BEIJING — Sephora is expanding its footprint in China.
The LVMH Moët Hennessy Louis Vuitton-owned beauty retailer is teaming up with Chinese e-commerce giant JD.com to launch a Chinese online flagship. Sephora and JD.com, China’s second-largest e-commerce player behind Alibaba Group, unveiled the partnership on Wednesday afternoon.
Anne Veronique Bruel, president of Sephora Asia, said a main driver behind the deal is for the beauty retailer to take advantage of JD.com’s growing middle-class consumer base. JD.com has more than 100 million active customer accounts, according to the company.
“We want to bring the Sephora experience to where customers want to go,” Bruel said. “With JD.com, I think we share something in common, which are values. We both value and respect the shopping experience, and authenticity and innovation. The major focus of both companies is customer experience and to delight customers.”
Related Galleries
JD.com said the Sephora store will be the largest cosmetics store on JD.com’s platform, featuring more than 1,200 items from more than 70 brands, including Dior, Guerlain, Givenchy, Benefit and Kenzoki.
In unveiling the deal, JD.com stressed the importance of providing a marketplace for “authentic cosmetics” in China, a country where fake products are commonplace.
According to a 2014 Bain & Co. study on China’s e-commerce landscape, for apparel and cosmetics categories, e-tailers offering assurance in quality and authenticity rather than the lowest price are capturing more sales. The study recommended retailers rely on partners to help tap into China’s exploding e-commerce market. “Most traditional brands and retailers lack the required capabilities within their own organizations,” the study said.
JD.com has been expanding its presence in the world of fashion and beauty. Over the weekend, the company said it was linking with Luxottica to sell luxury eyewear online. JD.com has inked similar deals with Uniqlo and Gap in recent months. During an earnings call earlier in May, company executives said for the first quarter, sales of apparel and shoes were the fastest-growing category, with a 230 percent year-over-year increase.
Since Sephora entered China in 2005, the beauty retailer has expanded to more than 170 stores in 60 cities, Bruel said. Executives said the company has had double-digit year-over-year growth since opening in China yet declined to disclose specific sales figures or forecasts. Sephora will expand its brick-and-mortar locations to around 200 by the end of the year.
Helen Zhou, Sephora China’s vice president for marketing and e-commerce, said the beauty retailer has “huge expectations” for the new online flagship. “JD.com has more than 100 million active users and more than half of them are female,” she said. “We do have a huge expectation by working with JD that we can create a win-win situation where we are enriching the assortment for cosmetics and can also harvest faster growth.”
This is not Sephora’s first foray into e-commerce in China. The company launched its own Chinese site in 2009 that expanded to e-commerce in 2013. Zhou said it remains unclear whether the two online stores will serve to complement or cannibalize each other.
The flagship on JD.com marks a divergent e-commerce strategy for Sephora, which only operates its own stand-alone online stores in other markets, such as the U.S.
“I don’t have a crystal ball, so I can’t tell you what will happen for the future,” Zhou said, adding that since the Sephora flagship on JD.com launched less than a week ago, the retailer is seeing a “portfolio of customers who are very unique” versus those that shop on the retailer’s existing e-commerce site.
Zhou said the two platforms would differ in terms of product offerings. The JD.com site’s aim is to appeal to China’s emerging middle-class customers, offering products that are performing well in physical stores or that are unique to the China market. Sephora’s own site would continue to appeal to consumers already familiar with the retailer and continue to offer popular products based upon their existing preferences, she said.
But, Zhou said, Sephora’s e-commerce strategy in China continues to be a work in progress, especially as consumer tastes rapidly evolve.
“The JD.com customers are new customers that we have never encountered before,” she said. “Therefore, it is a very good expansion of our footprint, and with the product assortment, we are still learning. For the following months, we will study how these dynamics go and how to fulfill customers’ needs. What categories we need to bring more sku’s and what categories we need to reduce.”
She noted that compared to the U.S., skin care is the dominant category among Chinese consumers. In terms of online shopping behavior in China, visual presentation and product comparison are key differentiators versus other markets, she said, adding that up to half of Sephora’s sales in China are generated from new brands or from innovations or new products from brands already sold in the country.