Beauty and Personal Care Get Extra Boost from E-Commerce

on December 6 2012 | in Beauty | by | with No Comments

Shiseido

The beauty and personal care market in China was valued at US$24 billion, or roughly $18 per capita in 2010. Thanks to increasing disposable incomes and advanced product innovations, this number will experience even more growth over the next several years, mostly from premium beauty and personal care products.

According to a report by Euromonitor International, the anticipated baby boom this year drove up the demand for baby and child-specific products; older consumers continue to contribute to the sales of anti-aging products; and more and more appearance-conscious young men are purchasing men’s grooming items.

Whereas traditionally, consumers sought middle-to-high-end beauty and personal care products at department stores, and low-to-middle-end ones at superstores, an emerging channel has become the key catalyst for the industry’s rapid growth – e-commerce.

China has more internet users than any other country in the world. According to the report, online sales of beauty and personal care products increased by 84 percent in 2011. Many companies, including Proctor & Gamble (Guangzhou) Ltd., L’Oreal China, Unilever China Ltd. and Shanghai Jahwa United Co Ltd. have set up stores on Tmall.com, a B2C platform owned by Alibaba Group.

Several companies are also building their own official online retail platforms, such as Shiseido. The Japanese company launched its official website in 2012, through which consumers can purchase its Pure & Mild branded products. Five more Shiseido brands will be added to the online store in the near future.

E-Commerce’s two biggest appeals are its competitive pricing and accessibility. “China’s luxury market is in its early stages of development, with buyers of cosmetics and fragrance still price-sensitive,” says Zhou Ting, associate professor at the University of International Business and Economics in Beijing. Online platforms eliminate the traditional overhead costs associated with brick-and-mortar stores, and therefore are able to offer lower prices.

In August 2012, US cosmetics and fragrance manufacturer Clinique, owned by Estee Lauder Group, announced price cuts on four of its skincare products by up to 30 percent in the Chinese mainland market. According to a statement released by Estee Lauder, the main purpose of the price cuts is to bring customers back into department stores, to enjoy better service and after-sales service.

E-Commerce also makes high-end products more accessible. Consumers from second and third-tier cities, where brands may not be readily available in stores, can purchase the products online from virtually anywhere with internet access. Such access and reach greatly expands the consumer population.

However, there are also drawbacks of online retailing in China that companies need to be aware of, such as the underdevelopment of logistic systems and the unreliability of online payment methods.

Analysts have noted that the growth of high-end beauty and personal care markets in China has lagged behind the growth of luxury apparel and leather goods. However, it is important to distinguish between a decline and a slowdown. “The cosmetics market in China is still growing, but just at a slower pace than in previous years,” explains Wang Jiajun, an analyst at the China Market Research Group. “Estee Lauder and L’Oreal in the first half of this year both saw double-digit growths in China.”

Euromonitor expects China to account for one-fifth of the growth of the global beauty and personal care market between 2010 to 2015, estimated at about $34 billion by 2015. The growth will be led by skin care items, followed by men’s grooming and baby care products.

 


[china daily, in-cosmetics]
photo credit: shiseido

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