China is always talked about as huge opportunity which it is – China alone accounts for 30% of the world’s eCommerce sales. But it is complex and challenging and we have seen many big international players fail in this market. Amazon closed it’s online market place in mid 2019 and Macy’s did so too at the end of last year.
On the flip side we see the Chinese e-commerce players increasing in dominance. Alibaba group who own Taobao and Tmall have been increasing their share of market in the Beauty sector. In September Alibaba bought it’s biggest competitor in the Cross border e-commerce space – Kaola NetEase with plans to fully integrate it into Tmall therefore dawfing the competition from JD.Worldwide. Tmall has also been aggressively courting beauty brands globally to come onto their platforms setting a target of 1000 new beauty brands in 2019. Can Alibaba out compete by having the majority of brands on their platforms? The big threat to this is the trend for private traffic of which Tencent through we chat has the biggest share – we can go into this in more detail below.
1. Important E-commerce trends in China
Live streaming for e-commerce has really come to the fore following the success brands had with it during Singles day. Tmall global products purchased through live streaming soared over 2.3M products which was a 400% increase vs last year.
Kim Kardashian was an international brand who had great success with this model. She collaborated Viya a top live streamer and together they sold 15,000 bottles of perfume on Singles Day. According to Alibaba over 100,000 brands and merchants used live streaming to market their products on Singles Day this year.
Measure China a data agency dug into this popular selling tool and looked into live streaming revenue by product category for Skincare in the first half of the year
Private traffic on Chinese social media is a hot topic and like live streaming is something brands targeting the Chinese market should consider carefully as part of their marketing strategy.
- What is private traffic? – it is internet users who you own/come to your channels directly without you having to pay a “gate keeper eg: a platform”. In the west the equivalent is email but in China email has been ineffective for quite some time. So the biggest private traffic channel is we chat.
- Paying the gatekeeper – like in the west all major social channels are requiring brands and influencers to pay to reach their own followers. Organic reach is being restricted on Facebook as well as Weibo and other channels. It is not just social channels in China Baidu, Taobao etc all require you to pay to get traffic to your website or shop.
- How to leverage private traffic in China? – use we chat personal accounts and we chat groups to create communities of consumers. It is for the most part a very manual process, but it creates true meaningful interactions between brand and consumer and if used with mini programs, it links seamlessly to sales through easy commerce integration especially social selling tools
2. Macro trends affecting Cosmetics in China
National Pride is on the rise
have seen many young Chinese consumers fiercely defended their nation online – Dolce & Gabbana racist ad at the end of 2018, Versace’s t shirt saga, Cathay pacific was targeted with a boycott for allegedly supporting the Hong Kong protests and the list goes on. When it happens the backlash is swift and sweeping. It is something any brand operating in China needs to be aware of.
Along with this we see Chinese consumers wanting to buy products that use Chinese traditions things that speak to them on a cultural and historic level. As a consequence big brands are starting to incorporate ancient Chinese beauty ingredients into their product lines.
Measure China a data agency who collects, cleans and classifies China’s ecommerce data had some very interesting findings on the market share of C-Beauty in China. C-Beauty has always had the largest proportion of sales in the China market whilst overall sales are growing C-Beauty’s share of the market is actually dropping Oct – Mar 2019 vs. April to September 2019. C-Beauty is mainly mass cosmetics brands so price points are low and volumes are very high.
Authenticity & search for Individualism
For many years China and Chinese consumers have been stereotyped in terms of copycats, package tours, group buying, chasing what someone else has. But that has been steadily changing for the past decade. Now we are at a point where certainly in 1st tier cities consumers want to differentiate themselves from not just lower tier cities but also from their friends and family. Consumers are looking for more ways to express their identity and individuality. This has led them to search for more niche independent beauty brands and has led away from the previously mega popular but sameness aesthetic of K-beauty.
This trend has also fueled the rise of makeup sales in China. As makeup is an easy to way to project your self-expression.
The Rise of the Male consumer
As men in China start to feel more pressure on their appearance and as personal success has also become synonymous with better grooming the Male skincare and makeup market has started to rise. Of course, it is still a very small proportion of the overall market but set to explode in coming years.
Brands are increasingly using male celebrities to promote their skincare and makeup which helps sell to both male and female consumers. Li Jiaqi is Chinese most popular beauty influencer originally focused on lipsticks but now he works on all sorts of products!
Brands who have products specifically for men but also brands who can market their products to men’s needs and wants are in a good position for China in the coming years.
Fitting nicely with the rise of male skincare another trend identified by MeasureChina is this idea of ‘lazy people’ (懒人). Due to the incresed demands of modern society especially in the fast paced, highly competitive China market, consumers want to keep their beauty routines simple
According to a 2018 consumer-trends report by Alibaba Group’s Taobao Marketplace, spending on ‘lazy’ consumer products in China has increased by 70% from the previous year. Again the rejection of K-Beauty’s often complex, multi step routines is evidence of this.
3. Most exciting Beauty trend
The rise of the “Ingredient-Geeks” (成分党)
This takes the cake for me as someone who is passionate about effective, non harmful cosmetics. For years, I have been telling clients that influencers in China are less specialized than in the west. And there was very little choice for Clean and natural beauty brands if you wanted to find influencers who truly believed in your product. Now there are specific influencers who are analysing the ingredients of beauty products and giving their point of view on efficacy, value for money and harmful ingredients.
Watch out brands who claim one thing and deliver another! According to MeasureChina’s data, derma cosmetics (products that contain active ingredients proven to be effective) is one of the fastest-growing categories this year. Also, consumers are searching for something that doesn’t irritate their skin.
In this post there is a lot of food for thought for brands in or entering the China market. If you leverage some of these trends your chances to maximise sales increase dramatically..
So if you are thinking about improving your China performance or entering into the market in 2020 do get in touch for an initial chat.
And for further reading see Measure China’s full blog post here.