CHINA FASHION BUSINESS

Alibaba has been seen slumping since the birth of Douyin(TikTok) and Pinduoduo. I don’t know about other businesses, but I still think that Alibaba will maintain its leadership in the area of clothing business.

Pinduoduo and Douyin are “selling goods”, while Alibaba has been “developing the brands”. Under the rules of these platforms, it’s very difficult for new brands to succeed at Pinduoduo and Douyin because these platforms just want sellers compete on prices. Moreover, they, as selling platforms, do not want “brands”, instead they just want “goods”.

The mass audiences believe that online platforms impacted hugely on the brick-and-mortar stores. But looking deeper into the KPI of the online platforms, many are far inferior to their counterparts offline, despite the online market’s remarkable explosiveness. In particular, the associated purchase rate and repurchase rate of the online platforms are much lower than brick-and-mortar stores, and the goods return rate of online platforms is much higher than that of physical stores. Online platforms still have a long way to go in this area.

Alibaba is progressing in the right direction: the more accurate and detailed matching of its merchandise and customer throughtagging and digitalization, the more productive. In fact, this method has long been adopted by brick-and-mortar businesses, and the best of them is ZARA (and perhaps Uniqlo too). Some Chinese domestic companies have also employed this method, but I have not heard of anyone who has greatly improved its business performance with the help of this mode. However, this is indeed a feasible method. In practical operation, there are not only technical issues but also personnel proficiency and enterprise management issues. These enterprises still have difficulties to run digitalization e, such as the poor data quality staff’s unawareness of data science.

Now the customers’ traffic is very limited, it requires deep ploughing and intensive cultivation to achieve a higher horizon.

Clothing is Alibaba’s largest business, and its gene in clothing business determines that they have the most resources in this field. Clothing is a very strange industry. You think it is important, but it is actually very ubiquitous. You can buy clothes everywhere, and seemingly anyone can roll up their sleeves to do clothing business! It seems the industry has a low threshold, right? But, in fact, it is harder to do it well than any of other consumer goods. Because its consumption is the most puzzling for there are too many uncontrollable variables which ranges from fashion trends to personal aesthetics. Many of the so-calledsophisticated data analytical models find themselves difficult to be applied when it comes to the clothing industry. But Alibaba has accumulated a lot data and models in this area, which makes them hard to be surpassed in a short term.

A final remark about the consumer research in China, which, in my opinion, is our biggest weakness in consumer goods’ business. I think there are two main reasons why American brands are successful. (1) No one in the world is better at marketing than American companies; (2) No one spends more time and money on consumer research than they do!

Consumer research is never done only by a bunch of data at the backend system. The most important thing is to maintain constant communications with consumers.