Tmall launched luxury discount channel Luxury Soho, luxury brands are going to start a discount war？

Luxury Soho, the discount channel of Tmall luxury goods, was launched in a low-key way on April 20th.

The entrance of Luxury Soho luxury discount channel will be pushed to the homepage of potential luxury consumers through Tmall Big Data, and Taobao users can also directly search for "luxury discount" to enter the platform, which is the same as the rules of Luxury Pavilion of Tmall luxury channel.

Tmall luxury platform Luxury Pavilion was launched in 2017. At present, more than 100 luxury brands such as Prada, Valentino and Versace have settled in the platform.

Luxury Pavilion platform sells all the regular-priced goods of luxury brands, while Luxury Soho can be regarded as a discounted version of Luxury Pavilion.

Hu Weixiong, vice president of Alibaba Group and general manager of Tmall’s Fashion Division & FMCG Division, told Women’s Daily that luxury brands have a specific product life cycle. In the future, luxury brands can open two different types of stores in Tmall, with the official flagship store focusing on new products in the season in the Luxury Pavilion and the official Ole store focusing on cost-effective Ole products in the Luxury Soho.

Hu Weixiong also added that Tmall luxury products will do a good job in hierarchical operation and distribution operation through such a dual-channel operation strategy, help brands acquire new customers, and complete the marketing and consumer operation of the whole product cycle.

Interface fashion observation shows that Coach and MCM are the first brands to settle in Tmall Luxury Soho channel, and they have opened official Ole stores in Tmall respectively.

As of press time, Coach’s official outlets flagship store has 3,176 fans, and a total of 478 products have been put on the shelves, with a discount as low as 30%. For example, a ROGUE handbag with a counter price of 9,950 yuan is priced at 2,985 yuan in this store. MCM’s official outles flagship store has 525 fans, and a total of 120 products have been put on the shelves, with discounts ranging from 30% to 30%.

In addition to Coach and MCM’s official Ole stores, other brands of goods on the Luxury Soho channel come from different channels, including the official flagship store of the brand, the official direct store of Tmall luxury goods, luxury buyers such as LAMAVO, luxury collection stores such as LEANCCE, and cross-border e-commerce such as customers’ neighbors.

Luxurisoho has just been launched, and it is imperative for users to pull new ones. Tmall simultaneously launched the "Super Black Five Days" campaign, launched luxury goods with a price as low as 20%, and invited users to draw lots to buy them. Users can also get lottery codes when they pull people.

In addition, the official Tmall luxury products also broadcast live on the theme of "Super Black Five Days" for several consecutive days, and drained the Luxury Soho channel in the live broadcast room.

Tmall launched Luxury Soho luxury discount channel on the premise that consumers’ willingness to buy luxury goods in China is weakening, and the sales performance of luxury brands has been greatly impacted by the epidemic.

According to the "China Luxury Report 2020" jointly released by integrated communication consulting firm Rhodes Communication Group and Precision Market Research Center on February 25th, 10% of China mainland consumers and 20% of Hong Kong consumers plan to reduce their luxury spending in the next 12 months. Simon Tye, executive director of the Precision Market Research Center, said at the time that this was the first time he had seen a 10% reduction in luxury spending in the past decade.

The above survey was completed in December 2019, and the COVID-19 epidemic has not affected people’s willingness to consume. After the outbreak, consumers in China may reduce their luxury spending even more.

Rhodes’s latest forecast shows that the global luxury market will plummet by 25%-30% in the first quarter of 2020, and the income of the luxury industry will lose 60 billion to 70 billion pounds (about 520 billion to 610 billion yuan) in 2020.

Under such special circumstances, using discounted goods to attract new and old customers can be regarded as a joint self-help measure for e-commerce platforms and luxury brands in a special period.

Recently, several luxury sales platforms have been launched, including Xiaomi’s e-commerce platform Xiaomi Youpin’s "Famous Products Discount" channel, and Wan Li Mu, a cross-border e-commerce launched by Fun Store Group, all of which sell discounted luxury goods, but they have not been officially authorized by the brand.

In fact, there are not many brands that have officially cooperated with Tmall Luxury Soho channel. In terms of selling discounted goods, e-commerce platforms and luxury brands do not completely belong to a community of destiny. Tmall may be able to effectively expand its market share by launching a discount luxury platform, but luxury brands are facing some embarrassment.

For brands, once the "discount war" is started, it is difficult to end, which was the nightmare of fashion luxury brands after the 2008 financial crisis.

After the e-commerce entered the market, Ole’s living space was repeatedly squeezed. How to strike a balance between promoting consumption and maintaining brand value is one of the most difficult lessons for luxury brands during the epidemic.