BW Confidential - Issue #10 - May/June 2012 - (Page 61)

Taobao & the internet Storming the web An analysis of the rise of China’s online giant Taobao and what it means for beauty by Raphaëlle Choël I n less than 10 years, Taobao has become China’s leading online shopping platform, and whether brands like it or not a major destination for buying beauty. More products were purchased on Taobao in 2010 than at China’s top-five brick-and-mortar retailers combined, making it the biggest retailer in the country, according to Boston Consulting Group. The company, part of Hangzhou-based Alibaba Group, launched in 2003 as a consumerto-consumer (C2C) online marketplace linking buyers with sellers, much in the same vein as US-based Ebay. It now has more than 800 million product listings, 370 million registered users and according to Alexa site rankings is one of the world’s top-20 most visited websites. It also says that apparel and cosmetics are its most popular product categories. Analysts estimate that Taobao could now account for up to 15% of beauty sales done in China. Taobao also claims to have a 60% share of the C2C market, which in turn accounts for 80% of all online sales in China. Most beauty brands can be found on Taobao May-June 2012 - N°10 - BW Confidential Marketplace, the name of the company’s C2C platform. Many products are sold without authorization from brands and are often procured from dubious sources, such as distributors or middle men getting rid of excess or out-of-date stock. There are also a growing number of sellers who buy products overseas (as they are cheaper, due to high taxes in China) to sell them through Taobao. In addition, there is a vigorous trade in counterfeit products on the site, although Taobao has been making efforts to clean up its image on this front by black-listing known counterfeit traders and removing fake goods. Its seller rating system is also an attempt to distinguish purveyors of genuine goods from those peddling counterfeits. n n n Beauty brands on Taobao & Tmall There are no official figures about the presence or sales of beauty brands done on Taobao and Tmall. However, the consumer search rate of brands and categories gives some indication of the most popular companies and products on the sites. According to a report conducted by, the search rate for skincare products was 51.6%, followed by make-up at 20.2% and haircare at 14.5%. In terms of brands, the search rate of skincare companies on Tmall was topped by L’Oréal Paris, followed by Estée Lauder and Clinique (the presence of Estée Lauder and Clinique on these sites is unauthorized by the brands), while in cosmetics the top search was for Maybelline followed by Za and L’Oréal Paris. On Taobao’s C2C site, in terms of skincare, consumers searched most for Estée Lauder, followed by Laneige and L’Oréal Paris; while in make-up, Chanel topped the searches, with Dior coming in at number two and L’Oréal Paris number three. 61

Table of Contents for the Digital Edition of BW Confidential - Issue #10 - May/June 2012

- Brand & retail news recap
- 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 Clinique global brand president Lynne Greene
Insight: Skincare
- Category overview
- Retail technology
- Retail viewpoint
- The latest trends
- Spas & healthcare
- Spa case studies
- Inspiration from Apple
- Store concepts
Market watch: China
- Country overview
- Industry viewpoint
- Prestige retailing
- Taobao & the internet
Digital focus Social media strategies
Strategy spotlight Case studies to inspire
Travel retail: Asia Pacific
- Regional overview
- India
- Interview: Delhi Duty Free Services coo Arun Barathi
Radar Six up-and-coming beauty brands
- Make-up packs
- Innovation showcase
Last word Metis Insights director Stéphanie Morou

BW Confidential - Issue #10 - May/June 2012