Alibaba’s secret to making the metaverse sell

It’s important to understand the metaverse’s potential to avoid falling into the ‘gimmick’ trap explains Zarina Kanji, head of business development and marketing for TMall Global, Alibaba Group UK & Nordics. Credit: Shutterstock

"Welcome to China,” is not the most likely opener to a keynote presentation taking place in the heart of London’s West Kensington. However, Zarina Kanji, head of business development and marketing for TMall Global, Alibaba Group UK & Nordics, insists the Shanghai skyline is the scene everyone needs to imagine to fully comprehend the opportunities that lie within the metaverse for fashion brands. 

At the start of her keynote presentation for the Retail Technology Show, she plays a time-lapse video displaying the incredible speed at which Shanghai has evolved over the past 30 years, stating: “Today - China has over a billion internet users and is a digital first nation.” 

Kanji explains the adoption has taken place at a rapid pace, and most are highly engaged, mobile first users spending a lot of time researching and interacting with brands and products before making a purchase. 

She adds the metaverse was a natural next step for China’s tech-loving population and Alibaba has successfully weaved it throughout its shopping ecosystem. 

To fully understand the foundations of the metaverse Kanji says we need to rewind seven years: “This was the launch of livestreaming in China and Alibaba’s live streaming is where consumers sell products and brands through the platform.” 

The idea goes beyond TV shopping and is what she describes as “shoppertainment” – as it’s less about convenience and more about discovery and social interaction. 

Consumers can watch the sessions and leave messages, ask questions and share emojis all live and brands use it to drive deeper engagement with their consumers and ultimately drive sales.

It would be easy for fashion brands to sidestep the metaverse altogether, however Kanji, citing data from McKinsey, points out the global metaverse is expected to be worth $5trn by 2030.

The emerging 3D-enabled space is expected to become a place people use for work, shopping and entertainment as virtual and augmented reality offers life-like experiences online.

Kanji highlights that in the fashion and retail world, brands and retailers are already launching stores, and digital events.

At Alibaba, she says “we call it phygital - it brings the best of the two worlds to the end consumer. Digital channels allow for stronger engagement and the metaverse continues to tap into the popular shoppertainment trend.

Alibaba is most widely known for its core commerce so most of Kanji’s examples come from its business-to-consumer online retail platform, TMall, and TMall Luxury Pavilion, which is its online retail platform for high-end brands. She says it’s these two platforms where most of its metaverse innovations take place.  

Kanji explains that over 80% of those shopping at TMall are under 40 and 59% are between 18 and 29. This demographic lives mainly in cities, has a disposable income as has delayed marriage and babies in favour of pets, health and fitness, fashion and beauty. 

An obvious disconnect between China and the West is that most luxury items are purchased by older consumers in the West whereas in China luxury shoppers are much younger. 

This means it makes sense for luxury brands to tap into this virtual space as it’s an evolution of its core demographic’s everyday lives. 

China is forecast to account for 40% of all luxury spending by 2030 and Kanji says this is significant because the popularity of the metaverse has been underscored by the increase of luxury goods sales using 3D and augmented reality (AR) features. 

In fact, in 2022 TMall Luxury Pavilion, which successfully merges entertainment, 3D products, virtual influencers, and virtual showrooms with luxury, recorded double digit growth. 

It’s important to understand the metaverse’s potential to avoid falling into the ‘gimmick’ trap. 

Kanji explains the first component of the metaverse is AR, which was essential for personalised livestreams during the Covid lockdowns. It’s also worth noting China’s consumers were in lockdowns for longer than elsewhere with its strict Zero Covid policy only lifting in early 2023 so the metaverse allowed consumers to feel part of a community while continuing to shop.   

Kanji says luxury fashion brand Gucci was one of the first brands to adopt the technology for its jewellery collections and it meant consumers could see how the jewellery would look on their own hands and bodies even when stores were closed. 

Many luxury brands also took advantage of China’s big shopping day - 520 I Love You Day (China’s Internet Valentine’s Day), and gave consumers a free digital limited-edition gift alongside their physical purchases. 

Kanji emphasises the limited-edition element makes the offering even more covetable, and the digital collectable is generally packaged with the physical item. 

Virtual influencers are also being used as brand ambassadors and helping to amass a following amongst Chinese consumers and Alibaba has already created its own, including Dong Dong who was created for the 2022 Beijing Winter Olympics. 

Kanji suggests that for the broader spectrum of brands outside of the luxury space – virtual influencers are less risky than investing in human ambassadors so it’s an interesting way to increase Return on Investment (ROI). 

In China, she says virtual influencers increase confidence amongst consumers, which in turn increases sales conversion rates. 

She continues, Alibaba saw four times the engagement when one of its virtual influencers stood alongside a real influencer for a product demonstration, so Chinese consumers are clearly responding to the virtual influencer model. 

Kanji believes the fashion brands that will profit most from the metaverse are the ones that can successfully tie all its elements together. 

She highlights the Watches and Wonders 2023 event which took place during a Swiss trade show. It featured an immersive real-time metaverse event with a 3D space on the app that allowed consumers in China the chance to try on the latest watch models virtually.

She adds the technology only took four weeks to create and shows how brands can bridge the gap between the virtual world and the real one.

Kanji also highlights the potential of creating a virtual world, such as Alibaba’s Taobao Life, where consumers can create their own avatars and experience the world for themselves.

Alibaba used its virtual metaverse world to team up with brands and give its consumers’ avatars the chance to try on outfits and snap selfies in the virtual world and the proof was in the pudding as users tried on the virtual items six million times.

And for one global shopping event, a virtual shopping street in Taobao Life allowed consumers to browse stores and add items to a virtual cart so it quite literally took the real world and placed it into a virtual one.

Kanji is confident that despite China’s demands being ever evolving, the rest of the world will eventually catch-up.

She says the key is understanding that consumers today live in both the online and offline world and for fashion brands it’s about embracing the technologies of the phygital world to reach consumers at multiple touchpoints.

Kanji played a clip from the Vogue China augmented fashion show where guests wore extended reality glasses. The show featured brands, artists and mascots all walking the runaway and consumers could take virtual selfies and virtually try on what was being displayed straightway.

The Vogue China show is a great example of the metaverse in action and giving consumers what they want exactly when they want it.

She says it’s crucial for global fashion brands to listen and react to consumer insights: “You need to ask how you can best employ the technology to remain relevant to your consumers?”

She also believes partnerships are key and advises brands to embrace them and consider who it makes sense to work with – real influencers, virtual ones or both and on what platforms.

The expansion of the metaverse is happening in China at rapid pace so Kanji issues a caution that what’s trending today might not tomorrow.

The early adopters will have the learnings to optimise a seamless experience in future, she concludes.