FashionUnited interviewed Christina Fontana, fashion and luxury director for Europe at Tmall, the B2C market of the Alibaba Group. She talked to us about the future challenges that companies will have to face, as well as the different tools that Alibaba offers them to contribute to their international expansion, especially in the Chinese market.
You were born and educated in the United States, but you have spent most of your professional career in Europe. How and why did you decide to take that leap?
I have both Italian and American citizenship, so I have always spent a lot of time on both sides of the Atlantic. I decided to stay permanently in Europe when I saw the opportunity to help European brands develop digitally, locally and globally, and particularly in China, which is now the largest and most digitally advanced e-commerce market in the world.
What position and jobs do you currently hold within the Alibaba Group?
I am the fashion and luxury director for Europe at Tmall, the B2C marketplace of Alibaba Group. My objective is to help European companies enter the Chinese market and connect them with more than 700 million consumers in the marketplaces of Alibaba Group, Tmall and Tmall Global. I focus on Tmall Luxury Pavilion especially, as it is the leading platform in China dedicated to luxury brands and more than 180 companies already operate on it.
Alibaba, AliExpress, Tmall... What exactly are the platforms developed by Alibaba that European companies seeking to sell their products, both to China and to other regions of the world should join?
As you point out, Alibaba Group is an ecosystem of digital markets and services targeted at different audiences and geographies, covering commerce and retail, logistics, smart payments, cloud computing and entertainment. To reach consumers in China, Tmall Classic and Tmall Global marketplaces are the best choice, because they connect with more than 700 million active consumers in that country. Thousands of European brands have already created their own virtual "flagship store" with their own "look and feel" prices and marketing strategy, which reflect their business model. In total, more than 20,000 European brands and companies are already selling on our platforms.
More than 20,000 European brands and companies are already selling on our platforms.
However, if the objective of a brand is to sell in countries other than China, the platform we propose is AliExpress. Using tools such as AliExpress Business, Spanish companies, and SMEs in particular, will be able to sell their products to other European countries or to Russia. We already have 7,000 Spanish merchants operating on AliExpress.
Finally, another option for companies to do business with us is Alibaba.com, the primary business of the Alibaba Group, and the leading global wholesale trade platform serving millions of buyers and suppliers worldwide. It is a portal through which small businesses can sell their products to companies in other countries within a "virtual trade show environment and in a profitable way”.
In short, what are the benefits for European small and medium-sized enterprises joining Alibaba's online trading platforms?
Alibaba Group's mission is to facilitate business everywhere by offering companies the opportunity to transform the way they market, sell and operate. We provide the technological infrastructure and marketing reach necessary to help small businesses and brands to interact with their users and customers via the internet.
We also believe in the power of integrating traditional offline commerce.
The digital world is very important to us, but we also believe in the power of integrating traditional offline commerce. To give life to what we have called ‘New Retail’, we have digitized through implementing in-store technologies and mobile smart payments with real-time product interaction via mobile devices. It is a model that merges the best of online and offline retailing to meet the needs of consumers, while also providing a seamless, personalized experience. A good way to understand New Retail is through our Freshippo supermarkets, known in China as Hema, which allow, thanks to our digital technology, suppliers to interact with customers at any time during the shopping process, regardless of whether the access point is online or offline.
And for consumers, what advantages do the group's different platforms offer compared to those of your main competitors?
For consumers, it's all about getting the best possible shopping experience in an environment they like, and not just enjoying the convenience but, more importantly, living a personalized, content-rich and immersive experience. This is possible thanks to the market model we operate in, which gives retailers and brands the opportunity to run their "flagship store" as if it were their own website or an offline store, with full control over the brand and strategy. This results in a "win-win" for brands and consumers, who have the range of products and services at their fingertips, while being able to experience this shopping process as a completely personalized leisure activity.
What are the tools that contribute to making this process more attractive?
Our platforms offer opportunities to drive brand engagement through the use of innovative tools such as live streaming, short video publishing and other content formats to reach existing and new consumers. Each of our platforms is a leader in its field and seeks to meet the needs of different audiences. For example, Tmall Global, created in 2014, addresses the growing demand of Chinese consumers for international products and brands. It is the main platform for foreign brands to reach Chinese consumers, generate brand awareness and gain valuable consumer knowledge to create their strategy in China, without the need for physical operations in the country.
It is also remarkable that Alibaba Group's B2C marketplaces in China, such as Tmall and Tmall Global, realize something that the Chinese consumer is looking for: the social and exchange component of shopping, including, for example, discovering the latest trends, interacting with their favorite influencers and opinion leaders and sharing opinions with their circles.
By 2036, we want to reach two billion global consumers.
What are Alibaba's medium- and long-term goals?
