Tmall is becoming the place to be for beauty brands.
Last week at the Tmall Beauty Summit 2019, Alibaba’s Tmall president, Jet Jing, said 1,000 new cosmetics shops from both international and domestic brands will open on Tmall in 2019. Several brands have already signed on to open flagships on the platform this year, including Tom Ford, Glamglow, Primera and Barnängen. Currently, more than 3,000 beauty flagship stores are selling on Tmall including Estée Lauder’s La Mer, Estée Lauder and Jo Malone; L’Oréal’s Lancôme and Giorgio Armani; P&G’s SK-II; Shiseido Group’s Shiseido and NARS; and LVMH’s Givenchy and Fresh.
While Amazon still has yet to find its footing with beauty, especially among luxury players, beauty is big business for Tmall, and the category is continuing to grow: Tmall reported that its sales of beauty products jumped by more than 60 percent last year. Furthermore, according to a joint report by Tmall and market research firm Kantar released during the Beauty Summit, online sales of cosmetics, skin-care and personal-care products in China grew by 46 percent, 40 percent and 37 percent, respectively. (Meanwhile, the consumer goods category increased by only 34 percent in the region.) Additionally, Alibaba’s “New Retail” strategy is intended to redefine commerce by enabling seamless engagement between the online and offline worlds.
Jason Chen, Tmall general manager of beauty, doesn’t see Tmall as a shopping platform alone, as the company also educates its beauty and personal-care brands on how to connect with its audience of 700 million consumers.
“Brands use Tmall not just as a sales channel but also as a branding powerhouse for shaping their overall strategies for the China market,” he said. “We handle billions of transactions every month and [give] our partner brands insights into consumer trends in China.”
Chen shared with Glossy how Tmall is on-boarding its latest beauty and personal care brands, what is trending in the Chinese market, and how brands can capitalize on being more customer-centric.
How does Tmall on-board its beauty and personal-care brands?
We are committed to helping connect brands directly with the Chinese consumer. Brands joining Tmall are looking to leverage our technology and data-driven consumer insights. Before launching on Tmall, brands will usually begin planning up to half a year to a year in advance, collaborating with us closely on everything from brand marketing and product selection to annual strategy planning to ensure they have a successful launch. A month before officially launching, they can also choose to perform a “soft launch.” During this stage, we will work with them to fine-tune final details, such as marketing strategies or visual aspects of their storefront. And will make sure they are connected with consumers across multiple touch points both online and offline.
In 2018, Jo Malone, YSL Beauty, Giorgio Armani and Givenchy launched flagship stores on Tmall platforms. With each of these launches, we worked hand-in-hand with the brands to create special experiences that resonate with Chinese shoppers and introduce the brand’s identity and heritage. [With Jo Malone, Chinese shoppers were able blend their own signature scents virtually, based on moods and personal tastes.] Atelier Cologne and 3CE both launched on our Tmall platform in January. We also see tremendous room for growth going forward. Total sales generated on all business-to-consumer retail websites in China currently account for 12 to 15 percent of the entire cosmetics market, and we predict those channels will grow by another 30 percent to 50 percent over the next two to three years.
From a positioning point of view, are you seeing luxury, mass or indie brands resonate with Chinese customers more on Tmall?
We’ve seen high-end luxury beauty brands enjoy immense success on our platforms, but shoppers are looking to Tmall as the platform to connect with mass brands and local brands. Local Chinese beauty brands have grown popular by being consumer-centric and moving quickly on content. Because they are younger and don’t have as many offline channels for growth, many of the successful homegrown beauty brands today have essentially grown up on Tmall.
Brands are also working with us to successfully transform their digital operations, and, as a result, they’ve seen incredible brand revitalization and new customer acquisitions. As an example, Innisfree, a popular cosmetics brand from Korea, worked with us to complete a “New Retail” digital makeover for its offline stores in China, introducing interactive technologies and merging online and offline memberships. Shiseido has also opened an office in Alibaba’s hometown of Hangzhou to collaborate with us more closely and also jointly develop products targeted to Chinese consumers. Today’s consumers in China have rapidly changing tastes, and as a result, brands have realized the success of their operations is dependent on their ability to digitally innovate.
How do you get brands, especially heritage beauty companies, to double down on digital innovation when they are not necessarily accustomed to it?
Chinese consumers do not see the same distinctions between online and offline, and neither should our partner brands. For the brands and businesses on our platform, “New Retail” means the full digitization of their entire retail value chain, including consumer engagement, inventory management, logistics and even product development. When brands embrace digital innovation, not only does it mean greater profits and consumer engagement for them, but also retail as a whole becomes more tailored to consumer preferences and is more flexible and efficient.
What are some of the tools Tmall is incorporating to make shopping more seamless within “New Retail”?
Some of our newer solutions are brand employees going online to serve as “beauty advisers.” Some of these advisers have outstripped celebrity KOLs [key opinion leaders] in popularity and are helping drive online sales and traffic to a brand’s offline stores. With “try before you buy,” users can pay a 10 percent deposit to test a product with the promise of a simpler and faster refund process. And our interactive vending machines use the mobile Taobao app, where customers can scan a QR code and purchase individual or sample-size beauty products at a discount to test a product.
How important are customized beauty experiences on Tmall for both customers and brands?
Our partnerships are driven by the aim to provide more personalized experiences, both online and offline. Tmall storefronts often serve to boost traffic and engagement in a brand’s offline space. For example, Coty’s Wella hair-care line allowed shoppers to try on different looks and purchase hair services online on our platform, and then redeem those services at a hair salon. About 54 beauty brands, including Estée Lauder, La Mer and Laneige, have integrated their online and offline membership programs, and now allow users to make appointments online for skin-care treatments in brick-and-mortar stores. For young consumers, shopping is a full-fledged lifestyle. They are looking to express themselves through distinct looks and are seeking out unique experiences or exclusive, customized products when they shop.
Chinese beauty consumers are becoming much younger. How are you responding to their demands from a trend perspective?
They are more willing to try new products at faster rates, and as a result, they’re helping to set nationwide beauty trends. Users born after 1990 make up over 40 percent of shoppers on Tmall Global, overtaking those born in the 1980s as the main consumption force. We see some exciting new beauty trends in China and are working with our brand partners to make sure they are able to seize these opportunities. Male beauty and grooming is on the rise in China. In terms of category expansion, we see greater rates of adoption of skin-care tools and beauty devices. Brand-wise, we are working on expanding the selection of Japanese and Korean beauty brands, and we’re also working with more influencers as they develop their own individual beauty lines and brands.