Tmall

There has been a notable transformation in the variety of marketing activity used for selling prestige beauty online in China.

“This year, we have suddenly a lot of livestreaming sales. So social commerce is becoming more and more important,” said Samuel Yan, e-commerce commercial lead at The NPD Group, based in Shanghai. “WeChat Mini Programs are also becoming an important platform for the brands to sell through.”

Short videos, apps and customized services are, too. So rather than relying on Tmall and JD.com, an increasing number of brands are trying to lasso traffic by reaching consumers themselves.

Digitally advanced China ­— a major beauty market that deconfined earlier than other countries during the coronavirus pandemic — is considered a bellwether for how cosmetics businesses will evolve elsewhere.

“All these innovative marketing activities are what we saw as the biggest change for this year,” said Martine Ringwald, senior vice president, business development, beauty and luxury at The NPD Group, based in Paris.

Still, there is a lot of room for e-commerce’s expansion, especially cross-border nowadays as Chinese consumers remain stymied from traveling too far afield and so are unable to purchase international brands abroad.

“Today we can say e-commerce for prestige beauty [makes] about 35 to 40 percent [of revenues],” Ringwald continued.

Tmall continues outpacing JD.com when it comes to prestige beauty sales, according to The NPD Group, which recently began tracking e-commerce in China.

JD.com

JD.com  Courtesy Photo

“[That’s] even if Tmall really suffered during February because of logistics issues. JD was much more equipped to manage logistics, so JD really did better than Tmall at that time,” explained Ringwald.

She added that Tmall has been actively opening different types of stores, some of which are cross-border.

This June versus June 2019, Tmall’s growth rate for prestige beauty was up 90 percent, whereas JD’s advanced 74 percent, according to NPD, which uses daily web-scraping on Tmall and has direct access to the JD.com Union Site for monthly data.

In June, the prestige beauty segment’s revenues continued to increase on the platforms, at plus 87 percent versus the same month last year in China, mainly generated by Tmall with $1.14 billion in revenues.

“The Chinese consumers continue to trade up in purchasing all beauty products, regardless of the negative impact of COVID-19,” Yan said.

According to NPD, pre-COVID-19 the value weight of each beauty main category was 64 percent skin care, 28 percent makeup, 6 percent fragrance and 2 percent hair care. That compares to 69 percent skin care, 24 percent makeup, 6 percent fragrance and 1 percent hair care post-lockdown.

In skin care, sets and kits make 27 percent of sales, followed by face serums with 18 percent, toners and clarifiers with 10 percent, and eye treatments with 9 percent.

Consumers have been honing in on clean, clinical and sustainable brands. Self-care-related sub-segments continue outperforming, too.

Starting in May, there was a gradual uptick in the makeup category, with foundation sales generating 19 percent of the total color-cosmetics business.

NPD conducted a six-week consumer sentiment study, between June and July, and found as lockdown eased there was a gradual decline of prestige beauty e-commerce sales.

“But still, Tmall and JD dominate in terms of the channels, but we do see a slight increase of department stores and shopping malls. People started to purchase more offline, but it hasn’t come back to the pre-crisis level,” Yan said.

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