Our long-term goal is that by 2036 we want to reach two billion global consumers, create 100 million jobs and support more than 10 million small and medium enterprises on our platforms. The Chinese market still offers a great opportunity that many European companies are already taking advantage of with our support. Therefore, our commitment will continue to be to support European brands in connecting with consumers in China and around the world.
And to achieve this, what strategies do you intend to promote?
As a global technology company, it is in our DNA to continuously develop and use innovation and digital technology to empower our customers, consumers and partners to do business, find the products and services they need and connect with each other within our ecosystem.
When paying attention to Alibaba's links with Spain, the collaboration with El Corte Inglés, which served as a gateway to the Spanish market, stands out. How is it evolving and how do you assess Alibaba since this alliance?
We are very excited to have partnered with one of the largest department store groups in Europe, and we will continue to work together on several interesting projects and initiatives, both in Spain and China. It was in late 2018 that Alibaba Group and El Corte Inglés signed an agreement covering areas such as retail, payments, cloud computing and the move towards New Retail. In this context, Alibaba and El Corte Inglés continue to collaborate to accelerate the digital transformation process of El Corte Inglés with the help of Alibaba Cloud's Artificial Intelligence and cloud-based retail solutions. Additionally, El Corte Inglés has partnered with Alipay to offer this payment platform in its department stores, so that Chinese shoppers enjoy the same shopping experience in Europe as in China, paying for their purchases simply by scanning a QR code in the mobile application, without having to carry cash or credit cards.
Focusing now on the fashion sector, what importance does the industry represent within Alibaba's global balance sheet?
Tmall was born for fashion and this remains one of our main focuses. This is also reflected in this Chinese e-commerce trend: McKinsey's figures show that fashion is the largest online segment in China, with 61 percent of fashion consumers having bought clothes online in the last three months. We are talking about a huge number of consumers browsing and buying online, which led us to create the Tmall Trend Center, our research arm from which we predict what the next fashion trends will be. We then make this analysis available to our partners to help them develop their business in China.
In China, most fashion consumption is driven by the consumers who do not live in prime cities.
And what is the demographic profile of Chinese fashion consumers?
That's another important point, demographics. Currently, in China, most fashion consumption is driven by consumers who don't live in prime cities. This is something that western brands have been slow to understand, leading them to open physical stores mainly in the most populated cities. And it is precisely this digital dimension that offers companies the opportunity to maximize their reach to consumers living in second-tier cities and rural areas, providing them with an enhanced experience that can be complemented in a boutique or physical store.
What initiatives to strengthen the connection between China and Europe will you be promoting in the coming months?
We want to be able to offer the best possible selection of products to Chinese consumers, so we will continue to work both with established luxury brands and with other international retailers and smaller firms linked to street style. Therefore, several European brands are scheduled to join our platform in the coming months.
It's precisely this luxury industry that you mention, the same one that remains part of your main responsibility as a member of Alibaba's team. How important is this sector for Alibaba?
Alibaba is at the forefront of how luxury brands are evolving in the digital age. This is largely because we know the digitized Chinese consumers, who buy everything online from organic food to luxury cars. And we are talking about Chinese consumers who, according to McKinsey, will account for 40 percent of global luxury spending by 2025, which is why this segment is important to Alibaba. In the specialized platform Tmall Luxury Pavilion, launched in 2017, we already have more than 180 brands, including some of the most important and historical European and American fashion houses, such as Valentino, Bottega Veneta, Giorgio Armani, Cartier, Prada, Moschino, Zegna, and Marni.
Tmall Luxury Pavilion was created to respond to the demands of the luxury industry to maintain its exclusivity in an online environment.
What exactly does Luxury Pavilion add to the purchasing process of all these brands?
Tmall Luxury Pavilion was created to respond to the demands of the luxury industry to maintain its exclusivity in an online environment. And when you visit, you immediately see that it is a comprehensive platform that allows brands to offer personalized experiences and services, which are normally reserved for customers visiting a physical store.
Therefore, through Luxury Pavilion, shoppers access a totally unique experience, consisting of personalized home pages, custom-made brand pages, product recommendations and exclusive VIP bonuses and awards. These aspects are complemented by technologies such as virtual reality or augmented reality, which will only further enhance the consumer shopping experience.
To be successful in China, brands must invest and plan.
Is this luxury sector an area where European companies continue to lead, or is their globalization causing them to lose ground?
The luxury sector in Europe is unique in many ways, due to its long history of brands, its heritage, the quality of its products and the craftsmanship behind them. Proof of this are the more than 180 brands present today at Tmall Luxury Pavilion, as well as the importance of Europe’s heritage within the luxury industry and the minds of consumers. Chinese buyers are no exception, and China, as the largest luxury market in the world, offers great business opportunities for international luxury houses. This is an opportunity that they can take advantage of to innovate, advance their digitalization model and deepen their ties with consumers in a significant way.
And how does Alibaba seek to drive its growth in the luxury sector?
