Hi everyone. I’m really excited to have Lucy Zhang here today to talk to you.
She works for Feelunique, the European Beauty e-retailer. She is based out of Hong Kong and working on the China Market. She’s got a wealth of experience with Brands going into China through cross-border e-commerce, and I’m really excited to have her here today.
Hi Lucy. Hi Allie.
I guess today what I really wanted to ask you about for the brands that are listening is how Feelunique works. How does Feelunique work in China, many of the Brands know Feelunique from the European side of the business, but how does it work over here?
Our business model for China is through cross-border because most of the brands that we carry are cruelty-free. We operate in China through our .com site, which is in Mandarin and the domain is hosted in China.
We’re able to provide our users with that faster user experience. We ship all of our products from our UK warehouse today, which means Logistics is actually a very key success factor for us.
Feelunique has many different brands – what sells best in CHina?
Most of our brands are Global Foreign Brands. And so what type of products sell best?
Let me just explain a bit more about our customers. Since we are an independent retailer that operates through the cross-border model and we also ship from UK warehouse.
This means that there are more hurdles compared to China domestic platforms when a customer shops on our platform. These hurdles include a higher free shipping threshold and you know also a longer delivery time.
Having said that most of our customers are extremely sophisticated and very demanding, their probably amongst the most demanding customers.
They are usually at the forefront of the trends not only just within China but also overseas and they’re very knowledgeable about brands and ingredients and also importantly there are quite price sensitive.
So if you keep this in mind, I would say the brands and products that sell best on our platform can be divided into three categories.
#1 – The first category is brands that are very well known and established globally and where Feelunique has a price advantage versus the China platform. These are the brands that are similar to Caudalie or The Ordinary.
#2 – The second group are brands that have gained popularity overseas, but are not necessarily accessible in China now in today’s world these brands have become less and less.
Because once they’ve reached that stage overseas they are likely to have the financial resources to be able to find a TP in China, and they will decide to launch on Tmall Flagship.
But the brands that I have in mind are Brands like Charlotte Tilbury or Huda Beauty before they officially entered the Chinese market.
#3 – The third group is actually quite interesting. These are the very very niche brands. I had never heard of them outside of Feelunique, but they do fulfill a very specific need in the market and they also have very few competitors in the market.
Two examples I can give you are the first brand is called Hydrea London. Hydrea London is a body brush brand. I think within the last year this dry brushing concept in China to exfoliate your body has become very very popular.
Hydrea London produces some very high quality brushes. We’ve actually seen this brand’s performance increase multiple folds within the last couple months.
The second brand is some brand called Medik8, a skincare brand. Why this brand is special is they have a very clear and focused brand philosophy, which is called the CSA philosophy.
This philosophy stands for vitamin C plus sunscreen by day and vitamin A by night, so it’s not really a “New Concept” because a lot of skincare brands play it. But Medik8 really focuses on it anything that and everything that they do is surrounding this CSA philosophy.
The three different buckets. It’s interesting. Obviously, you have so many brands on your platform. So it’s not surprising but it’s great also to see those smaller brands if they’ve got the right niche, if they’re really targeted then they can do well and presumably,
that’s in terms of marketing and brands need to find a way to sort of develop themselves in China. That’s another issue. Isn’t it? That brands have to get over?
Exactly. So to the last brands that I mentioned they’re quite small. They’re quite niche. I was surprised how people in China or our customers would be able to discover these friends.
But then again it goes back to my point on being our customers are some of the most sophisticated and knowledgeable Beauty Shoppers in China.
They are always looking at Instagram even though it’s block Instagram and YouTube. They’re always looking at different information to do that research.
for brands coming in – What’s the biggest challenge for them in terms of cross border eCommerce?
The biggest challenge is getting the brand awareness out there. I think at least from what I’ve seen and actually we do. The most brands that we work with are niche brands that don’t really have awareness in China.
The biggest challenge for them is having the resources – financial or a team to be able to really build out that awareness in China and I think a lot of the brands have this misconception of the minute I enter China that means I get money in my bank, but it’s really difficult.
It’s a very complicated market. It just doesn’t work like that.
Finding the right partner really having that patience to focus on your vision and your goal and I think that also goes back to your point before about if you’ve got a product that is very specific and you can really explain it very easily.
You have a lot of traction in your home market as you said the more sophisticated consumers are looking at International platforms like Instagram.
If you’re getting cut through there and it’s a simple proposition a star product, then you’re already like a whole it makes the whole thing a lot easier right then trying to do from scratch.
Absolutely! Then the next stage of challenge is how do you drive that excitement?
How do you sustain that excitement? And how do you continue to drive that newness?
What you’re seeing is there are many many local brands in China. They have the budget. They understand completely what the Chinese consumers want and they’re able to turn over new product development in a matter of one or 2 months.
For small brands entering this market, you really have to be clear about what you present to the customers and be clear about what your goal is.
I think it’s about also being ruthless, You have a huge product line and they’re all these products your babies probably I talk to brand founders all the time and they loved so many different things for different consumer groups.
And I totally understand but if your resources are limited and a market like China is so big.
