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Alibaba’s Luxury Platform Making Metaverse Into ‘Commercial Reality’

Alibaba is celebrating the five-year anniversary of its Tmall Luxury Pavilion by doubling down on efforts to court shoppers in the metaverse.

The e-commerce titan is unveiling a series of virtualized shopping experiences as it touts the recent success of China’s largest luxury marketplace and lays the groundwork for future expansion into the digital realm.

Tmall’s sales increased by nearly 300 percent over the past three years as it augmented its offering of more than 200 luxury brands like Louis Vuitton, Fendi, Dior, Gucci, Yves Saint Laurent, Balenciaga, Cartier, Chloe and more. Luxury Pavilion saw its consumer base balloon by more than 150 percent from 2019 through 2021 as consumers turned to the web as a lifeline during the pandemic, according to Janet Wang, head of Alibaba’s luxury division. “We saw how quickly brands embraced digital transformation and consumer increased their online consumption,” she said. Now, it aims to introduce digital experiences that change the way consumers browse and buy, allowing them to experience and interact with brands in new ways.

Last month, the company hosted an augmented reality fashion show in partnership with Vogue China and international artists. Replacing top models were digitized mascots from the luxury brands that took part in the showcase. Attendees took selfies with them after the show.

Tmall is using the event to introduce “Meta Pass,” which gives shoppers priority access to products within the digital landscape. Blockchain-certified warrants can be purchased by passholders and exchanged for limited-edition items. Exclusive items including a Max Mara fall 2022 oversized sweater, Burberry’s Lola bag, and Marni fleece-lined Pablo sneakers were available to participants.

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“Before ‘metaverse’ became a buzzword, we had already transformed this buzzword into a commercial reality,” Wang said, adding “the digital world can provide consumers with the same, or even better, shopping experiences and luxury-brand identities than in the real world.”

Chinese consumers were early metaverse adopters, according to Wang. Avatars like Mark Zuckerberg’s recently unveiled Meta cartoon, on the other hand, appear rudimentary compared to the models created by companies like China’s Damo Academy. Its “meta-human,” Dong Dong, has lifelike features and an appearance comparable to a real person, Wang said.

These sophisticated technologies aren’t just allowing China’s shoppers to explore the metaverse, but to transact in it. Wang said that the consumer experience with digital storefronts in the Luxury Pavilion has evolved dramatically over the past five years. They now deliver an experience that mirrors real-life boutiques, and the virtual reality technology enables brands to showcase the details of luxury garments and accessories.

The only online marketplace in China that features goods from luxury firms LVMH, Kering, Chanel, Richemont and Hermès International in one location, consumer engagement is growing rapidly, Wang said. The number of shoppers who made Luxury Pavilion purchases last year was 153 percent higher than 2019, with total transaction volume up 309 percent during that period. More than 50 percent of that transaction volume comes from repeat buyers who have made more than three purchases on the platform, and 70 percent are female.

Luxury Pavilion is also stepping up digital collections in recent months, with 37 limited-edition, luxury lines released since last year’s 11.11 festival. Users can outfit their virtual avatars in luxury products to be worn in the Taobao Life 3D gaming experience. More than 20 brands have released digital art collectibles, or NFTs, on the platform, and many have also held virtual fashion shows. Notably, men under the age of 30 make up almost 70 percent of the audience for these virtual products and experiences. 

3D luxury shopping within Tmall Luxury Pavilion.
3D luxury shopping within Tmall Luxury Pavilion. Alibaba

Tmall Luxury Pavilion is hoping fashion firms buy in, Wang said. Last month, it hosted an extended reality experience for luxury executives in Shanghai showcasing Damo Academy’s technology. Attendees donned AR glasses and tried to put a digital luxury gift bag into a box. They also interacted with brand mascots and were able to “hold” a virtual model of a Burberry deer in the palm of their hands. Content was projected onto walls, illustrating how shoppers might navigate the virtual shopping experience.

Wang believes that the advancement of such technology will equip fashion for future disruption, as rolling Covid lockdowns remain a mainstay in China. The country’s luxury online penetration grew to 23 percent during the first year of the pandemic, up from just 12 percent the year prior. And even in the face of rising inflation and economic uncertainty, luxury houses such as Bulgari, Moncler and Brunello Cucinelli have all launched virtual storefronts on the platform.

“We all know how digital savvy Chinese consumers are and how fast they’re able to adapt to new technologies,” Wang said. “That’s why we’re introducing a whole new meta experience.”