We assume that, with over 180 brands operating directly and another 150 brands available through our joint venture with Net-A-Porter, Tmall Luxury Pavilion is becoming the only luxury online location in China. The reason brands choose us is because they retain total control over their store, the brand, the operations and ultimately the relationship they have with their consumer base. And we provide them with technology, such as the recently launched Flagship 2.0 store model, that enables them to drive customer engagement and consumer insights that will help them build their strategy. Our approach is to combine digital technology so that brands can innovate and find new growth opportunities, while maintaining their DNA and uniqueness, and of course connecting them with consumers. Tmall Luxury Pavilion can be thought of as the place where innovation and heritage meet.
Cartier or Kenzo have been some of the latest fashion brands to join this platform. What should all these brands take into account when it comes to achieving success among Chinese consumers?
To be successful in China, brands must invest and plan accordingly, establish operations with customers locally and work to ultimately build a strong position and consolidate their "luxury and exclusivity" status in the eyes of Chinese consumers.
There has always been incredible cross-pollination in the creative fields, and we like to contribute to it by taking Chinese designers to major Fashion Weeks.
In recent years we have seen a growing visualization of the creative talent of Chinese designers, which you are promoting through platforms such as "China Cool". Do you think there is a risk that initiatives like this will end up being understood as a threat by major European firms and designers?
I don't think so. Part of the beauty of fashion lies precisely in the fact that designers have the opportunity to draw inspiration from cultural and artistic aspects from all over the world when designing their own creations. There has always been an incredible cross-pollination in the creative fields, and we like to contribute to it by taking Chinese designers to the top Fashion Weeks with our Tmall China Cool project. On the other hand, we also take western designers to China, for events like the Tmall Collection or the Westlake Fashion Show, which is a part of the Taobao Creators Festival. We believe that sharing and promoting that inclusion strengthens the fashion industry.
Creativity, diversity and inventiveness is what has made Europe successful for years.
When talking about this new phase of the technological and digital revolution in which we find ourselves, many analysts point out that Europe will be the one to lose out to the economic power and dynamism of companies in the United States and China. What would you say are the strengths and weaknesses of European companies?
One strength is the quality of European products and the rich history and heritage of many companies, which is something that Chinese consumers love. I also believe that creativity, diversity and inventiveness is what has made Europe successful for years, and I hope that European companies will find their way to continue to play an important role on the world stage.
In the financial results of its last third quarter, Alibaba experienced a 62 percent increase in profit. But with only about 7 percent of its revenue being generated outside China, what growth prospects does the company have for the coming year?
We don't normally share our forecasts, but what is certain is that Europe will continue to be a relevant region for us.
At the time, that same economic balance sheet was accompanied by a warning from the company's president and CEO, Daniel Zhang, about the economic dangers of the coronavirus. Do you already have a figure for the negative impact the outbreak is having on Alibaba?
I can't make any predictions, but I can say that our priority remains supporting our customers, particularly small and medium enterprises, in dealing with the current crisis and ensuring that they can operate their businesses in a sustainable way. We are on your side and will continue to help you in any way we can.
From big challenges also come opportunities to rethink models and strategies.
Showing above all our solidarity with those affected by the disease, in what way do you think the outbreak will end up affecting European companies and consumers?
Things are moving so fast that it is extremely difficult to predict the effect it will eventually have on companies and consumers. First and foremost, we need to focus on the health and safety of our employees and partners, and then there will be time to assess the impact on business once the health emergency is over. What is clear is that out of great challenges come opportunities to rethink models and strategies, similar to what happened in China during the SARS outbreak in 2003. So we can only wait for brands, companies and entrepreneurs to use their ideas and resources to innovate. This is how we will manage to overcome this difficult situation, and I can assure you that Alibaba will be by your side to help you achieve this.
With the arrival of the coronavirus it seems that geopolitical tensions have taken a back seat, but how does an American working from Europe for a Chinese multinational see the tariff policy that the Donald Trump administration has been promoting until now?
Trade wars do not benefit any of the parties involved. As for Alibaba, our business has proven time and again to be resilient in the face of complex geopolitical and economic conditions, as we focus primarily on Chinese domestic demand.
Trade wars do not benefit any of the parties involved.
What will this year mean for Alibaba in its relationship with Europe?
Alibaba will seek to remain the trusted partner of European companies, across all sectors, and will continue to help them succeed in the Chinese and global markets.
And in general terms, what will this 2020 mean for Alibaba?
This 2020 has started as a year with important challenges, but we believe that if we stand together we can help companies and entrepreneurs to do what they do best: innovate and find solutions for society. Now, more than ever, we need your courage and vision to drive the recovery, and there is no doubt that we will achieve it by also making use of digital innovation.
This article was originally published on FashionUnited.ES, translated and edited.
Photo Credit: Christina Fontana, courtesy of Alibaba