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Chinese Alibaba Seeks Upscale Consumers

Chinese Alibaba Seeks Upscale Consumers

Alibaba Group, the Chinese ecommerce giant, is courting upscale consumers in what it sees as its next bastion of growth, Investopedia reports.

While ecommerce sales have been slowing in the region, well-heeled consumers are increasingly purchasing luxury goods and upscale services online, presenting an opportunity for the company to continue on its rapid growth pace.

The first evidence of its new push came earlier this week when it announced Chinese travelers can book hotel stays at Marriott hotels around the globe via Alibaba’s website and pay for the bookings via Alipay, its digital payment platform. “E-commerce is not just related to trading of goods,” Alibaba chief executive Daniel Zhang Yong told reporters when announcing the partnership, according to the South China Morning Post. “Today, consumers’ lifestyle has vastly changed and they need various kinds of services.” According to the executive the new-found wealth of many in China is driving huge demand for high-end travel excursions, upscale entertainment, luxury goods and other services. Alibaba, he argued, can meet all of those demands thanks to its online retail platforms.

With the Marriott deal, the hotel group becomes the first to take part in Alibaba’s new "88" membership program, which is a customer loyalty plan with support from 50 global brands. Jiang Fan, the head of mobile operations at Alibaba’s Taobao business said in the same report that under the loyalty program some members get faster access to the latest products from its brand partners, limited-edition items and other services and products geared specifically for them. “First, they splurge on goods via online shopping,” Jiang told the Post. “Beyond that, their consumption behavior earns them credit as trend-setters [or top influencers under the program].” Fan acknowledged these members would only represent a small amount of customers on Alibaba’s ecommerce platforms, but they will play a big role in setting the trends for online shopping. He said there will likely be several thousand members that get the top level ranking.

The move on the part of Alibaba to go after the affluent in China comes at a time when consumers in the country are clamoring to buy high-end luxury goods. Bain Capital predicts luxury sales in China will increase between 6% and 8% this year alone, thanks in part to increasing discretionary spending on the part of Chinese consumers, easy access to credit and a weaker yuan​. These same consumers are also interested in traveling abroad, with The Wall Street Journal, citing the research firm Euromonitor International, reporting that online travel sales in China are set to hit $86.9 billion this year, up 20% from a year ago. Alibaba said in a press release announcing the deal with Marriott that Chinese travelers are forecast to take 700 million trips during the next five years.


 

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