CBNData and Tmall Global jointly released their consumer report on Jan 11. According to this report, sales on Tmall Global continues to see significant growth since its 2014 inception with food, cosmetic and skincare and mother and baby products leading the sales as its main product categories. Interestingly enough, while everyone was expecting strong sales of baby milk powder and paper diaper in cross-border business, cosmetics and skincare beat mother and baby products to top the best-selling category list. In the meantime, sales of daily necessities also started to take off.
Post 90s and post 95s joins Haitao force, 1 out of 5 millennials made their first order for cosmetics
There seems to be a strong correlation between strong performance of cosmetics and skincare sales and a rapid growth of younger consumer segment. Tmall Global provides a rare opportunity for Chinese consumers to get access to foreign brands and products for the first time, barring potential risks in product quality and logistics posted by Haitao. Along with the maturation of Tmall Global in 2016, large number of first-time buyers of import goods signed up to the platform, effectively doubling its users. Among the new users, more than half are post 90s and post 95s.
Consumer habits differ considerably depending on age group. Recently starting their professional career, the post 90s saw their purchasing power released on Tmall Global with the fastest growth of average customer spend, whereas the post 95s and the millennials remain in growth stage of Haitao due to limited pocket money.
However, young consumer groups tend to display the same consuming patterns. Although spending less through Tmall’s group purchasing channel Juhuasuan as a whole, young consumers are more eager to buy more cosmetics and skincare on Juhuasuan. This clearly indicates a competitively priced cross-border platform with rich variety of choice for cosmetics and skincare is favoured by young consumers.
Interestingly, it’s the millennials that are more enthusiastic about buying cosmetic and skincare products as they made more than half their orders for cosmetics and skincare, body care, essential oil and perfume in 2016.
This trend doesn’t only apply to female but also male consumers. Actually one out of five male millennial consumers placed their first order for cosmetics and skincare product on Tmall Global.
As compared with new consumers, those accustomed to buying foreign products are much more demanding in terms of brand choice and product functions. Especially for post 80s consumers in tier one and tier two cities, being more concerned with body care and skincare, they helped to push the sales of foot mask, neck cream, bath salt, hand-made soap, essential oil soap and men’s bath gel. As the earliest Haitao buyer, they are no longer satisfied with popular brands but actively seeking less well-known brands suitable for their specific needs.
Stay or leave, it’s all down to competition
Earlier this year, multiple brands including Dior, Estée Lauder, Clinique and MAC started to cut their retail prices, some as much as 18%. Although generally intepreted as a collective gesture responding to the government’s policy to lower import duty for high-end cosmetic and skincare product by 15%, quite a few brands have apparently outpaced the policy and cut their price by over 15%, fuelling the speculation that they tried to take more market share from cross-border business.
Although some large brands chose price-cutting to cater to the consumers, the advantages of cross-border e-commerce for cosmetic and skincare products seem to be unbeatable at least in the short run. To import cosmetic and skincare products into China, it’s necessary to acquire a sanitary inspection certificate, which involves a full set of checking that typically lasts 9 months or 13 months for special products, a process both costly and time-consuming. Cross-border e-commerce doesn’t require any of these, thus the possibility of launching new products simultaneously in China.
In 2016, Tmall Global introduced cosmetic and skincare products from South Korea, Japan, France, Switzerland, Poland, Canada, Israel and other countries, many of them were a first to Chinese consumers. Among them, South Korean brand AHC, Leader, Jjayiun and Mediheal, Japanese brand Lululun, Utena and Quality First, Taiwanese brand Dr. Jou and Wellfon became the best-selling brands in facial masks category. South Korean brand such as LIRIKOS, VERITE, Espoir, OHUI and Beyond, Japanese brand such as Freshel, Kanebo, Kose Cosmeport, European brand such as Bypass, Martiderm and Australian/New Zealand brand such as Thursday Plantation, Anitipodes and Royal Nectar, being new and never sold via traditional channels in China were made available and accepted by Chinese consumers through the help of Tmall Global.
Although benefiting from being newly introduced and competitively priced, cosmetics and skincare brands nevertheless face strong competition on cross-border platform. Recently, Adore Beauty closed its Tmall store after operating for 6 months. Adore Beauty represented Australian brands such as Evo, Lanolips, ASAP, Alpha-H, Skinstitute and ELEVEN but failed to generate enough brand awareness in China, a bad example of “survival of the fittest”.
China is the second largest consumer market of cosmetics and skincare after the US. There are currently more than 4000 domestic and foreign brands sold in China. Cross-border e-commerce might provide foreign brands a channel for direct access to Chinese market but it’s up to the brands themselves for ultimate success.
To find our more about setting up online store in China, please read our previous post “How To Open Your Online Store On TMall (New)” and our webpage: “Set up TMall store, Taobao store and other types of online store“.
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