Alibaba Group Holding Ltd: L’Occitane Opens Store On Tmall

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Alibaba Group Holding Ltd (NYSE:BABA) continues to attract high-profile brands to its online platform Tmall. Luxury brand Burberry, the cosmetics brand Estée Lauder, smartphone giant Apple, electric vehicle makers Tesla, General Motors, Volkswagen and many others have opened online shops on Tmall. The latest to join them is the high-end French skincare brand L’Occitane.

Alibaba continues to court prestigious brands

L’Occitane joined Tmall earlier this week to fight unauthorized sales of its product on Alibaba’s platform. L’Occitane’s Asia-Pacific head Andre Hoffmann told The Wall Street Journal that several sellers were already selling the French company’s goods on the platform without its permission. Opening its own shop was the only way to ensure that damaged and expired products are not old. Upscale brands are concerned that unauthorized sellers could erode their pricing power and tarnish their brands’ image.

Alibaba has promised elite brands that it will take strict actions to prevent unauthorized or gray market selling once the brand opens an online store. Gray market goods are mostly authentic. They are purchased from outside China and then sold in mainland China at a discount. When Burberry opened its online shop on Tmall earlier this year, all the third-party sales disappeared from the platform.

L’Occitane was initially reluctant to join Tmall

Sources told the Journal that L’Occitane had been negotiating with Alibaba for the past several months. The French company was initially reluctant to open a store on Tmall. Its biggest concern was to protect its premium image on the online platform. In the past, the French brand had avoided opening stores on Chinese marketplace sites as it believed that Chinese shoppers were accustomed to cheap and discounted prices online, which could affect its premium image. But it couldn’t ignore the huge opportunity offered by China’s e-commerce market.

Alibaba’s Tmall has more than 70,000 sellers. The platform has 45% share in China’s B2C online sales. According to Euromonitor, Tmall’s sales have surged 10 times in the last three years to $50.9 billion.

Alibaba shares fell 0.61% to $108.50 at 11:18 AM EST on Friday.

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