In April, livestreaming video shopping marketplace ShopShops hosted an event with former Victoria’s Secret model Lindsay Ellingson and Divya Gugnani, co-founders of fledgling beauty brand Wander Beauty. The joint trunk show with travel-accessories brand Hudson + Bleecker was well-suited to Wander’s “portable” ethos.
As Ellingson took shoppers through her beauty routine, demonstrating Wander’s Unlashed Volume and Curl Mascara and Baggage Claim Gold Eye Masks, Chinese shoppers could comment, ask questions and instantly purchase products from the New York–based beauty brand. But although the shoppers were based in China, they didn’t have to travel to the United States to take part in this truly “American” retail experience.
ShopShops is a 2-year-old Beijing- and New York–based service that connects Chinese shoppers with international brick-and-mortar stores through two- to three-hour shopping events that are broadcast from the store, either before or after shopping hours.
Discovering smaller brands and seeing hosts try on products is largely part of the appeal, said founder and chief executive officer Liyia Wu, who found that observing the noticeable results on Ellingson translated into sales.
Lindsay Ellingson talking Wander Beauty on ShopShops
ShopShops is best described as a QVC-meets-Facebook Live-meets-Farfetch, in that it’s the global generation’s approach to shopping small global stores and brands through video. And although much of the focus has been on American fashion boutiques, Wu has also seen enthusiastic interest in American beauty products, despite the relative accessibility of Japanese and Korean brands to China. If anything, U.S. beauty products might be more elusive than apparel; Farfetch, for example, does not currently sell beauty.
Wu said 20 percent of ShopShops’ monthly sales are in beauty or skin care, and that the top beauty event so far sold more than $22,000 in product in two hours. Total sales for events have ranged from about $1,500 to about $30,000, depending on the category.
Wu said beauty is one of the highest-volume categories, and she’s seen interest in a wide range of brands, from heritage to mass market to luxury. “Customers tune in to ShopShops to discover something new, which is true for apparel and for beauty,” she said. “Beauty products typically have a lower price point, which can translate into a greater willingness to try something new.”
Video is especially complementary to buying and selling beauty.
“Our hosts always try on products, but with beauty, we find that it’s especially important to engage customers with demos and tutorials so they learn how to use a product and see what it might look like on their skin,” Wu said. “The ShopShops audience loves seeing ‘before and after’ demonstrations.”
In addition to well-known brands such as Estée Lauder, Kiehl’s, Nars and Urban Decay (which isn’t available in China), ShopShops customers are clamoring for brands including Erno Laszlo, Tracie Martyn, Make Beauty and Manic Panic, as well as items from C.O. Bigelow, with which ShopShops has an exclusive. The marketplace hosts weekly events with the historic American apothecary, during which shoppers can buy new products that aren’t available in China, in addition to limited-edition or discounted items.
The most popular skin-care products for Chinese customers include whitening (such as those with SPF), anti-aging and hydrating products, while popular makeup categories are bold lipsticks and full-coverage moisturizing products. Make Beauty’s Soft Focus Foundation and its Skin Illuminator are two best-sellers.
Even when Chinese shoppers do have local access to a major global brand, the experiential element of connecting with a live broadcast from an American store is more appealing. A livestream from a YSL pop-up store in Soho, for example, was popular, Wu said.
Behind the scenes of a livestream for C.O. Bigelow on ShopShops
Chinese shoppers are an increasingly relevant segment of the global beauty market.
In October 2016, Morgan Stanley reported, China was on pace to eclipse the United States to become the world’s largest beauty market. While domestic purchases of cosmetics in China have been declining, Chinese consumers are increasingly buying foreign makeup and skin-care items — but they’ve been largely limited to buying during foreign travel or buying through e-commerce, which gives the advantage to larger brands that have the capability of offering global e-commerce sales and where consumers risk inadvertently buying fakes.
“Chinese consumers are increasingly interested in premium foreign brands as they look to trade up from mass-market local labels,” said Liz Flora, the editor of Asia Pacific Research at research firm Gartner L2. “The market for foreign beauty brands in China has long been dominated by the big international conglomerates, but we’re starting to see a wave of smaller niche brands moving in as consumer tastes evolve.”
Some shoppers choose to buy “gray market” products that are bought abroad then resold in China for a price that is lower than what the tariffs would require, but “this market is extremely unregulated and it’s easy for consumers to get tricked into buying fake products,” Flora adds. An alternative like ShopShops, which packages and ships products directly to the customer in China, allows viewers to see the provenance of the items. “It would make sense that shoppers could gain needed peace of mind seeing an actual live video of the store it comes from and being able to ask questions that are answered in real time,” Flora said.
Additionally, the appeal of the gray market might wane starting in July, as the import tariffs on skin and hair products in China are set to decrease from 8.4 percent to 2.9 percent.
Meanwhile, the ubiquity of global video shopping, which is already quite popular in China, stands to increase. Flora said livestreams in China are currently “far more sophisticated and elaborate” than current shopping shows in the U.S. (On Chinese e-commerce platform Tmall, for example, a beauty livestream for Pure & Mild garnered 32.6 million viewers, thanks in part to being hosted by mega celebrity Zhao Liying.)
But that stands to soon change. This spring, ShopShops secured a $6.1 million investment led by Forerunner Ventures and Union Square Ventures. It just launched a “mini-program” within WeChat and will launch its own app. (Shows are currently hosted on Taobao.) It also will begin working more with Chinese influencers to host shows.
“Initially, no one understood what we are talking about,” Wu said. Now, ShopShops hosts about 85 events a month, and has hosted shows in cities including New York, San Francisco, Chicago, Boston, Los Angeles, Miami and Montreal. And despite the interest in North American brands and retailers, Wu has also begun testing in Korea, meaning hosting shows in Seoul for Chinese customers. After all, she admits, “Beauty is definitely an important category there.”