reductions in tariffs for imported luxury goods, relaxation of import regulations, and global pricing strategies on the part of major brands, all reducing the appetite for grey market goods or those purchased while traveling abroad.

One result is that the flow of luxury spending abroad is gradually coming back to China, with part of the 600 billion yuan (US$90.2 billion) currently spent by Chinese abroad on luxury goods shifting to domestic e-commerce platforms.

China’s e-commercie platforms are not always cheap products with poor quality. Let’s see a few examples.

Apple’s only authorized e-commerce platform is on Tmall, opened in January 2014.

The average product price at Zwilling’s Tmall store is almost RMB 2,000 and it sells over RMB 15 million in one day, which is the total sales of one offline retail store.

Burberry launched its Tmall store in April. Read more here.

The turnover of Estee Lauder’s Tmall flagship store in June was nearly 10 million yuan, stimulating the off-line store sales at the same time. Estee Lauder launched Tmall flagship store on 21 May as the only authorized third-party e-commerce platform in China and the sales exceeded RMB 3 million on the first day.

French brand le coq sportif has been on Tmall for five years.

Companies with or without legal entity registered in China can benefit from Tmall platform. Incitez China are helping global brands set up both local and global Tmall online stores in China; talk to us to find out more.

Burberry officially launches Tmall flagship store on Apr 23 2014. This is the first time that an international Luxury brand enters into the third-party online shopping platform, which is some quite surprising.

According to its recent sales report of the website, its flagship store on Tmall sold only 132 products in 18 days, including 32 unconditionally returned ones, a high refund rate of 26.4% comparing to the average refund rate of 7.21% of similar products on Tmall.

Previously, Xiu.com and Jingdong mall also sold outdated Burberry bags windbreakers and other products at special offer, but they did not obtain the official authorization or recognition of Burberry. Apart from Burberry company’s official website, the Tmall flagship store is the only sales channel that has been authorized and recognized by Burberry.

Burberry’ commodities can be classified as 3 categories: men’s, women’s and coat, and sub-categories for each. For example, its women’s products include coats, bags, sweaters, scarves, accessories, dresses, make-up, watches, fragrance and so on.

The products sold on the website is the same as those on its official website, and almost all of them are seasonal new arrivals. And the prices are also the same. Burberry’s flagship store on Tmall guarantees that if the purchased goods are in original state and not used, Burberry can provide free return service within 15 days from the date of delivery of the product. However, items purchased from Burberry’s official flagship store on Tmall cannot be returned to its retail stores.

Compared with Burberry’s official website, the information of its flagship store on Tmall such as sales, return and exchange, reivews and other information are open to the public. According to information displayed on the website, it had more than 300 SKUs, and had sold 132 commodities in 18 days, most of which are fragrances priced between 300 to 500 yuan, followed by clothes priced between 2000 to 3000 yuan, such as Polo shirts, jeans and trousers.

It can be seen from the information displayed on the website, the most expensive product that has been sold is a designer leather wallet, priced at 4,200 yuan. And there is no sales record of any coat or bags that are priced at 8,000 yuan.

A yellow diamond-level (one of many Taobao/Tmall ranks for online buyers) buyer makes an anonymous comment: “The packaging is very good, the pants fit perfectly. My size often need to book from the counter, the online shopping saves me a lot of trouble.”

A netizen from Beijing buys a product as a birth gift for his friend, “The perfume I bought from Tmall flagship store is certainly a certified perfume, it is much faster than get the fragrance delivered from the UK than the official website, it only takes three days for me to get it, it is quite convenient.”

Although Burberry flagship store gets high review ratings in the “product match with item description”, “service of the seller” and “seller delivery speed” with average score of 4.9, 4.8, 4.9 respectively, it is higher than the average score of 60%, indicating that it delivered good user experience.

But its “refund rate in the nearest 30 days” makes people feel eye-popping: the number of returns is 32 times, with a refund rate of 26.4%, it is much higher than the average of 7.21%, and it gets 3 complaints.

The high refund rate could be caused by three reasons:

1. The high unit price of products make customers  more demanding and easier for them to feel dissatisfied
2. It is normal if the size of clothes does not meet the size description, making clothes not suitable, so the return probability is high
3. Some customers might purchase more than one items of the same product but with different colors, who would return the undesirable, so that they could take advantage of the free return service

Buying Directly in China v.s. Buying from Overseas Merchants

Luxury products sold at overseas purchasing store is often at least 30% cheaper than that sold in the luxury brand’s official Tmall store. For example, a classic Burberry plaid tote bag is priced at 8,250 yuan at Tmall flagship store, but it only costs 5,600 yuan in a French purchasing store. Despite that it is difficult to distinguish the genuine from the fake ones, but some buyers are willing to try and buy.

Many oversea Chinese, with their connections in China, can easily open oversea purchasing service store on Taobao, making profit from the big price differences between retail prices in China and the oversea ones. This is very common for luxury products, skin care and premium products in China.

At the time of writing this post, I can no longer find Burberry’s Tmall flagship store. It’s easier to blame Taobao for not being the right platform for luxury products than developing the appropriate business, product and marketing strategy for Tmall operations.

The lack of strategy and planning is why Burberry did not perform well on Tmall. I will follow up with another post on whether international brands should sell their product on Tmall or through their own official website.

Update (8 Jul 2014): Burberry has re-launched its flagship store, indicating “upgraded” version. Taobao and Tmall displays total number of sales for each product item but this “upgraded version” has those numbers blocked: