In a standing-room only session at NRF 2020 Vision: Retail’s Big Show, Coresight Research CEO and founder Deborah Weinswig moderated a conversation between Christina Fontana, head of fashion and luxury, Tmall luxury division, for Alibaba Group, and Erick Haskell, international president at Allbirds.
Weinswig began by complimenting Allbirds on its spectacular growth rate — the company did over $100 million over its first two years and is currently valued at $1.4 billion — and asking Haskell how they had managed it. “We pride ourselves on being a direct-to brand,” he responded. “The direct-to-consumers model has been the solution to many of the problems we have encountered.”
Storytelling helped Allbirds over a product hurdle with Chinese customers.
Noting that by working with Alibaba, Allbirds is varying (for the first time) from its direct-to model, Haskell said, in essence, that Alibaba offered his company a level of speed and reach that Allbirds could probably not have attained on its own. Essentially, Tmall was simply too big to ignore.
Asked to describe Alibaba and how it works with retailers, Fontana said, “Alibaba concentrates on building platforms, technologies that allow retailers to speak directly to their customers. One of the things we emphasize strongly is the importance of storytelling, and how essential it is for Western brands to explain to Chinese customers what their brand is about, and why customers should buy them rather than something made in China.”
Storytelling, Haskell said, helped Allbirds over a product hurdle with Chinese customers. Intentionally and by design, Allbirds shoes are very simple in appearance, which is not necessarily a path to approval in China. Haskell’s, and the company’s, response to this was to explain in some detail the quality of the materials involved in these simple-looking shoes. Especially the wool, which comes from the finest New Zealand Merino sheep — the same wool used in the most expensive woolen fabrics available.
The efficacy of this story became apparent last November 11: 11/11 (renamed from Singles Day in 2015) is an annual promotional event on Tmall, designed to reward shoppers by offering discounts. It is now the single largest 24-hour shopping event in the world. Both Black Friday and Cyber Monday each generate around $8 billion in sales; during the last 11/11, 200,000 brands participated, generating sales of $38 billion — all at a discount.
Well, almost all. Among the merchants participating was Allbirds, which does not discount and did not discount on 11/11. They had a record sales day too, at full price.
It is important, Fontana said, for Western brands to understand some basic facts about China and the Chinese consumer. They are young — they average 10-15 years younger than Western consumers for a given product category, especially in luxury and fashion — and they’re picky. They want a lot of information about the brands they shop — tradition, history, famous customers — which, again, creates an important role for storytelling.
Asked what Allbirds had learned in the process of entering the China market, Haskell singled out the importance of the China market itself as an important lesson. “We just opened our first store in Japan,” he said. “Until very recently, a Western retailer would not make its entrance into Japan nine months after going on the market in China.”
Another lesson to be learned, Fontana said, and another reason to be grateful for some help from Tmall, is that the media market in China is extremely fragmented: there is, for a variety of reasons, no Chinese equivalent of the major capital-city newspapers found in other countries. (Tmall itself, in fact, serves as a sort of media outlet.) Finally, asked for advice for retailers about to take the plunge, she said, “Be true to yourself. On Tmall, you own the story.”