Jeremy Webb
Customer Engagement
Should Luxury Brands Be on SEA’s eCommerce Marketplaces?

The article was originally published on Marketing Interactive.

Accessories maker Coach is now officially on Lazada, arguably representing the most high-profile entry to date of a luxury fashion brand on the platform. But will other luxury brands follow suit? And what kind of strategy will they adopt? We will likely see a similar debate reignited from the early days of Tmall in China, where luxury brands for many years grappled with if and how they should show up on the platform.

Coach’s LazMall flagship store retains all the branding you would expect from the luxury brand, as closely as possible matching the experience a shopper would have offline or on the brand’s own website. As well as a well-designed store, it is taking advantage of Lazada’s Feed function, posting new arrivals for followers on the Instagram-style function within the app.

Pricing is identical or similar to other channels, with few discounts – the main exception being their Summer Sale; the same sale can be found on other channels. As part of this Super Brand Launch, minimum-spend money-off vouchers worth SG$15 and SG$50 are offered to all customers. There are flagship stores on Lazada in Singapore, Malaysia and Thailand, each with a unified look and feel and approach to pricing and assortment.

Coach itself had an interesting history on Asia’s marketplaces, setting up and closing its China Tmall store twice before finally rejoining the platform in 2019. Various reasons were discussed for the company changing strategy, including operational challenges and discomfort with the Chinese platforms action to combat counterfeits.

The fear of many brands is that marketplaces, by their nature, are messy environments, with different sellers displaying and pricing products inconsistently and off brand; in some cases, counterfeit or discontinued lines may be on sale. Even a brand’s official presence on the platform does not allow full control over the look and feel, with the seller needing to follow certain templates and navigation, as well as integrating logos and other iconography of the platform alongside their own.

By entering these marketplaces, some argue, brands are lowering themselves in the same way they would be by selling their products offline in Tesco or Walmart. But the reality is that these brands are on the platforms whether they like it or not.

If a brand such as Coach chooses not to enter officially, it will still have their products there unofficially. By having an official presence on Lazada, at least it i s able to outshine the other sellers, with easy comparisons between their store and others. Such comparisons may dissuade shoppers from using the unofficial channels. The key is less about whether these brands should be there in the first place, but how the brands show up and how the marketplaces fit into the overall ecosystem strategy

First, it is essential to determine how a platform such as Lazada best fits into the overall channel mix. Shoppers, especially in luxury, explore and experience the brand on a number of touchpoints, online and offline. Lazada will be just one of these platforms, and for many it won’t be the one where the final sale is made. For that reason, sales may not be the only objective of a brand’s Lazada flagship store.

For many consumers, they will follow a “webrooming” mission, whereby they experience brand on places such as Lazada before making the purchase offline or on other online channels; for others who exhibit “showrooming” shopping behavior, it is vice versa. Understanding how your shoppers use various channels is essential in determining the channel mix and, crucially, the objectives and KPIs for each. If Lazada acts as more of a “webroom”, then KPIs such as store follows and engagement should be considered as well as conversion rates and basket size.

Burberry, which made its high-profile entry onto China’s Tmall in 2016, reported scant sales in their first months. Sales from that particular channel would certainly not have been their primary KPI.

Luxury brands in other sectors, such as automotive, have been early entrants into marketplaces, which represent one part of an omnichannel strategy. BMW, for example, has a beautiful flagship store on Lazada, where it sells first installments of certain models. Other auto brands are selling purely merchandise on the platforms and are, as such, great ways to display the brand on the platform.

The second thing that is especially important for luxury brands is the experience. At Ogilvy, we see marketplaces such as Lazada as offering full-funnel experiences, from discovery through to the receiving of the physical product, to repurchase. For brands such as Coach and Burberry, showing up in the right way at each stage of the funnel on these platforms is critical. Any slip up will lead to bad reviews, which will damage the brand in the long term.

Although admittedly there is less control over a brand’s presence, Lazada does allow brands a reasonable degree of customisation.

So either find a partner that gets luxury brands or issue guidelines to ensure copy and visuals, customer service, and things such as outer packaging are on brand.

And the experiences will not stop with just store design and content. It’s almost certain that luxury brands will innovate as the marketplaces open up new shoppertainment functionality and better options for utilizing data. Also, although some brands will baulk at the idea of discount-driven platform mega sales and Super Brand Days, as we’ve found with our luxury clients in China we will also likely see luxury brands taking part in these sales in new ways that retain the high-level brand experience.

For sure Coach will not be the first high-profile luxury fashion brand on a marketplace like Lazada. Many will hold back and join once best practice and shopper expectations are more established; others will rush on in search of first-mover advantage and the PR value they can get from a high-profile launch. It’s an exciting space and we’re set to see a lot of brand value, as well as sales value, built on these platforms in the coming years.

    We'd love to hear from you.