How about Selling Your Cosmetics via E-commerce in China?

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Taobao – successful cosmetics companies’ choice

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Everybody in cosmetics knows the importance of the Chinese market, but only a few knows the way leading to the world’s second biggest market which is 32 billion USD in size while local competitors are still immature. At the same time, e-commerce has expanded to 277 billion USD in 2012 and it’s still growing at a surprising rate, at 25.8%. What’s more, the market of second and third tiers cities is developing faster than Beijing and Shanghai because it is not convenient to cover them with real stores, especially for new companies in the market. Due to that half of the sales of e-commerce consists of those second and third tiers cities. It means with only one online store, you’ve already connected your business with second and third tiers cities.

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e-commerce 08-14

china e-commerce market size from 2008-2014

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What are those successful companies doing?

The combination of these two becomes some companies’ choice, such as L’Oréal (the No.1 brand in China, with over 12% of the market), Herborist (high-class Chinese herbal medicine cosmetics brand) and Chcédo (No.1 local brand in China).

Their choice is: Taobao. (Taobao Marketplace is a Chinese language web site for online shopping, similar to eBay and Amazon, operated by Alibaba Group. source:wiki)
If input “化妆品(cosmetics)” on Taobao searching bar, you can find 49 brands already existing there. The three brands mentioned will be taken as samples. And what they do good and bad will be discussed here.

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1. L’Oréal’s page

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The L’Oréal Group is the world’s largest cosmetics and beauty company. On Taobao, L’Oréal uses a Chinese company to manage their account.

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Clear design

The design of the online shop is quite clear without unnecessary information. For each product, only picture, product name and discount information.

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And Chinese customers are easy to be influenced by multi-media introduction like pictures and smell as well as price. Chinese customers are highly price sensitive shoppers. For example, during the “Qingming” festival, the Chinese customers spend 160% more in Lotte shopping mall during the discount time than usual, the JoongAng Daily reports. So price plus multi-media and name is clear and impressive to Chinese customers.

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Fake store

One problem with L’Oreal Taobao shop is its SEO on Baidu, if you search “L’Oréal, Taobao, official shop”, the first two results are not their real store. And the fake L’Oréal Taobao store appears on the first looks also real.

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the result of "L'Oreal Taobao official" on Baidu

the result of “L’Oreal Taobao official” on Baidu

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the fake oreal taobao store rank first on Baidu

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Those customers don’t know will probably trust this site and place order to them. If they sell real L’Oréal it is ok, but what if they sell fake products?

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Customers cannot choose

Only on the first page of L’Oréal’s Taobao shop, you can find over 100 products. As a Chinese customer, I just feel lost just by skimming the page. It’s also because there are selection options on other stores which will be mentioned later.
The performance of the store is good, with about 9,000 orders every month.

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2. Chcédo

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As a sub-brand the biggest cosmetics group in China: Garan (Group), Chcédo was established 7 years ago. They are focusing on the domestic market.

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Clear design

Like L’Oréal, Chcédo gives clear message to customers: short name and highlighted price.

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Visitors can get all the important information at one glance.

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Customers can select what they want

The selection bar allows customers to select exactly what they want. So there’s no need for customers to browse the whole page to find what they want.

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selection bar

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The options include series of products, effect of products, type of products, type of skin and the price, which is the most important.

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No discount

However, there’s no discount information on Chcédo Taobao store. So the customers will forget one unique advantage of online store should have: price! It is the price difference between online stores and traditional store that attract so many customers.
The performance of Chcédo Taobao shop is so-so with 360 monthly sales, only 4% of that of L’Oréal.

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3. Herborist

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Started in 1995, Herborist belonged to the state owned group Shanghai Jiahua. Now Herborist has become the leading cosmetics company in Chinese traditional medicine cosmetics.

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Clear discount message

Unlike Chcédo, discount information on Herborist Taobao store is visually inevitable.

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So customers can understand very clear the difference between they buy it here online or buy the same product in real stores.

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Special customer service name

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The customer services are all named after traditional Chinese medicines. It is only store on Taobao you can find in cosmetics field. It simply impresses customers more.

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Unnecessary message

The problem of this online store is the unnecessary messages. For example, in the following screenshot, even the discount information are not so distinguishable. And the description is only direct advertising words, no useful information inside.

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Herborist gets about 6,000 orders every month.

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What needs concerning?

These three companies are the most successful three companies in China cosmetics market. And they all choose professional agencies to manage their online Taobao shop. What’s interesting is, some foreign brand, such as L’Oréal, understand Chinese market even better than local companies.

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1. Price & Discount

As mentioned before, price is still one of the most important concerns for Chinese customers, especially for online business. For example, the design or information from Herborist is as good as or even better than that of L’Oréal, but their sales is only 4% of L’Oréal, as a result of lack of discount.

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2. Clear information

In fact, it is important for product introduction in all forms. But for e-commerce, it is tremendously important for China e-commerce because the designs of online stores in China are usually stuffed with more than 100 items. It is very easy for visitors to lose their focus and even interest to keep browsing if the information is not clear.

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3. Selection

To find what they want on one store for customers is like looking for a needle in a haystack. So customers prefer selecting what they want according to some categories like effect of products, type of products, type of skin and price.

In the cases of these three companies, they have some problefms. And also, many companies worry about the problems they can meet with their online store, for example, fake stores, fake goods and e-commerce fraud.

But with the improvement of the rules, those problems will be solved one by one. And with the high coverage and low cost, e-commerce is good choice for cosmetics companies, especially those who want to start their business and increase their influence in China.

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Other solutions to attract Chinese Cosmetics Users

Except for E-commerce, there are also other efficient solutions for increasing your brand awarenss and improving your brand image.

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1. SEO/PPC

It’s still one of the top practice to attract customers who are searching for cosmetics. You may have already got some ideas about what a good cosmetics website should have from the  content above. And now what you need to do is to bring visitors to your website. To reach this target, nothing can be better than SEO/PPC in China.

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2. Buzz

Buzz allows your brand or new product spread very fast among potential consumers in a short time.  It’s very difficult for a cosmetics product to be appealing for Chinese tourists for a long time. Thus it’s very important to let your targets know the product and make decision to buy it before it’s taken place by other product. And buzz can help you greatly.

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3. e-PR

Chinese cosmetics users are very careful about the safety and effect of the products put on their faces or skins. That’s why many of them will go online to search a lot of information before they buy. If they see your product on some very trustful media, of course they will have a much better impression on it.

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4. SNS

Social networks turns out to be the most influential source of information for Chinese consumers on cosmetics. Millions of girls or women search, visit, comment, discuss on those website about cosmetics. The information, especially the experience from others can easily leads those people’s decision.

Please feel free to contact me via email: marketingtochina[at]gmail.com, if you have project or any questions.

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