As the global skin-care industry undergoes a scientific revolution, vague promises of a younger-looking face are no longer enough for savvy Chinese beauty shoppers.
A trend that has manifested in the U.S. through an influx of K-beauty products and indie brands like The Ordinary and Drunk Elephant, the rise of “skintellectualism” has also infiltrated China’s skin-care market. Called the “chengfendang” or 成分党 — which translates literally to something along the lines of “ingredient club” — in China, these increasingly confident and informed beauty shoppers are conducting extensive research on active ingredients and formulations.
This has prompted a 331 percent surge in skin-care ingredient and related cosmeceutical keyword searches between October 2018 and January 2019 on search giant Baidu, according to a recent report by Gartner L2 on beauty product trends in China. Sales of beauty products listed with these keywords had 370 percent higher average monthly unit sales than the average of all beauty products on Alibaba’s B2C e-commerce platform Tmall in the fourth quarter of 2018.
The report also finds that top beauty brands are adjusting their product offerings to meet demands for trending ingredients. Out of the top 10 best-selling ingredients on Tmall in the fourth quarter of 2017, nine were featured in product listings by an increased number of brands in the fourth quarter of 2018.
Nicotinamide was the best-selling skin-care ingredient on Tmall in the fourth quarter of 2017, yet only 1 percent of beauty brands listed the ingredient in their product names during that period. By the fourth quarter of 2018, the portion of brands listing nicotinamide had risen to 14 percent as unit sales of the ingredient surged and kept it in the top-selling position.
As skin-care shoppers’ knowledge deepens, they’re expanding their purchases beyond the more “entry-level” skin-care ingredients to a wider range of products. Star ingredient hyaluronic acid was the second best-selling ingredient on Tmall in the fourth quarter of 2017, but slid to fourth by the same time next year. It’s one of the most popular ingredients listed by brands in product descriptions, but appearing on listings for 19 percent of brands in the fourth quarter of 2017 and rising to 23 percent by the same time in 2018.
For information on the latest skin-care trends, shoppers aren’t just searching online, but are also turning to a wide range of “skinfluencers” on social platforms like Weibo and Xiaohongshu to learn about products. One of the top skin-care bloggers is Junping, a former champion of a reality show competition for beauty experts. He vlogs about products and ingredients to his 8 million followers on Weibo, and hawks his own line of skin-care products that he sells on Tmall.
While many of the cult indie brands known to U.S. skin-care aficionados abstain from selling in China due to animal testing, the market is still highly competitive with a long tail of influencer-created and Tmall-born brands squaring off against K-beauty, J-beauty, C-beauty, European and North American giants. The list of top-selling beauty brands on China’s most important e-commerce event Singles Day, for example, was led by top global players Lancôme and Olay, but also featured local upstart HomeFacialPro, a Chinese brand known for The Ordinary-esque serum bottles containing in-demand ingredients. A very similar Chinese brand with almost identical bottles, Bauo, excelled enough at Tmall optimization to become the number-one best-selling beauty brand on the platform for Chinese New Year.
The largest beauty multinationals have the advantage of massive marketing budgets that can be used to leverage China’s top pop idols to sell their products online. This is especially effective for Gen Z and Millennial shoppers, who have embraced the concept of “resisting the first signs of aging,” a term that has increasingly popped up in product descriptions.
L’Oréal Paris, for example, targeted younger consumers by making Gen Z pop star Cai Xukun the face of its Youth Code enzyme essence. The lead singer of Nine Percent, one of China’s most popular boy bands, the young idol helped drive more than 350,000 unit sales around Tmall’s Singles Day when he posted a promotion of a special-edition bottle of the product on Weibo — a post that earned more than 2.3 million interactions. Olay, meanwhile, used a different Nine Percent member, Zhu Zhengting, to spur 1,261 percent unit sales growth of its “Little White Bottle” nicotinamide essence on Singles Day.
While celebrities can drive engagement and sales, consumers also need to believe the products work and have been raising the bar for skin-care brands to prove it. This has been a significant driver of growth of the cosmeceutical category, especially for brands from Japan. Known for its stringent regulations of cosmeceuticals, Japan requires that brands must be medically approved to be labeled in this category. Among the brands in Gartner L2’s index, Japanese cosmeceutical brand Dr. Ci: Labo had the best performance on Tmall search results based on a combination of rank, visibility and share of shelf.
Individual ingredient listings are set to become even more important in this space as China’s FDA has followed in Japan’s footsteps, tightening its own regulations on which brands can be deemed “cosmeceutical.” It banned the Chinese term for the word on cosmetics products, prompting brands including WIS, La Roche-Posay and Vichy to remove the term from their Chinese sites.
Gartner L2’s report finds that the brands that have been most successful at selling to China’s skintellectual demographic are nailing the target on a combination of digital factors including product development, search optimization, celebrity endorsements and influencer mentions. For brands developing new products, the key is hitting the sweet spot of hot new ingredients on the rise in popularity before the deluge of competitors gets there first. Product demonstrations by the most trusted skin-care influencers on key social platforms are helping to boost buzz around both ingredients and products, while pop star-led visibility has helped turn a niche trend into a mass-market phenomenon.
Liz Flora is editor of APAC Research at Gartner L2.