You really do need to pick one thing to hero and it sounds like that’s worked with some of your brands. I guess on to like a more any more advice for brands coming in.
What advice do you have for them?
I think the most important is to find the right business partner, but also at the same time not only just business partner, but also having the right team internally to be able to be the brand Champions to be able to manage the business partner.
There are so many ways to enter China nowadays there. You can find your own distributor. You can work with a TP. You can even partner with the E retailer platform like Feelunique.
But the thing is you really have to do the research not just be blindsided by the sales figures, sales potential that anybody represents to you.
Do your research to find the right partner that has the same vision strategy and goals as your brand.
I think even more important is to have the right internal team members that are knowledgeable about the market that can be the brand ambassadors and to help you to manage whatever partner that you end up finding.
I think that’s the really tricky thing isn’t it with smaller brands especially because they don’t think about the setup.
They think about the partner, of course because you know to work on most of these platforms you have to have a partner, but then they don’t have the internal resources to back that up and trying to move so fast and you need assets or you need content so that’s tough.
And the thing is I think what a lot of brands when they find partners, of course, there’s English-speaking team members in the partners team, but a lot of time it’s so much more than just the language, the culture.
It’s how fast China moves so it’s really important to have that right team.
Anything else in terms of advice?
I think really just be prepared to invest the time and money.
Like I said, entering China doesn’t equal to instant revenue or profit. It takes time to be able to build a long-term strategy that allows you to be successful in the market in the long run.
Now, you could be a brand that maybe is only looking at the short-term benefits then sure but I think no matter what your strategy is, you have to be prepared to spend the time and money before you reap the benefits.
I think my last advice is to just not get distracted by any quick wins because there is no such thing as quick wins in China, you have to do to stay grounded to what your brand stands for in order for that sustainable growth for the brand.
Yes, and there are so many sort of stories where people have been burnt with China aren’t there.
You always hear brands who have been in some way or another and someone’s offered them the world and it just hasn’t ended up being anything like that. So I think your point about quick wins is a really good one.
Unfortunately, even at the moment where China is looking like a bright spot on the global Retail Landscape. It’s definitely performing better than most other markets, but at the same time you still need to have that commitment to it.
You’ll see that benefit in a year or a couple of years but you need to invest now first. And so obviously the Chinese Beauty Market is, about to be the biggest Beauty Market in the world second to the US, and it’s so dynamic and there’s so much going on.
which trends in china beauty do you think brands really should know about?
It’s such a difficult question. I think you know you also mentioned that the market changes so fast a lot of the times the second you feel like you have the market figured out something changes.
It could be the regulations as we’ve seen, they are thinking about eliminating animal testing. It could be like a new game Animal Crossing that’s just all of a sudden blowing off the charts where all the brands are spending their marketing dollars on this one game.
I mean I think obviously there is the trend of Clean Beauty to be watched especially with animal testing rule being eliminated in the near future.
I do think the sophistication level and the awareness level in terms of Clean Beauty amongst the Chinese consumer isn’t quite there yet. I think it might be another year or 18 months.
But it’s not too late to start the homework, start your research, to be the market entry player on that front.
But I think one trend that is happening for sure, is the sophistication of Chinese consumers, with globalization with any brand not just beauty, but any brand in the world trying to woo the Chinese customers.
They’ve really become very sophisticated and demanding when it comes to how does the product or the brand benefit me?
How does it make me stand out among my friends or how does the brand represent my values?
So you’ve seen with some of the fashion brands the types of marketing activations they’ve done, really makes a huge impact.
And I think a couple of years ago if a brand had the marketing dollars to spend on celebrities they can leverage the celebrity power and become quite successful, but now a brand really needs to be clear on what it is.
What is the need that it fills for the Chinese customers and be focused on this not just focused on the celebrities so that they can truly address this need or whether or not the brand fulfills a sentimental value.
how does it improve the consumers General well-being?
I think definitely with the research that I’ve done around Clean and natural brands I agree with you it is still not mainstream by any means, we’re not talking like the US or Australia where it’s already pretty established.
Chinese have a small subset of people that are looking at it and I think that’s growing because of Covid you’ve got a sort of healthy Beauty which is something that people are more interested in so they are looking more around ingredients.
I think the sophistication of the consumer, it’s astounding the amount of information because they like consuming information but I think more so the exactly then the west and reading about what’s behind the brand, what in the product ,where does it come? I think that is so knowledgeable.
I’ve said it so many times that it’s almost become cliche for myself, but you know Mckinsey China did some research, the average Chinese consumer requires 8 touch points before they make a purchase whereas overseas it’s only 6, it’s really the level of information that they consume is tremendous.
Yes, that’s why now celebrities and the big KOCs, obviously they still do have big influencing power. But now the KOCs, the key opinion consumers, the micro-level.
KOCs have become more influential and therefore they charge more as well, because the customers are demanding for more information.
They’re demanding for more angles, more channels, and more opinions about a certain product or a certain brand before they actually make that purchase decision.
Well, I think we could talk all day. It is a very interesting topic. I think we will leave it there. If people want to get in touch with you I will put your details below.
Thanks so much Lucy.