BW Confidential - Issue #6 - May/June 2011 - (Page 62)

Market watch: China E-commerce Beauty gets wired Beauty brands have implemented impressive e-commerce strategies in China. Good news given the internet’s potential of becoming one of the market’s major retail channels by Oonagh Phillips eauty has not been known for being ahead of the curve when it comes to the internet. However, in China, cosmetics brands are doing a much better job than companies in a lot of other industries. A study by US-based consultancy L2 Think Tank measuring the ‘digital IQ’ of 100 prestige companies in a range of industries in China found that three of the top-five brands in its ranking were in beauty: Lancôme, Estée Lauder and Clinique. L2 Think Tank also reports that 92% of beauty sites included in the study were in the Chinese language and 46% were e-commerce enabled. The number of sites featuring a selling platform has mushroomed in China over the past two years. L2 Think Tank director of research and advisory services Maureen Mullen says that most prestige cosmetics brands have tripled or quadrupled sales in their e-commerce business. Last year also saw an interesting move from L’Oréal: the group went beyond the mono-brand e-commerce platform by setting up a website where consumers can buy all of its luxury brands. It’s not hard to see why beauty brands are making such a push with e-commerce. The number of internet users in China stands at around 400 million and online retail sales 62 B doubled in 2010 to reach Rmb500bn ($75bn), according to internet research firm Analysys. Research and Markets forecasts that total internet transactions will reach RMB2.5trn (or “ Most e-businesses are C2C. There is a need for a B2C site that does not discount and guarantees genuine product so the consumer is reassured and so brands can have better control over their business years. In addition, the internet is a way of expanding a brand’s geographical reach. “The internet is a good way to get at the pockets of growth in the second- and third-tier cities, where retail is not so well established,” says Mullen. “Also 80% of Chinese are under 45, so they are digitally native, and it makes sense to try to reach them with the web” . Chinese webs Going local with the web in China is key: consumers may choose foreign over home-grown brands, but Chinese users much prefer a digital interface that caters to local tastes. However, while Chinese search engine Baidu accounts for 62% of the search-engine market, only 39% of prestige brands come up in its organic search results. And there are still many brands that don’t include local content nor have sites in the Chinese language, according to L2 Think Tank. It advises brands to partner with Chinese technology companies and agencies that will better understand consumer tastes and Chinese algorithms. Brands are also being urged to do more with mobile. There are around 745 mobile phone subscribers in China, and more than one quarter of users access the internet through their May-June 2011 - N°6 - BW Confidential Gouten Consulting founder Francis Gouten about 20% of total national retail sales) in China by 2015. It’s estimated that e-commerce now represents 3 to 4% of beauty sales, a figure that could reach 10% in the next few ”

Table of Contents for the Digital Edition of BW Confidential - Issue #6 - May/June 2011

Cover
Comment
Contents
Update
- Brand & retail news recap
- Digital digest
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
Launches
- The latest in fragrance, skincare & make-up
Interview
- Puig ceo Marc Puig
Insight: Skincare
- Category overview
- Department store initiatives
- Perfumeries
- The latest trends
Wellness
- Discounting in spas
- Spa case studies
Retail
- New store concepts
Travel retail
- Market analysis: Asia & Middle East
- Chinese travelers
Radar
- Four up-and-coming beauty brands
Market watch: China
- Analysis: country overview
- Industry roundtable
- Prestige retailing
- E-commerce
Packaging
- Decoration techniques
Last word
- LPK Beauty vp group creative director Liz Grubow

BW Confidential - Issue #6 - May/June 2011