Decoding LVMH’s partnership with Alibaba

French luxury group LVMH will deepen its partnership with Alibaba to leverage the firm’s cloud and artificial intelligence capacities and boost its presence in China, the companies said on Wednesday.

The world’s biggest luxury group, and the Chinese e-commerce giant first forged a partnership in 2019. The reinforced ties come as luxury companies redouble efforts to cater to shoppers in China, where demand has been dampened by a property crisis and high youth unemployment.

The partnership also illustrates the growing focus of the high end luxury brands on improving online shopping, even as they invest in ever-more sophisticated physical retail stores.

It comes as the Chinese tech company — the country’s largest by market share — seeks to focus on its core businesses including ecommerce in its domestic market.

Along with rival JD.com, Alibaba is facing competition from low-price and discount-focused platforms such as PDD Holdings’ Pinduoduo and ByteDance-owned Douyin.

“The reinforcement of our partnership will help us to further accelerate our omni-channel business growth,” said Stephane Bianchi, group managing director of LVMH, referring to various shopping avenues both in-store and online.

LVMH has around 30 brands on Luxury Pavilion, the high end site on Alibaba’s Tmall shopping platform, including jewellery houses Chaumet and Tiffany, which recently joined the platform, highlighting the embrace of digital channels by even the most traditional of luxury businesses.

Although high end labels were traditionally reticent about entering the realm of digital shopping, the Covid crisis and increasing influence of social networks have accelerated the global industry’s push to meet shoppers online.

Digital services on Tmall’s Luxury Pavilion include 3D product displays, virtual try-ons, and live streaming.

As part of the agreement announced on Wednesday, LVMH will also gain access to technology from Alibaba Cloud, to help improve supply chain processes and customer insights, both companies said.

Source: BOF

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